Page 310 - DMGT407Corporate and Business Laws

Unit 12: Management of Companies

Notes
Key Parameters
“The CEO and top management salaries are generally benchmarked against key parameters
which may differ from company to company,” said Mr E. Balaji, CEO, Ma Foi Management
Consultants. The target set could be anything from improving market capitalisation,
earnings, profit after tax or a combination of all the above.

“In the case of IT companies, one would not be surprised if key performance indicators are
related to bringing down day sales outstanding, maintaining key customers, doing well
in specific geographies or controlling costs,” he said.

The trend of offering big incentives as part of overall compensation package is likely to
continue, said Ms Priya Chetty Rajagopal, Vice-President, Stanton Chase.
Satyam Effect

The fall of Satyam Computer Services may also have contributed to the swelling wallets
of IT company’s executives. Major IT firms lay lot of impetus on winning new clients
especially at a time when firms are shrinking their IT budgets.
“It is a known fact that all companies were busy making sales pitches to Satyam’s customers
soon after the fraud came to light. Invariably, the ones who were able to attract most of
Satyam’s customers were the top tier IT firms. As a result, key officials with those IT firms
would have been appropriately rewarded by the management,” said a senior official of
Mumbai-based IT solutions firm.
Questions
1. Elaborate the role of Satyam in context of the case.

2. Analyse the compensation trend in IT industry of last few years.

Source: thehindubusinessline.com
12.6 Summary

A company, being an artificial person, acts through human agency.
Every company is required to have a Board of Director for managing the affairs of the
company.
The Act has made provision for the appointment of a managing director or a manager.
The Act has regulated the remuneration which can he paid to the managerial personnel.
A meeting of the Board of Directors of every company must be held at least once in every
three months and at least four such meetings must be held in every calendar year.
It has provides for liabilities and duties of directors.
It provides that every public company, having a paid up share capital of ` 5 crore or more
shall constitute a committee of the Board of Directors known as Audit Committee.
Act has made provision for the appointment of a Company Secretary.

12.7 Keywords

Compensation: It is the remuneration provided to the directors for their services.

Director: A director is any person occupying the position of director, by whatever name called.

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