Nepal’s central bank has decided to cap CEO’s pay to eight to 10 percent of total expenses made on employees of their respective institutions.
[…] a ceiling on the salary and benefits of CEOs was needed to check existing practice of handing out huge amount of perks and benefits to the head honchos, even if the financial condition of the bank concerned is not very sound. Similarly, the huge pay has been used by some executives cum promoters to “quietly” recoup their investment, in the form of remuneration.
The NRB study also concluded that the practice of awarding huge pay to the CEOs and other subordinates was also putting pressure on the management, especially of new banks, to increase earnings by many folds to pay the increased liabilities. This often instigates the management to make massive risky investment in unproductive sectors like land and real estate that are rejected by established banks, said the official.
Sounds good to reduce malpractices in the (bubbling) banking sector and to decrease widening income inequality!