Sajjan Jindal’s reappointment at JSW Steel red-flagged by shareholder advisory firm

Mumbai-based shareholder advisory firm Stakeholders Empowerment Services (SES) has asked minority shareholders of JSW Steel to vote against key resolutions proposed by the company at its upcoming annual general meeting.

SES has flagged concerns regarding the reappointment of Sajjan Jindal as Managing Director of the company, when he is already its Chairman, which, SES says, will lead to concentration of power and blur the line between ownership and management.

The firm also flagged the company’s board remuneration policy, which favours promoter Directors. “The board, especially independent directors, have failed to implement remuneration policy, according to SES. While promoter ED has been paid almost 50 per cent higher than what was paid in previous year, all other professional non-promoter EDs have been paid same remuneration as was paid in previous year. Did they fail to meet their key performance parameters or did only Promoter ED contribute to good performance,” the report said.

For 2017, Jindal — as promoter and executive director — drew a total pay of ₹19.51 crore, while non-promoter executive directors Sheshagiri Rao, Vinod Nowal and Jayant Acharya drew a compensation of ₹4.78 crore, ₹3.44 crore and ₹3.01 crore, respectively.

At the meeting, JSW Steel also wants shareholder consent to raise up to ₹14,500 crore from the market from qualified institutional buyers and through the issue of foreign currency convertible bonds or global depository receipts. SES has asked minority shareholders of the company to vote down the capital raising resolution since securities will not be offered to existing shareholders.

“Additionally, the proposed issue may have a potential dilution effect of around 23 per cent of the shareholding of existing shareholders,” it said.

An email sent to a spokesperson of JSW Steel requesting comments on the report’s conclusions went unanswered.

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