IiAS opposes Hindustan Zinc CEO's reappointment over remuneration terms

IiAS has recommended against resolutions on CEO remuneration and reappointment of two independent directors at Hindustan Zinc, citing governance and transparency concerns

Hindustan Zinc Ltd’s (HZL’s) three board decisions, which will be put to vote soon, have come under the scrutiny with voting advisory firm Institutional Investor Advisory Services India (IiAS) recommending an ‘against’ vote on these resolutions.  The key resolution flagged by IiAS is the reappointment of HZL’s Whole-Time Director and Chief Executive Officer Arun Misra. The advisory firm has supported his continuation as CEO but opposed the terms of his remuneration.  Misra drew a remuneration of ₹13.54 crore in FY25 from HZL, in addition to stock options worth ₹6.37 crore from holding company Vedanta, taking his total pay package to ₹19.9 crore. IiAS estimates his FY26 remuneration is estimated at ₹31.42 crore.  As HZL does not have a stock option scheme, its senior executives are given stock options by the holding company Vedanta.  “As stated in the annual report, the cost of the stock options is borne by HZL as per an agreement with Vedanta. We believe, given that Misra is an executive director in Vedanta, the cost of stock options should be borne by Vedanta and HZL in the proportion of the duties discharged rather than by HZL alone,” IiAS has said in its report, while demanding greater transparency on the quantum of proposed stock options and disclosure of performance metrics for variable payouts.  Requests for comments sent to HZL on the IiAS report went unanswered till the time of going to press.  Meanwhile, IiAS is also opposing the resolution to reappoint two of its independent directors Pallavi Joshi Bakhru and Anoop Mittal.  Bakhru, a senior leader at Grant Thornton Bharat, previously served as Group Head–Taxation at Vedanta between 2015 and 2020. IiAS has emphasised that best governance practice discourages appointment of former executives alongside their prior supervisors within a five-year cooling-off period — a threshold not yet met in her case.  Further complicating matters, Grant Thornton advised HZL on the Black Mountain Mining deal in 2023, which raises potential conflict-of-interest concerns regarding her role, IiAS has stated.  The voting advisory firm has stated its opposition to the reappointment of Chatterjee stems from non-compliance with board independence norms. The 1999-batch IAS officer represents the government of India, who has a 27.92 per cent stake in HZL.  Since the chairperson of HZL is a non-executive promoter, regulations mandate that half of the company’s board comprise independent directors. As of August 8, HZL’s independent representation stood at only 33 per cent, IiAS has observed.  “This matter is pending with the Ministry of Mines – government of India for appointment of more independent directors. We expect the government to first address the board composition, before appointing nominees on the board. We do not support this resolution,” IiAS has said.  IiAS has recommended ‘for’ votes on the other seven resolutions put forth by HZL, which will be put to vote between August 20 and August 24 ahead of its  annual general meeting on August 25