The Institutional Investor Advisory Services has urged shareholders of Raymond Ltd. to vote against the reappointment of Gautam Hari Singhania on the board ahead of the company's annual general meeting on June 27.
"Until the time the divorce related issues are settled, and the results of an independent investigation are received, we expect the board to have both directors — Gautam Singhania and Nawaz Modi — step off the board," the proxy advisory firm said as a reason for its recommendation.
It has recommended voting against his appointment as chairperson and managing director because Singhania's proposed remuneration is high for the size and complexity of the business, and not comparable to peers.
Singhania is currently undergoing divorce proceedings. His estranged wife, Nawaz Modi, has accused him of domestic violence and has also publicly alleged that he has used company funds for personal benefits. Yet, the textiles-to-real-estate major has proposed to reappoint the 59-year-old as chairperson and managing director for five years starting from July 1.
"The board has not issued an update since their last statement in December 2023 and it is unclear if it has sought an independent investigation into these accusations," the IiAS said. "It is now for the shareholders to shield the company from this intra-promoter dispute."
Singhania has been on the board of Raymond since April 1, 1990. He has attended all nine board meetings in the last financial year.
Salary Exceeds Threshold
The proposed remuneration structure allows for Singhania to be paid in excess of regulatory thresholds. Based on the fiscal 2024 profit alone, this can be in excess of 5% or Rs 35 crore, according to the IiAS. "The board must provide a maximum cap on the remuneration, and not leave it open-ended with significant headroom built in for possible excessive remuneration," it said.
Based on past practices and his fiscal 2024 remuneration of Rs 19.8 crore, that is about 474.3 times the median salary of the company's employees.
The IiAS estimates his fiscal 2025 remuneration at Rs 22.7 crore.
The proxy firm said there is no cap on the quantum of remuneration payable to Singhania, no disclosures on the performance targets required to be achieved for the commission to be paid, nor any clarity on whether malus or clawback clauses have been built into the remuneration structure.
"Given the high level of remuneration in the past, and the lack of clarity in the proposed remuneration structure, we do not support the resolution," the IiAS said.
Singhania's commission as a share of consolidated pre-tax profit has increased over the past three years, from 0.4% in fiscal 2022 to 0.9% in the last fiscal.
If the share of profit as commission keeps increasing across the proposed tenure, his commission will outpace company profit, the IiAS said.
Raymond is yet to respond to NDTV Profit's queries.
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