Companies

Jindal’s proposal to pay remuneration to 4 independent directors faces objection from proxy advisory firms

Suresh P Iyengar Mumbai | Updated on September 28, 2021

Jindal Steel & Power's Raigarh facility.

Terming the payment unfair, SES said any transaction which is detrimental to the shareholders cannot be ignored

The proposal of Jindal Steel and Power (JSPL) to pay one-time remuneration to four independent directors has come under the glare of proxy advisory firms Institutional Investors Advisory Services (IiAS) and Stakeholders Empowerment Services (SES).

The company has sought investors nod to pay erstwhile independent directors Ram Vinay Shahi and Arun Kumar Purwar ₹25 lakh each, while Sudershan Kumar Garg and Hardip Singh Wirk are to be paid ₹5 lakh.

The company had sought investors’ approval at the extraordinary general meeting (EGM) to be held on September 30. Earlier, it had to put off the EGM after the advisory firms raised concern over related party transactions.

On Monday, IiAS in a report said in the past concerns were raised over related party transactions for the sale of Jindal Shadeed Iron & Steel LLC and Jindal Power, which were prejudicial to the interest of minority shareholders.

‘Unfair payment’

“Purwar, Shahi and Wirk were on the audit committee which approved these transactions. Therefore, we do not support the one-time payment being made,” said the report.

Terming the payment unfair, SES said any transaction which is detrimental to the shareholders cannot be ignored, even if there have been significant contributions by the independent directors in the past since they are ultimately appointed on the Board as the guardians of the shareholders’ interest.

In response to SES claim, the company said the independent directors served on the company’s board for a term when the company faced troubled and difficult times. They helped the company navigate various challenges and steered it back to profit, it added.

Salary hike

IiES has also opposed a hike in Naveen Jindal, Executive Chairperson, salary from November till September 2023 in the range between ₹45-53 crore from ₹18 crore earned in FY21.

Based on estimates, IiAS said his FY22 pay will be higher than his peers even when compared with some promoter executives in the Nifty companies index. As a measure of transparency, the board must disclose the performance metrics and related benchmarks used to determine his variable pay, it added.

However, justifying the hike, the company said remuneration of Jindal fell as the financial performance of the Company declined due to regulatory challenges since FY15.

As no payment of performance-linked compensation was made to Jindal for the last 7 financial years, the proposal to revise the remuneration has been moved, it said.

Published on September 28, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like