The corporate affairs ministry on Monday told the Rajya Sabha that companies can pay higher salaries to the top brasses after getting approval from the government under the existing Act.
"The companies may pay more than the prescribed ceiling to their CEOs who are holding board-level positions with the approval of the Central government as per the provisions of the Companies Act of 1956," corporate affairs minister Salman Khurshid said in a written reply to the Upper House.
He said the Act prescribes that the total managerial remuneration to be paid to a board-level CEO of a company having only one whole-time director or a manager is 5 per cent of the profit of the company.
In case, a company has more than one whole-time directors or managers, then the salary is limited to 10 per cent of the profit.
A few years ago, a heated debate was triggered off whether the government should impose restrictions on companies to pay salaries to CEOs. Prime Minister Manmohan Singh later allayed these fears.
