Most institutional investors oppose extension of Balkrishna CMD’s tenure

MUMBAI: The tire manufacturer’s proposal to extend the term of its chairman and CEO Arvind Poddar has met with opposition from several institutional shareholders. The resolution was opposed by 63% of the company’s institutional investors, according to data from NSE, but it was still passed thanks to votes from the group of promoters and part of the institutions. The proxy consulting firms had recommended that institutions vote against the proposal citing “excessive” compensation paid to the Poddar family – the promoters of the company.

Institutions with 3.43 crore votes were against the proposal to extend Poddar’s term. Institutional votes representing two crores of shares backed him up.

The promoter group owns 58% of the company’s capital, while foreign portfolio investors (REITs) and mutual funds, which make up the category of institutional investors, each hold 14%. The company also has around 90,000 individual investors who together hold 6.2%

Shares of Balkrishna Industries closed at Rs 2,294 each, up 0.9% on Friday.

The June 30 resolution, however, was passed after the group of promoters cast 11.2 crore votes in favor of the resolution. Ultimately, the resolution passed with 80% approval, or 13 crore of votes, in favor while 20%, or 3.43 crore of votes, was cast against, NSE data showed. It was not possible to determine which institutions voted against the proposal to renew Poddar.

HDFC Mutual Fund is the company’s largest institutional investor. Its hybrid retirement savings fund held 4.18% of the capital as of March 31, 2021, according to the shareholding model. Kotak ESG Opportunities Fund and DSP Quant Fund respectively held 2.36% and 1.94% of the capital of the company.

An email sent to Balkrishna Industries went unanswered.

In a report dated June 14, proxy advisory firm Stakeholders Empowerment Services (SES) advised institutional investors to vote against the resolution citing an “asymmetric compensation” structure.

“Out of the total board compensation of 75.72 crore, Arvind Poddar, chairman of the promoter and managing director of the company, received 37.42 crore and his son (Rajiv Poddar) makes another 37.32 crore. . This represents 99.6% of the total remuneration of the board of directors for fiscal year 21, ”the report states. “This clearly indicates that the compensation is biased in favor of promoters.”

SES also said that the salaries received by the Poddar were significantly higher than those of other full-time directors of the company, who do not belong to the group of promoters.

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