CPSES without Independent Director should not be eligible for PRP: Panel

NEW DELHI: To improve corporate governance in central PSUS, the third pay revision committee has recommended that such enterprises should not be eligible for performance related pay unless they have Independent Directors on Board.

Stressing that all CPSES should have professional Boards with Independent Directors, the panel said: “All the CPSES should constitute a Remuneration Committee headed by an Independent Director. CPSES will not be eligible for PRP unless Independent Directors are on their Boards”.

The committee has also recommended a modified performance related pay but said that the overall profit distribution should be linked to 5 per cent of the annual profit accruing from core business activity.

The recommendations of the Justice Satish Chandra committee, which are come into effect from January 1, 2017, will be placed before the Union Cabinet for approval.

The panel also suggested that CPSES should allow 30 per cent of the basic pay as superannuation benefits which should include CPF, gratuity, pension and post-superannuation medical benefits.

It said the CPSES should make their own schemes to manage these funds or operate through insurance companies on fixed contribution basis, and the amount of pension, gratuity and post retirement benefits should be based on the returns from the schemes to be operated.

The committee recommended that there should not be any upper ceiling limit for purpose of paying the gratuity or post-superannuation benefits. Pension and medical benefits, as superannuation benefits, are aimed at ensuring the loyalty of executives to the CPSES, and it should be extended to those who superannuate from the CPSES and have put-in 15 years of service, the panel said.