Financial Daily from THE HINDU group of publications
Saturday, Jun 19, 2004
Ranbaxy to seek shareholders' nod on directors' compensation
New Delhi , June 18
RANBAXY Laboratories Ltd will seek shareholders' nod at the forthcoming annual general meeting (AGM) on June 25 to empower its board to compensate the non-executive directors through payment of commission on net profit of the company.
With increased integration of Indian economy with the global markets, corporate India has been looking at newer compensation mechanisms to attract the best talent into their boardrooms.
Payment of commission on the net profits of the company has been increasingly adopted by large corporates to compensate non-executive directors.
The issue of right compensation for the increased responsibility of non-executive directors in a highly competitive business environment has been a topic of debate both in the corporate sector and among the regulators.
The debate has recently intensified, given that remuneration of board-level members has become a key corporate governance issue.
In 1999, Ranbaxy obtained shareholders' nod to pay commission to the non-executive directors of the company for a period of five years.
The quantum of payment was however capped at one per cent of the net profit of the company for each financial year.
At the forthcoming AGM on June 25, the shareholders' nod would be sought to authorise the board to determine and pay commission to the non-executive directors of the company (not exceeding one per cent of net profit of the company in the aggregate for all the non-executive directors in a financial year) for a further period of five financial years commencing from January 1, 2004.
As on December 31, 2003 Ranbaxy had 11 directors including the non-executive independent Chairman and three executive directors.
Meanwhile, Mr D.S Brar, who had announced his decision step down as CEO and Managing Director last year, will not seek a board-level position in the company at the forthcoming AGM.
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