Investor Issues
How CEOs inflate their salaries
The researchers were interested in testing the theory that business executives, who have strong networks among their peers, are more likely to inflate their colleagues' pay because they believe it will be reciprocated
 
If you have a strong network of business colleagues who sit on each other's board, your pay can be a lot heftier - but often at the expense of your shareholders, according to a new study by the Ted Rogers School of Management at Ryerson University and the University of Toronto's Rotman School of Management.
 
The researchers were interested in testing the theory that business executives, who have strong networks among their peers, are more likely to inflate their colleagues' pay because they believe it will be reciprocated.
 
"There's a great deal of research trying to understand how a chief executive officer's pay is determined," said study's co-lead author professor Fei Song from the Ryerson University, Toronto.
 
"One school of thought is that their pay is determined by a corporation's board of directors," Song explained.
 
"However, people who make up these boards are often CEOs of other companies themselves and are more likely to receive higher compensation packages because of this exclusive network," Song added.
 
But what happens when CEOs are paid more?
 
"If executives of corporations receive a higher compensation, they may be taking the company's revenue from the shareholders' pockets and paying it to themselves," Song added.
 
Indirectly reciprocal networks are often overlooked and difficult to track, the study said.
 
"Imagine three CEOs from companies A, B, and C where A sits on B's board, B sits on C's board, and C in turn sits on A's board."
 
"In this example, there is no direct conflict of interest because A does not benefit him or herself by inflating B's salary and the same applies to the other two CEOs," said co-author professor Zhong from the University of Toronto.
 
"Nevertheless, our findings suggest that everyone in the network is likely to inflate salary for each other. Now imagine this network consists of hundreds of CEOs," Zhong said.
 
While it is difficult for shareholders to see the circle of reciprocity among CEOs, "as a start, giving shareholders more powers to monitor board meetings would help", the researchers said.

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Traffic violations to attract steeper fines; half-baked, say experts
In a bid to crack down on rampant driving violation and growing number of traffic related deaths and casualties, the Narendra Modi government has sought to drastically up the penalties for traffic violations
 
Dangerous driving that causes the death of a child would now attract a penalty of Rs.50,000 ($805) as well as imprisonment under proposed legislation that suggests an over 40 percent increase in existing fines for traffic infractions. However, BJP leader and former top cop Kiran Bedi calls it a "joke", echoing experts who find the hikes a half-baked solution and call for Prime Minister Narendra Modi to whip up a "national movement" for road safety akin to Swachch Bharat.
 
"A fine of Rs.50,000 for causing a death is a joke. Is life so cheap in India," Bedi, known for ruthlessly enforcing the law as the traffic head of Delhi Police in the seventies, asked while speaking to IANS, adding: "We need prevention and not collection of fines. Toughness of law and fairness in enforcement along with advanced technology for sound traffic management is the answer for road safety."
 
While such pecuniary penalties play a "vital role", experts say holistic traffic management must be complemented with strict enforcement, traffic police training, enhanced provisions like declaring drunken driving a "criminal" offence and a strong political will on the part of lawmakers who could become "ambassadors" of road safety.
 
With an average of 375 deaths per day (over 135,000 a year) due to road accidents in India, "we need to adopt road safety as a national cause. The prime minister must take the onus the way he is doing for Swachch Bharat or Ganga cleaning," road safety campaigner Prince Singhal, the founder of Campaign Against Drunken Driving, told IANS.
 
Singhal also urged MPs, legislators and village council heads to become "ambassadors" of road safety. "They must channelise government funds like MPLADS (for development in their respective constituencies) towards devising and executing programmes geared to ensure road safety," he said.
 
In a bid to crack down on rampant driving violation and growing number of traffic related deaths and casualties, the Narendra Modi government has sought to drastically up the penalties for traffic violations.
 
According to an official statement, the Ministry of Road Transport and Highways is consulting stakeholders before legalising the hiked penalties that are proposed in the fourth draft and reflect a substantial increase in the quantum of punishment that is way above those provided in the outdated Motor Vehicles Act, 1988.
 
For instance, as per the draft Road Transport and Safety Bill, available on the ministry's website, first-time offenders of impaired driving may have to cough up Rs.10,000 and face a possible six-month suspension of licence if their blood alcohol content (BAC) is found more than 20.0 mg per 100 ml of blood.
 
Subsequent incidents will attract a fine of Rs.20,000 in conjunction with up to six months' imprisonment and one year of licence suspension.
 
A ticket for exceeding the posted limit by five kmph will see a 40 percent jump from the existing fine of Rs.400 in the 27-year-old act.
 
So, how does the proposed increase in fines stack up with the rest of the world? Take that for jumping a red light. If it is going to be Rs.1,500 in India, it's ($229)(Rs.14,300) in some cities in Canada and $145 (Rs.9,125) in, say, Paris.
 
Institute of Road Traffic Education (IRTE) president Rohit Baluja exuded little confidence in such penalties without professional training of the traffic police and scientific road engineering because "over 30 percent of accidents happen due to road failure".
 
A National Crime Records Bureau report says 34.3 percent - or 137,423 - of accidental deaths in 2013 happened due to road accidents.
 
"Fines should be increased. But they are meaningless unless the road environment, including its geometry and traffic engineering, is also improved according to the law," Baluja told IANS.
 
He said road safety, however, does not always suffer due to untrained drivers but often because of poorly defined lanes and inappropriate road signage that confuse pedestrians, cyclists and motorists alike.
 
The IRTE president also called for improving road engineering standards, regular road repairs and scientific traffic management that will serve the purpose only when traffic constables implementing the law are also well trained.
 
"There is no training of traffic police here. While issuing challans (tickets), they may not even have full knowledge of traffic rules and violations. They need to be trained to understand what can be categorized as violation," Baluja explained, based on his experience as a trainer for Indian Police Service officers as well as traffic
policemen.
 
"They often overlook the real reason that caused the violation. For instance, what's the fault of a driver who is unable to see the red light at an intersection because the traffic signal was hiding behind a tree?" he questioned.
 
Echoing this sentiment, International Road Federation chairman K.K. Kapila said efficient enforcement of legislation is the "single" key to ensure safe roads that must also be complemented with advanced technology like cities in advanced countries.
 
Kapila told IANS that a demonstration stretch between India Gate and the Badarpur border in the national capital is being worked out as an experiment to this effect.
 
The stretch will have several CCTV cameras and other gadgets needed for an intelligent technology system that will capture breach of lane driving, over-speeding, and other traffic violations, Kapila said.

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COMMENTS

Ankur Bhatnagar

2 years ago

The government wants to take an easy way out. After all, the easiest thing to do is to simply revise the pre-existing fine quanta upwards. Not only it doesn't take much effort, it makes the government 'appear' serious about traffic issues.

I expect the only outcome of these new fine amounts would be greater corruption at the ground. Now the people would be far more inclined to bribe the traffic cops. While it will certainly increase the black income of cops, their bosses and the politicians, it will only expedite the breakdown of law enforcement machinery. Cynics might even suggest more income for transport officials/politicians as the real motivator for the upward revision of fines.

The real need is to steeply increase the detection of traffic violations. If they are issuing 100 fines today, they should target 500 fines per day because the detection of violations is a very small fraction of actual violations. More than the amount of fine, the deterrent would be the certainty of a fine. Even a Rs. 100 fine can go make people follow the rules if they know that they *will* get caught.

In fact, the amount of fines should be reduced so that there is lesser incentive for the drivers to bribe the cops. That will strengthen the integrity of traffic cops and will make only make them more effective.

Of course, increasing the number of challans issued is a more tedious task than simply increasing the amount but that's what is needed.

Anand Vaidya

2 years ago

Poorly written article. Not fit for MoneyLife standards.

Are you saying that stiff penalties won't be a deterrent? Then how do you justify Canada's?

Stiff penalties, education, better road engineering, police training - all need to happen. Penalties are the quickest , the rest take time.

India ends evacuation in Yemen, 5,600 pulled out
India has ended its massive evacuation efforts of its nationals in Yemen, pulling out 5,600 people, including 4,640 Indians and 960 nationals from 41 countries, the government said.
 
External Affairs Minister Sushma Swaraj tweeted: "The evacuation operation from Yemen is over. General V.K. Singh is returning tonight. We are closing our Embassy there."
 
Earlier the external affairs ministry spokesperson Syed Akbaruddin tweeted that India concluded its evacuation efforts in Sana'a by airlifting over 630 people by three special Air India flights from the Yemeni capital.
 
Akbaruddin said the security situation in Yemen has deteriorated further with a bomb blast at Aden port on Thursday. "India completes its air evacuations from Sana'a".
 
"The total no. of Indians evacuated from Sana'a by air has crossed 2,900 by 18 special flights since the beginning of the air operations," he tweeted.
 
"Indian naval vessels have also evacuated over 1,670 Indians from Aden, Al Hudaydah and Al Mukalla ports in Yemen since 31 March," he wrote.
 
"Indian Naval Ship INS Sumitra evacuated 349 persons, including 46 Indians and 303 foreign nationals from Al Hudaydah port on April 9," he said.

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