For the second time this year, some large institutional shareholders have vetoed the reappointment of a top-level corporate executive as the chairman of a group’s flagship company.
Last week, 18.63 per cent of the shareholders of Hindalco Industries opposed the reappointment of Kumar Mangalam Birla as Chairman.
KM Birla (51), who took over the reins of the Aditya Birla (AB) Group in 1995 at the age of 28, following the death of his father Aditya Vikram Birla, has been among the longest serving chairmen of Indian conglomerates.
Institutional shareholders — both foreign and domestic ones — hold more than 105 crore shares in Hindalco. Out of this, nearly 72 per cent came to vote on the resolution concerning KM Birla. Institutions holding over 14 crore shares did not want him reappointed as Chairman.
In July, 22.64 per cent of HDFC shareholders had voted against the reappointment of Deepak Parekh. He had claimed in a media interview that the recommendation of a US proxy advisory firm, which cited his directorship in many other listed companies, as one of the reasons for the negative voting.
“This shows that institutional shareholders are growing restless and raising their opposition even to some of the powerful promoters in India’s top 50 listed companies. Such instances of dissent are likely to grow in the coming years as large shareholders grow eager for fresh ideas at the top,” said a leading commentator on corporate governance, who did not want to be named.
Nomura India Investment Fund, the Government of Singapore, Templeton Mutual Fund, SBI, ICICI Prudential and LIC are among the largest institutional shareholders of Hindalco.
An email sent to the AB Birla Group spokesperson on Sunday on the issue remained unanswered.
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