Proxy advisory firms Institutional Investors’ Advisory Services (IiAS) and Stakeholders Empowerment Services (SES) have recommended shareholders of Finolex Industries Ltd vote against the reappointment of Prakash P Chhabria as the Executive Chairperson of the company and his remuneration for five years from December 1, 2021.
Chhabria, 59, is the Executive Chairperson and is part of the promoter family. He has been on the board since March 13, 1992.
“He received ₹224.7 million as remuneration in FY22 (including ₹191.9 million as commission), which is significantly higher than peers and not commensurate with the size and scale of the business. Based on his previous payout we estimate his FY23 remuneration at ₹265.1 million,” IiAS said in a report.
“His FY22 remuneration increased 26.7 per cent, while the median employee remuneration increased 13.4 per cent. Further, his individual remuneration equated to ~11.8 per cent of consolidated employee benefits expense for FY22, which is high,” it added.
‘No guidance or absolute cap’
“The commission, which forms a bulk of his remuneration (85 per cent of total in FY22) is open-ended with no guidance or absolute cap. Further, there are no disclosures on the performance metrics that determine variable commission. We expect companies to disclose performance metrics and cap the remuneration payable in absolute terms,” IiAS said.
SES said in a report that the company should separate the position of Chairman and Executive Director for good corporate governance.