The Securities and Exchange Board of India today said that asset management companies have at least 20% of the gross salary of key employees in the form of the units run by them to bring about additional transparency within the asset management industry. In the type of schemes they manage, Mutual Funds may have to pay their top workers a proportion of the wage
"In order to align the interest of the key employees of the AMCs with the unitholders of the mutual fund schemes, it has been decided that a part of the compensation of the key employees of the AMCs shall be paid in the form of units of the scheme," in a circular, the regulator said. From 1 July the circular is in force.
According to the circular, a minimum of 20% of the salary/perks/bonus/non-cash compensation (gross annual CTC) of Key Employees of AMCs shall be paid in the form of units of Mutual Fund schemes in which they have a role/oversight, net of income tax and any statutory contributions (i.e. PF and NPS).
Key employees of the AMCs shall include:
i. The CEO, Chief Investment Officer (CIO), Chief Risk Officer (CRO), Chief Information Security Officer (CISO), Chief Operation Officer (COO), Fund Manager(s), Compliance Officer, Sales Head, Investor Relation Officer(s) (IRO), heads of other departments, and AMC Dealer(s).
ii. Direct reports to the CEO (excluding Personal Assistant/Secretary)
iii. Fund Management Team
iv. Other employees as identified & included by AMCs and Trustees.
The order excludes Exchange Traded Funds (ETFs), Index Funds, Overnight Funds, and current closed-ended schemes. The payout paid in mutual fund units will be locked in for a minimum of three years or the scheme's tenure, whichever is shorter, according to the regulator.