Markets regulator SEBI has suggested a new approach to executive remuneration disclosure rules for asset management companies. The proposal involves replacing individual name-wise pay disclosures with consolidated figures to enhance transparency while addressing privacy and competitive concerns. Under the new rule, AMCs will report aggregate remuneration for senior roles like CEOs, CIOs, and COOs on their websites. This will include disclosing the total pay for the top 10 highest-paid employees and the overall remuneration for staff above specific thresholds, instead of revealing individual salaries.
SEBI’s consultation paper highlighted that all employees earning at least Rs 1.02 crore annually or Rs 8.5 lakh per month (if employed for part of the year) will be covered under this disclosure requirement. The Association of Mutual Funds in India (AMFI) had approached SEBI with requests, including the disclosure of AMCs’ remuneration policy on their websites and the consolidation of existing disclosure requirements for key employees. Additionally, a scheme-level, consolidated disclosure of fund managers’ remuneration will be provided only upon investors’ request and limited to relevant schemes.
According to SEBI, this new approach aims to offer unitholders a comprehensive view of senior management compensation, aligning the level of disclosure with considerations of materiality and proportionality. The regulator emphasized that individual-level remuneration disclosures may not significantly impact investment decisions or enhance investor outcomes. Moreover, public disclosure of named individual remuneration could expose employees to risks related to personal information misuse.
AMFI informed SEBI that investment decisions in the mutual fund industry are primarily influenced by factors such as scheme performance, risk management, asset allocation, investment strategy, and expense ratios. The industry faces competition for talent from other sectors like Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), which do not have similar disclosure requirements.
