Proxy advisory firm InGovern Research Services has recommended shareholders of Finolex Cables to “defer” two resolutions, including reappointment of Deepak Chhabria as executive chairman for a five-year term. The firm also sought to defer payment of commission to non-executive directors.
On its part, Finolex Cables termed the suggestions “biased”.
However, another proxy advisory firm, Institutional Investor Advisory Services (IiAS), green-lighted all of the company’s six resolutions, which included adoption of financial statements, declaring of final dividend of `7 per share and reappointment of directors
The advisories were issued ahead of the Pune-based company’s AGM convened on Friday (September 29).
According to InGovern, there is no cap on the overall compensation being paid to Chhabria, and the perquisites and other retirement compensation have not been quantified. While the bulk of the compensation would be the commission component, the performance criteria to arrive at the commission have not been clearly outlined.
Further, there is no mention of any exercise undertaken to benchmark the compensation being paid to Chhabria to industry peers, it said. The advisory firm has sought shareholders to defer the proposal and represent it with a proper 21 days’ notice period.
The board of Finolex Cables had proposed to re-appoint Deepak Chhabria as executive chairman for a five-year period from July 1, 2023-June 30, 2028. Chhabria was appointed full-time director in 1986 and later took over as the executive chairman on July 1, 2013.
InGovern also recommended shareholders to defer payment of commission to non-executive directors.
“Given the scale of operations of the company, 1% of net profits or Rs 2 crore being the maximum threshold specified for payment of such commission, is not significant,” InGovern, which also cited inadequate notice time to shareholders and the changes in resolutions through a corrigendum, as reasons.
Finolex Cables had published its first notice on September 4, and a corrigendum on September 16, which was only 13 days before the AGM instead of the stipulated 21 days’ prior notice. Detailed disclosures were also not made, the proxy firm said.
In its corrigendum issued on September 16, the firm did not add any additional items, but only made a few insertions in the existing resolutions.
This was done to provide shareholders better clarity and transparency and as a good corporate governance practice, it said in an email reply to FE.