A section of the institutional shareholders of Hindalco Industries opposed the reappointment of Kumar Mangalam Birla as director of the company at its annual general meeting held last week and voted against the resolution but it was passed with 91.6% of the total votes polled being in favour.
As much as 18.63% of the institutional shareholder votes polled (amounting to 13.57% of the total institutional shareholding) voted against the ordinary resolution to reappoint Mr. Birla as director of the company.
In the public shareholders(non-institutions) category, 1.78% of the votes polled were against the reappointment.
Mr. Birla received a variable pay of ₹5.17 crore whereas total variable pay received by other nine non-executive directors (NEDs) was ₹0.83 crore. Mr. Birla’s commission was more than six times the combined commission of all other NEDs.
‘Skewed remuneration’
According to proxy advisory firm Stakeholder Empowerment Services (SES), the remuneration policy of the company was skewed in favour of the non-executive promoter-chairman and the company had not provided any justification/disclosure regarding such skewed remuneration.
Mr. Birla is a member of the nomination and remunerations committee himself which may lead to conflict of interest situation and cannot be called good governance practice, according to SES.
“In absence of the requisite disclosures, we are of the opinion that the commission paid to Mr. Kumar Mangalam Birla is excessive compared to that of other non-executive directors of the company. Therefore, we raised a concern with respect to the same and advised shareholders to vote against the resolution.” J. N. Gupta, managing director, SES told The Hindu.
Justifying Mr. Birla’s remuneration, Mr. Anil Malik, company secretary, Hindalco Industries, said, “Under the leadership of Mr. Kumar Mangalam Birla, Hindalco has grown from a single location company in 1999 to now having a consolidated turnover of over ₹one lakh crore with EBITDA of over ₹15,000 crore.
“Mr. Birla has always received support of all stakeholders, including shareholders in [the] past.
“The commission payable to non-executive directors is decided by the board of directors on the recommendation of nomination and remuneration committee wherein the majority of the committee are independent directors,” said Mr. Malik.
