Vedanta faces the heat from minority investors

Vedanta Resources faced opposition from minority investors at its AGM on Wednesday.

Ahead of the AGM, London-based asset manager Aviva Investors told Business Line it was voting against the company on a number of resolutions being put to the AGM, including approving the remuneration report.

It is also voting against the re-election of Mr Naresh Chandra, a senior independent director and chairman of the remuneration committee, and Mr Aman Mehta, as well as share buybacks. It abstained from approving the reports and accounts, the re-election of Mr Navin Agarwal and the auditor.

Remuneration plan

Ms Stephanie Maier, Corporate Responsibility Manager at Aviva Investors, said that they were opposing the remuneration plan because of a substantial increase in the remuneration of top board members, and concerns about the long-term incentive plans.

“These were 20 per cent hikes [in base salaries] on already what we believed to be upper quartile salaries compared to the FTSE mining sector,” she said.

The investor is also concerned that the hikes were made despite set targets not being met. “They say they have taken corporate responsibility into account but we have seen substantial bonuses including to the Executive Chairman though we have seen 26 fatalities across the group this year,” Mr Meier said.

Steep hike

The Vedanta Resources Chairman, Mr Anil Agarwal, received a base salary of £1.17 million, and a bonus of £500,000 in the past year. The bonus was 63 per cent higher than a year before. Executive Directors' salaries rose by 22 per cent, and bonuses were up 71 per cent.

Environmental issue

Aviva Investors, which had voted against the reports and accounts at last year's AGM because of concerns about the lack of engagement with the Dongria Kondh tribe in the Niyamgiri hills, said the decision to abstain this year reflected “ modest progress” that had been made, including the appointment of Mr Tom Henshaw as Chief Sustainability Officer.

“The core message is that though they have made some progress they have a long way to go in terms of how they appropriately manage environmental and social issues,” said Ms Maier.

A number of shareholder advisory groups have also sharply criticised Vedanta Resources. Pension Investment Research Consultants (PIRC) has advised shareholders to oppose the remuneration report, and the election of Mr Chandra, while another group Manifest dubbed the payment of bonuses in the wake of 26 fatalities as “wholly inappropriate” and warned of the absence of a claw-back provision for annual incentives of “serious concern to many investors.”

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