Lalit Modi might be famous for his penchant for cricket administration and his ongoing tussle with International Cricket Council chief N Srinivasan, but it is his father, K K Modi’s empire that accounts for a significant portion of his earnings.
Modi, famous for having made Indian Premier League (IPL) a household name, is seeking reappointment as director of Godrfey Phillips India (GPI), flagship company of the K K Modi group.
But corporate governance experts are opposed to this, saying Modi didn’t attend even a single board meeting of the company during 2013-14 and yet, got Rs 1.7 crore as annual remuneration.
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Explaining the rationale behind the remuneration, the company had said, “Lalit Kumar Modi has been a prominent member of the board, serving the company through the last two decades. Presently, he is a non-executive director in the company. In recognition of his strong entrepreneurial skills, valuable strategic advice and the assistance provided by him in supporting various business initiatives of the company, the board accorded its approval to remunerate him by way of commission under section 309(4) (b) of the Companies Act, 1956.”
Proxy advisory firm Stakeholders’ Empowerment Services said the company should disclose why it was paying commission to only one non-executive director. “The remuneration of Modi is not aligned to those of other non-executive directors. It is higher than that paid to the board’s chairman. He has not attended the last three AGMs (annual general meetings); in the last three years, he has attended only seven per cent of all board meetings.”
In 2012-13, he attended only one board meeting, through teleconferencing. For that year, he was paid Rs 1.10 crore.
As the pay package of R Ramamurthy, a non-promoter executive director , doesn’t include a performance-based component, it is felt the company’s remuneration policy is skewed in favour of promoters.
Experts believe the remuneration to executive directors should be aligned with the company’s performance and should, therefore, include a variable performance-based component.
“Lalit K Modi was paid Rs 170 lakh as remuneration, 85 times the remuneration paid to the next highest-paid non-executive director/independent director. This indicates the company’s remuneration policy is highly skewed in favour of promoters,” Stakeholders’ Empowerment Services said.
The proxy advisory firm has asked shareholders to vote against the resolution seeking Modi’s reappointment.
An email seeking comment to a Godfrey Phillips spokesperson on Saturday did not elicit any response. Lalit Modi, too, didn’t respond to a message left on his website, www.lalitmodi.com.
Through the past couple of years, Modi has been based in London, following Indian authorities initiating legal proceedings against him over allegations of irregularities in the IPL.