Independent directors of MCX get pay hikes of up to 200%

Earnings in sitting fee represent 10-fold increase over FY 13

The remuneration of independent directors of Multi Commodity Exchange of India (MCX) has shot up considerably in the past couple of years. Earnings of independent directors (IDs) have seen a 100-200 per cent hike over the previous year. When compared to the earnings of the members of pre-crisis board in the financial year ending March 2013, this represents a tenfold rise. These numbers came to the fore in the company’s latest annual report filed with the stock exchanges.

The steep rise was due to a combination of a significant increase in the sitting fees paid by the company per board/committee meeting and in the number of such meetings, disclosures in the annual report showed. The number of committees, of which the IDs were part of, also went up following the resignation of managing director and chief executive officer Manoj Vaish early in the financial year.

According to the annual report for 2014-15, MCX paid Rs 80.9 lakh in sitting fees to its independent directors.

Among the major beneficiaries of this hike are former LIC Chairman DK Mehrotra who received a total remuneration of Rs 22.1 lakh. He was followed by G Anantharaman who took home Rs 19.3 lakh and Ravi Kamal Bhargava who earned Rs 14.7 lakh. Independent Chairman Satyanand Mishra earned Rs 12 lakh.

In comparison, Mehrotra earned Rs 6.2 lakh in FY14. Anantharaman and Bhargava earned Rs 9.3 lakh and Rs 9.9 lakh, respectively that year, while Mishra, who had joined mid-year took home Rs 2.4 lakh. In FY13, then Chairman Venkat Chary drew the highest fee among independent directors, he drew Rs 2 lakh. Others namely Shvetal Vakil, BR Barpande and CM Maniar drew between Rs 50,000 and Rs 1.5 lakh, the annual report showed.

 

A person familiar with the MCX board matters said, “In the absence of a full-time managing director, the company is now run through various committees. The independent directors, who are manning these committees, are having to put in considerable time and effort. These factors and industry standards of sitting fees paid by public sector firms were taken into consideration while deciding the hike last year.”

The annual report said, “The sitting fees paid to the non-executive directors and/or independent directors were fixed by the Board and thereafter was approved and ratified by the shareholders in the last AGM of the company. The same is within the limits prescribed under the Companies Act, 2013.”

An MCX spokesperson did not respond to an email seeking comments on the hike.

The annual report showed that there was a 100 per cent hike in sitting fee for board meets and a 50 per cent one in fee for committee meetings during last year. Till June 2014, directors drew a fee for Rs 20,000 for all meetings. “Thereafter, the sitting fees payable to the non-executive directors was revised upwards and they were entitled to sitting fees of Rs 40,000 per meeting for attending the meetings of the Board and Rs 30,000 per meeting for attending the meetings of any committee of the Board,” the report said.

It further added that following the resignation of Manoj Vaish, who was MD for a brief period, “the Board constituted management committee comprising of exchange officials (which was disbanded later), oversight committee and selection committee. Also, an independent directors’ committee and ethics committee were constituted during FY 2014-2015.” MCX had 20 such committees as of last year.

Total managerial remuneration stood at Rs 2.63 crore, well within the Rs 12.57 crore or 11 per cent of net profit limit, set by the Companies Act. Of this, Joint Managing Director PK Singhal drew Rs 1.56 crore, Vaish drew Rs 19.13 lakh during his brief stay. The exchange paid around Rs 25.6 lakh to non-independent, non-executive directors the previous financial year.