 "Shareholders approve Gautam Singhania as Raymond Lifestyle chairman")
Gautam Hari Singhania has been officially appointed as the executive chairman of Raymond Lifestyle Limited, following shareholder approval in a Postal Ballot on Wednesday, December 4, 2024.
The company informed Sebi that 86.85 per cent of the votes cast were in favour of the resolution, while 13.15 per cent opposed it. This decisive vote signals a pivotal moment for Raymond Lifestyle, marking a strategic shift aimed at accelerating growth and operational efficiency as the company approaches its centenary year.
However, Singhania’s appointment has drawn sharp criticism from corporate governance watchdogs, raising concerns about transparency and reputational risks.
The appointment of Gautam Singhania
Singhania’s appointment is part of Raymond Lifestyle’s strategy to leverage his extensive industry experience and leadership skills to drive future growth. The resolution formalises his role for a five-year tenure, which the company views as a strategic move to enhance operational efficiency.
Despite shareholder approval, the proposal faced significant opposition from corporate governance advisory firms Empowerment Services (SES) and Institutional Investor Advisory Services India (IiAS). These firms urged shareholders to reject the resolution, citing governance issues and potential reputational risks that have cast a shadow over the decision.
SES raises concerns over governance and transparency
SES, a corporate governance advisory firm, flagged several issues regarding Singhania’s appointment. The firm highlighted that his role was publicly announced before receiving formal board approval, raising concerns about the company’s decision-making process.
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SES also questioned Singhania’s ability to manage full-time executive roles at both Raymond and Raymond Lifestyle, arguing that no individual should hold multiple full-time positions unless the businesses are closely aligned.
Additionally, SES criticised the proposed remuneration package for lacking a cap on variable pay and commission and for the absence of clear performance-linked metrics. It warned that such an open-ended compensation structure could misalign executive incentives with shareholder interests.
IiAS slams Singhania’s remuneration and reputational risks
IiAS, another influential advisory firm, also criticised Singhania’s proposed pay structure for its lack of transparency. The absence of a maximum cap on his remuneration and performance-linked incentives raised concerns, particularly given the lack of malus or clawback provisions to address underperformance. IiAS described the compensation package as "open-ended" and lacking necessary safeguards.
Beyond financial concerns, IiAS flagged reputational risks tied to Singhania’s leadership. He is currently involved in high-profile divorce proceedings with his wife, Nawaz Modi, who has accused him of domestic violence and misuse of company funds for personal gains.
IiAS noted that Raymond Lifestyle’s board has not updated shareholders on these allegations since December 2023. The absence of an independent investigation into the accusations has further raised questions about Singhania’s suitability for the executive role, intensifying the controversy surrounding his appointment.