Grey areas of using corporate funds for personal luxury

These days, executive compensation of promoters and professional executive directors of listed companies are closely scrutinized by shareholders.

- Shriram Subramanian The author is Founder and Managing Director of InGovern Research Services, a proxy advisory firm

These days, executive compensation of promoters and professional executive directors of listed companies are closely scrutinized by shareholders. The compensation awards by the company are put to vote by shareholders. But being ordinary resolutions where even the promoters get to vote, almost all compensation proposals pass through easily. There is a reason for regulators to consider barring promoters from voting on compensations awarded to themselves.

However, what is usually not very transparent are the perquisites, the perks and benefits that don't always show up in the main compensation package. In many Indian companies, top executives enjoy a range of benefits beyond their salary. These include:

Some of these perks are allowed and even tax-exempt. For example, if a car or a phone is used strictly for company work, it doesn't count as a perk. But how can one prove that?