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Shareholder of a south-based real estate developer Grace Rejected special proposals seeking to cap total remuneration to non-executive directors at 5% of the company’s net profit.
He also rejected the proposal allowing remuneration Ravi Menon As non-executive director and chairman in excess of 50% of the total annual remuneration payable to all non-executive directors for the financial year 2024.
About 88.6% of institutional investors voted against the first proposal, while 86.3% opposed the second. Provided that the number of votes cast in favor of the special resolution does not exceed three times the number of votes cast against the special resolution, the said resolutions have not been passed by the shareholders, the company said in a regulatory filing.
If the annual remuneration payable to a single non-executive director exceeds 50% of the total annual remuneration payable to all non-executive directors, then companies must seek approval from the shareholders through a special resolution.
Grace did not respond to ET’s queries.
Ravi Menon is part of the promoter family of Grace, In the 2021 AGM, the shareholders approved his remuneration to be higher of ₹5 crore or 2.5% of the company’s net profit, whichever is higher. In the present resolution, the company said that the remuneration payable to him may exceed 50% of the total remuneration payable to all non-executive directors subject to a ceiling of 5% of the net profit of the company.
Recommending voting against both the proposals, Mumbai-based corporate governance firm Stakeholders Empowerment Services (SES) said there should be an absolute cap on commission as a good governance practice.
SES said, “There could be a conflict of interest in the absence of absolute cap on commission. The above remuneration package clearly indicates that the remuneration policy of the company is in favor of Ravi Menon and prima facie unfair to other non-executive directors.” Is.” ,
Another proxy advisory firm, Institutional Investor Advisory Services (IIAS), said that since regulatory limits are based on profits, 1% of profits could be large for large companies.
“Companies should, therefore, be encouraged to put a cap on the proposed amount to be paid instead of persisting with the regulatory limit. Additionally, IiAS does not encourage proposals to be permanently approved by shareholders, It said.
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