Archive · 7 Sep 2025
SEBI Considers Allowing MIIs to Adjust KMP Variable Pay
SEBI, the market regulator, might let stock exchanges and similar institutions pay their top bosses (KMPs) less than the current minimum bonus (variable pay) of 25% in bad years.
Currently, bonuses must be between 25% and 50% of total pay.
Institutions are worried they must give out a minimum bonus even when they do not do well.
SEBI will likely clarify that the 25% minimum is just for the total pay structure.
However, the actual payout amount could be less.
This allows flexibility when performance or financial health is poor.
The range was set in 2023 to improve governance.
SEBI is considering allowing Market Infrastructure Institutions (MIIs) to reduce variable pay for Key Managerial Personnel (KMPs).
Current regulations require variable pay for KMPs at MIIs to be between 25% and 50% of total pay.
The proposed change aims to provide flexibility, particularly when MIIs face poor financial performance.
MIIs raised concerns that the current regulations were being interpreted as guaranteeing a minimum payout.
SEBI is expected to issue a consultation paper to clarify the rules.
- Who
- SEBI and Market Infrastructure Institutions (MIIs)
- What
- SEBI is considering allowing MIIs to reduce variable pay for Key Managerial Personnel (KMPs) below the current 25% floor in specific situations.
- When
- The changes are expected soon.
- Where
- Not explicitly mentioned.
- Why
- To provide flexibility to MIIs in tough financial times and address concerns about guaranteed minimum payouts.
- Regulatory Body
- SEBI (Securities and Exchange Board of India)
- Affected Entities
- Stock exchanges, clearing corporations, and depositories (MIIs)
- KMP
- Key Managerial Personnel
- Current Variable Pay Range
- 25% to 50% of total pay
- Proposed Change
- Allow variable pay below 25% in poor performance years
- Reason for Change
- MIIs' concerns about guaranteed minimum payouts regardless of performance
- Source
- People aware of the development
- Date
- September 7, 2025