Havells clarifies after CMD's Rs 28 cr salary questioned by shareholders

The shareholders of the electrical equipment company Havells last week flagged an annual general meeting (AGM) resolution that proposed its chairman and managing director, Anil Rai Gupta's proposed remuneration of Rs 28.82 crore in 2023-24.

Shareholders observed that the payout is high in absolute terms and higher than their peers.

According to a regulatory filing by the company, the shareholders had sought clarification at the upcoming AGM of the company on June 27, 2023.

"Total promoter remuneration was Rs 38.59 crore and Rs 36.92 crore in FY22 and FY23 respectively, which is high in absolute terms," certain shareholders stated.

After this, the company has issued its clarification on the issue, saying, "Overall remuneration for FY23 of Anil Rai Gupta is 1.8 per cent of the profit before tax (PBT), which is commensurate with the size and nature of the business.'''

"There is no change in percentage of commission in the proposed resolution vis-a-vis the existing remuneration structure and it has been the same for the past 10 years," the company said in a regulatory filing.

It further said that the commission is based on PBT and will change as the company performs.

"FY23 remuneration of Shri Anil Rai Gupta is 1.8 per cent of net profit (last four years average 1.8 per cent) which is well within the limit of five per cent as prescribed in the Section 197 of the Companies Act, 2013."

Shareholder activism in India

Shareholder activism has gained traction in India in recent years as shareholders have become more informed, the number of institutional investors has increased, and company laws have changed.

In recent times, institutional investors have taken a stand against company management and opposed certain proposals that they believed were not in the best interests of the company.

In another case of shareholder activism, institutional investors in real estate developer Sobha Ltd voted against special resolutions to pay non-executive directors and the chairman of the company five per cent of the company's net profit at the AGM in April.

They also voted down a proposal that sought remuneration to non-executive director and chairman Ravi Menon in excess of 50 per cent of total payout payable to all non-executive directors for FY 2024.

Earlier in 2021, minority shareholders of Eicher Motors objected to the re-appointment of Managing Director Siddhartha Lal for a five-year term beginning May 1, 2021.

They were also opposed to the proposal to increase Lal's salary by 10 per cent in FY21.