 "Ajay Relan")
Last Friday, shareholders of Rajesh Exports voted on a resolution to reappoint Chairman Rajesh Mehta as a director. If elected, Mehta will enter one of the least-expensive boardrooms in the country.
Mehta drew Rs 1.19 lakh last year, less than minimum wages for a semi-skilled worker in Delhi. None of the three independent directors - G Shanker Prasad, Y Venu Madhava Reddy and Vijayalakshmi - have drawn a single rupee as fee or commission.
The independent directors have worked gratis, not just for the last year, but for the last several years.
Rajesh Exports did not respond to an email query.
The trio in the company is not a unique case.
Business Standard analysed remuneration data of independent directors of over 1,450 National Stock Exchange (NSE)-listed companies, which have filed their annual reports for FY16. Among these, there were 354 instances of independent directors, whose remuneration has been zero.
These are directors who were appointed on or before March 31, 2015.
If one adds those appointed after this date, meaning they have not completed a full year in office, the number crosses 400.
While on one hand, highly paid board members in several companies have drawn attention and criticism, this set of people provide an interesting contrast.
Among some prominent names are private equity stars such as CX Partners' Ajay Relan (HT Media) and Westbridge Capital's Sandeep Singhal (Kajaria Ceramics) and founder of staffing firm Teamlease Manish Sabharwal.
While Singhal's Westbridge Crossover fund has a 7.41-per cent stake in Kajaria, HT Media annual reports said Relan had voluntarily opted to not receive a sitting fee and commission.
Other independent directors on the HT Media board earned between Rs 10 lakh and Rs 20 lakh, according to annual report of FY15.
Sabharwal, an independent director of Pennar Industries, said, "I'm not sure what motivations of other independent directors to accept those roles are but I have a very good reason. It was my first job and the then chairman of Pennar, N Rao, was my first boss, who taught me many things and gave wings to my ambitions. So, for me there is no question of any compensation since I continue to learn a lot. Anyway, given my own company is still a baby in diapers relative to our market, this is the only outside-listed board I serve on."
While the bigger names would be mindful of their own reputation and that of companies they are associated with, the list includes a large number of little-known names, which are likely to be friends and social acquaintances of promoters of smaller companies.
In many cases, companies could be in such poor financial positions that they are unable to pay their independent directors.
The new Companies Act provisions and Securities Exchange Board of India's corporate governance norms have defined more clearly and, in some cases, enhanced the duties and responsibilities of independent directors.
In this scenario, unless clearly specified, the motivation of a person taking up a board seat pro-bono comes under a cloud.
Shriram Subramanian of Ingovern Research said, "I don't think sitting fees or the remuneration itself matters a lot. What we have to look at is whether these people are really independent. Are they contributing to the discussions? Or, are they 'Yes Men'?"
Subramanian added people might take up board seats because of other factors, such as being friends of promoters or part of the same social circle. "It could be because the director's status gets enhanced because of association with the company."
Ideally, an independent director should be a satisfied individual, not dependent on this position for money or recognition, Subramanian said.
Some experts feel better disclosure could be a cure.
"At the end of the day, independence is character. It can't be legislated. It may or may not be influenced by remuneration. But, the shareholder would like to know what the basis of not receiving remuneration was. Otherwise, there would be assumptions and conjectures," said J N Gupta of Stakeholders' Empowerment Services.
