Promoters nix Hinduja Global's stock rights plan

Voted almost entirely against management's resolution, while most public shareholders supported it

In a rare move, the promoters of Hinduja Global Solutions, the group's information technology and business process outsourcing arm, have voted against the employee stock appreciation rights (ESAR) plan.

Such decisions by promoters against management proposals are rare, raising questions around the rationale and whether the management and the promoters are not on the same page. A HGS spokesperson declined to offer any comment in this regard.

The total of votes polled were 52.68 per cent of the total. Of these, 65 per cent of the promoter shareholders took part; the others did not vote. Among non-promoters, only 26 per cent voted. About 85 per cent of the public shareholders had voted in favour but 99 per cent of the promoter votes polled were against.

A maximum of two million shares of Rs 10 each were to be issued under the plan. Hinduja Global shares closed Monday's trade at Rs 521.05.

The company had floated two resolutions through postal ballot to approve the ESAR plan. One covered all the permanent employees. The second resolution covered such employees of the company's subsidiaries. Equity-based compensation, went the explanatory statement accompanying these, was an integral part of pay across sectors -- it enabled alignment of the objectives of employees and the organisation. Also, that this was a reward for "continuous hard work, dedication and support, which has led the company on the growth path".

The ESAR plan excluded promoters, independent directors and directors holding 10 per cent or more of the stock, directly or indirectly. Both resolutions have been defeated, with 85 per cent of the votes polled going against. A closer look shows the promoters defeated the resolution, not the public shareholders.

According to the latest shareholding pattern, the promoters -- including Ashok Hinduja family entities Hinduja Group and Hinduja Realty Ventures -- together hold 67.5 per cent in the company. Partha DeSarkar is group chief executive of Hinduja Global. Ramkrishan P Hinduja is chairman of the board, with Shanu Hinduja, Vinoo Hinduja, Anil Harish, Rajendra Chitale, Rangan Mohan, Y M Kale and Pradeep Mukherjee.

J N Gupta, managing director, Stakeholders Empowerment Services (SES), said the board and management have to ensure that proper disclosures about the plan's rejection are made to the shareholders.

SES had objected to the resolutions, saying it would lead to excessive dilution, since the company already had two ESOSs (Employees Stock Option Schemes), wherein the aggregate outstanding options are 292,991, which may be converted into equivalent numbers of equity shares.