Two proxy advisory firms have asked shareholders of Finolex Industries to vote against a number of resolutions, including the reappointment of Prakash P Chhabria as executive chairperson. One of them has also asked shareholders to vote against the reappointment of Sanjay S Math as the managing director and the remuneration payable to auditors.
The advisories by Institutional Investor Advisory Services (IiAS) and Stakeholders Empowerment Services (SES) came ahead of Finolex Industries’ annual general meeting (AGM) to be held on August 30. However, another proxy advisory firm, InGovern Research Services, has asked shareholders to approve all the 12 resolutions of the Pune-based company.
According to IiAS, Chhabria’s FY22 remuneration rose 26.7%, while the median employee remuneration rose 13.4%. Further, his individual remuneration equated to about 11.8% of consolidated employee benefit expenses for FY22, which is “high”.
Also read| Finolex Industries net profit drops 31.8%
“He (Chhabria) received Rs 22.47 crore as remuneration in FY22 (including Rs 19.19 crore as commission), which is significantly higher than peers and does not commensurate with the size and scale of the business. Based on his previous payout, we estimate his FY23 remuneration at Rs 26.51 crore,” it said, adding there were no disclosures on the performance metrics that determine variable commission.
However, IiAS, in its note, asked shareholders to support all other resolutions, including the reappointment of Sanjay Math.
On its part, SES advised shareholders to vote against the reappointment of Chhabria stating “skewed remuneration” and “guaranteed commission proposed”. It was also of the opinion that the company should have separated the position of the chairperson from the executive position, even though there is no legal bar in the chairperson holding an executive position.
On Sanjay S Math’s reappointment as the MD and payment of remuneration, SES said “a guaranteed commission in form of variable pay” has been proposed. SES has also objected to ratification payable to cost auditors, citing the fee is significantly lower than that suggested by the Institute of Chartered Accountants of India (ICAI). “Exact turnover, that is subject to cost audit, is not disclosed,” it added.
However, SES had “for” recommendations for all other resolutions as there were no governance concerns.
Pune-based Finolex Industries was seeking shareholders’ approvals for a total of 12 resolutions, including adoption of financial statements, declaration of dividends, appointment of directors and issue of non-convertible debt securities.