2024-12-22 21:47:32 :
Two leading proxy advisory firms have recommended that Religare Enterprises Investors Ltd (REL) vote against giving chairman Rashmi Saluja a fresh five-year term, further reducing the chances of her reappointment. The appointment was already pending. She has an ongoing feud with the Boorman family, the company’s largest shareholders.
Religare disputed the opinion of the acting counsel supporting Saluja.
Proxy advisers InGovern and Institutional Investor Advisory Services (IiAS) defended calls for Saluja to step down, saying the protracted battle between Saluja-led management and the Burman family and the resulting litigation could distract the company’s board of directors.
“Various legal disputes and police cases may distract the board of directors and affect her ability to discharge her duties as executive chairman of the company,” the IIAS report said.
InGovern is also close to her $69 crore per annum, which is said to be much higher than industry peers.
“Ongoing scrutiny of Religare raises questions about the effectiveness of governance under her leadership, which reflects poor oversight and governance,” an InGovern report published over the weekend said. “Concerns are also raised about her pay practices and the impact on senior management of senior executives. Compliance with regulatory guidelines on remuneration.”
The agency adviser’s view was also influenced by the issue of stock options to Saluja by Religare subsidiary Care Health Insurance, although this was denied by the Insurance Regulatory and Development Authority of India (Irdai).
Shareholders will now vote on Saluja’s future at Religare’s annual general meeting (AGM) on the last day of 2024. In August, Religare had applied to the Registrar of Companies to postpone its annual general meeting by three months to December 31.
An ordinary resolution seeking to reappoint Saluja as a director would require at least half of shareholders to vote in her favor to pass. It appears to be increasingly difficult for Saluja to pass shareholder review following a proxy adviser report that is widely relied upon by institutional investors.
Institutional investors such as mutual funds hold 13.43% of the company’s shares. The largest among them are Motilal Oswal (7.3%) and Samco (1.37%). Religare’s largest shareholder, the Burman family, which controls 25.12% of the company through four entities, is also expected to vote against Saluja’s re-election.
Saluja joined the Religare board as an independent director in 2018 at a time when the company was in the midst of a crisis that culminated in the impeachment of its erstwhile promoters.
“It is particularly noteworthy that these attempts to question and discredit Dr. Salugga and the Board of Directors only occurred after the company had achieved extraordinary success and transitioned from a single company. $17 share prices hit $“Section 315 has created significant shareholder value. This timing, coupled with the fact that the Burmese’s pending legal cases remain unchallenged, paints a clear picture of the motivations behind these recent developments,” Religare wrote in a statement.
Regarding Saluja’s compensation and nursing health insurance employee stock ownership plan, Religare said the matter was pending. However, it reiterated that the company complies with all legal and regulatory frameworks.
The statement added that Religare’s board of directors, including its independent directors, continues to support Saluja’s re-appointment. “As REL is on the cusp of its next phase of growth (Religare 2.0), Dr. Saluja’s continued leadership as Executive Chairman is critical.”
Earlier this month, the Reserve Bank of India approved an open offer by the Burman family, promoters of FMCG company Dabur, to acquire an additional 26 per cent stake in Religare and become its promoters. The central bank also directed that the existing board and management structure of the company be maintained.
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