Institutional shareholders vote against reappointment of Bharat Forge MD

Proxy advisory firms had recommended that investors vote against the special resolution to appoint B N (Baba) Kalyani as the managing director of Bharat Forge, citing his excessive remuneration

More than half of Bharat Forge's institutional shareholders voted against reappointing B N Kalyani as the company's managing director (MD) last week, The Economic Times reported on Tuesday. 53.51 per cent of institutional investors voted against the resolution, while 46.49 per cent voted in favour, according to the voting results published on the BSE.

However, Kalyani will remain the company’s managing director as the special resolution was passed with the support of the majority of the promoter group. A special resolution requires the support of shareholders holding at least 75 per cent of the equity. Overall, 75.45 per cent of shareholders voted in favor of the proposal, while 24.55 per cent voted against it.

 

Bharat Forge had got the nod from shareholders for the reappointment of B N Kalyani as MD and G K Agarwal as deputy MD for five years on August 9, 2018.

Institutional investors including foreign and domestic funds hold a 43.87 per cent stake in Bharat Forge as on March 31, 2023, while the promoters own 45.26 per cent. Retail investors held around 11 per cent of the firm.

Proxy advisory firms such as Institutional Investors Advisory Services ( IiAS) and Stakeholders Empowerment Services (SES) had recommended that investors vote against the special resolution to appoint Kalyani as the managing director, citing his excessive remuneration.

IiAS had stated that Kalyani’s total salary package in FY23 was around Rs 21.26 crore, with the fixed component constituting 85 per cent. In FY24, his remuneration is around Rs 28.67 crore, out of which 79 per cent constitutes the fixed part.

The fixed portion of his remuneration rose from about 40.9 per cent in FY19 to 82.5 per cent in FY22, and the variable component declined from 59 per cent in FY18 to 17 per cent of the total remuneration in FY22, Iias said. “We believe that a major portion of executive remuneration should be variable and linked to company performance,” IiAS said.

SES said that Bharat Forge should reveal information about the individual caps for the fixed and variable pay. “In the present case, the company has not disclosed the absolute cap on variable pay. The commission paid to B N Kalyani is almost 2.5 times the next highest-paid commission to the executive director. Further, the commission paid to him for FY22 is almost equal to the total commission paid to all four non-promoter executive directors of the company,” SES said.