PSU chiefs asked to work on CSR for higher pay packages

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NEW DELHI: Pay packet of a PSU head can vary up to 300 per cent depending on the performance in hitherto neglected areas of corporate social responsibility, R & D and sustainable development from this year, a top official said.

On the performance appraisal scale of 100, the three key areas will account for 15 out of the 50 marks allocated to non-financial parameters, as per the guidelines of the Department of Public Enterprises (DPE).

According to DPE Secretary Bhaskar Chatterjee, the 15 marks will make a difference of “Heaven and Earth” in the Performance Related Pay (PRP) structure for the top management of 213 functional PSUs.

“We have introduced the PRP system under which you take home your basic salary. But if you perform well (on all counts including R & D, CSR and sustainable development) you get 100 per cent more; if you perform very good, you get 200 per cent more and if you perform outstanding, you will get 300 per cent more,” Mr. Chatterjee told PTI.

Each of these parameters have a weightage of five marks in the performance appraisal of the central government-owned companies.

Asked what difference it would make to the salary of a PSU head, whose company has not done well in the areas which have so far been neglected or at best were limited to organising the blood donation camps, Mr. Chatterjee said, “Then, you get your normal basic salary.”

But the take home would vary on performance.

Under the CSR guidelines which have become mandatory from the current financial year a PSU with a net profit of less than Rs. 100 crore will have to spend 3-5 per cent of it on the CSR.

Those earning Rs 100-500 crore a year will have to earmark 2-3 per cent of it on CSR. A company with a bottomline of Rs 500 crore and above will have to set aside 0.5-2 per cent on the CSR job, which should preferably be related to its business as a natural corollary.

According to the norms, investment in CSR should be project-based and mere donations to philanthropic/charity would not be treated as this activity.

The expenditure related to staff benefits will not be counted as CSR.

The indicative list in which the PSus should invest in the name of their social responsibility include drinking water, education, electricity facility, health and family welfare, irrigation facility, pollution control, animal care, relief to victims of natural calamities, vocational training and skill development.

Mr. Chatterjee said that it was felt that unless the government firms, several of which have now been listed in the stock markets, are made accountable, they would not invest in areas like the R & D. “But the moment I tell you, sorry now you are market exposed and there would be no automatic government buying, you will start doing R & D because it becomes a matter of your survival.”

He said the same is true about enforcing norms about maintaining ecological balance.

Mr. Chatterjee lamented that not many of the firms are fulfilling their social responsibilities on this account.

“Look at these mining-cement companies, do they care? Look at the kind of effluents they are releasing into water. Who is treating them,” he said.

However, once the rules are enforced the companies’ CEOs would take personal interest. “Now if you say am not going to do it, you will be seriously penalised,” he added.

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