Independence of Remuneration Committee & Executive Remuneration in India

The present study explores the impact of independence of remuneration committee on the remuneration of executive directors in a sample of 51 listed companies in India for a period from 2003 to 2012. In companies having fully independent remuneration committees and independent chairmen, a negative impact of accounting performance has been found on the executive remuneration. However, results reveal a positive and significant impact of market performance on the executive remuneration. In the presence of an independent chairman of remuneration committee, promoters' shareholding has been observed negatively related with the executive remuneration. These findings can be useful for the regulatory authorities in framing and improving norms regarding the determination of executive remuneration.