In rare rebellion, 97% institutional votes against JSPL pay revision

Institutional shareholders own over 262 mn shares in the company as per the filing accounting for 28% in the company

In a rare display of resentment against rising executive pay in corporate India, institutional shareholders of Jindal Steel and Power Limited (JSPL) have voted against a resolution authorising the chairman and managing director to revise the remuneration of wholetime directors.

Naveen Jindal, chairman and managing director, was the country’s highest-paid executive with a package of Rs 73.42 crore for the year ended March 31, 2012.

In the 33rd annual general meeting held in Hisar, Haryana, on September 26, 101.41 million or 97 per cent of the institutional votes polled were against the resolution, an exchange filing by the company showed.

HSBC Global Investment Funds, ICICI Prudential Life insurance and Lazard are the institutions which hold over one per cent in the company.

Institutional shareholders own 262 million shares in the company according to the filing accounting for 28 per cent in the company.

Of these, only around 40 per cent of the shareholders exercised their vote, with 104.56 million votes polled. Of these, 101.41 million votes were against the resolution, while the remaining three million voted in favour.

Of the non-institutional shareholders who participated in the poll, 132,355 or 99 per cent voted in favour of the resolution.

Though the resolution was passed because the promoter shareholders held 65 per cent equity and voted in favour, the results showed there is a case for interested parties to recuse themselves from such resolutions, say proxy advisory groups.

“In my opinion, such a move by institutional shareholders had not been seen before,” said J N Gupta, founder of Stakeholders Empower-ment services, a Mumbai-based advisory firm.

Advisory firm SES had published an advisory against the resolution in September.

"The entire remuneration policy of the company is opaque...The resolution can lead to a conflict of interest situation," it had said in a client note.

Though some institutions seemed to have heeded this call as the poll results showed, promoter group shareholders, who hold 530 million shares, voted in favour of the resolution, taking it through.

UNWILLING TO PLAY BALL Voting in JSPL’s AGM on a resolution to authorise CMD to revise directors' pay
	Total shares	Votes polled	Votes against	Votes for	% against
Institutional	262.59	104.56	101.41	3.15	96.99
Non-institutional	120.47	0.13	0	0.13	0.52
Promoters	551.76	524.34	0	524.34	0
Numbers in million .                                                                               Source: Company filings

“Although the resolution was carried through as the owners had majority, it shows that efforts can work,” Gupta added.

Next, we should say that interested parties should not vote ,had it been done resolution would have failed. Such efforts shall improve governance,”

JSPL, in its annual report, said it did not have a remuneration committee because "except sitting fees, the company is not paying any remuneration to the non-executive directors". This, according to SES, is not a valid explanation because such a committee is normally constituted to decide the remuneration payable to executive directors as well.