Monday, February 26, 2024

Reliance seeks shareholder nod to appoint Mukesh Ambani as head for another 5 years at nil salary

Reliance Industries Ltd, India’s most valuable company, has sought shareholder’s approval to give Mukesh Ambani another five-year term as chairman and managing director of the company till 2029 — a period during which he has opted to draw nil salary.

Mr. Ambani, 66, will cross the company law-mandated 70 years age for the chief executive of the company and requires a special resolution by the shareholders for him to be appointed beyond that age bar.

In a special resolution, Reliance sought the nod of shareholders to appoint Mr. Ambani as the head of the company till April 2029.

Mr. Ambani has been on the board of Reliance since 1977 and was elevated as chairman of the company after the death of his father and group patriarch Dhirubhai Ambani in July 2002.

In the special resolution posted to shareholders, Reliance said its Board of Directors on July 21, 2023, approved “re-appointed Mukesh D. Ambani as Managing Director, for a period of 5 years from the expiry of his present term, i.e. with effect from April 19, 2024.” Mr. Ambani, it said, had capped his annual remuneration at ₹15 crore from the financial year 2008-09 (April 2008 to March 2009) to FY20; and since FY21, he opted to forego his salary, due to the COVID-19 pandemic, until the company and all its businesses were fully back to their earnings potential.

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Accordingly, he has not been paid any salary and profit-based commission for three years in a row beginning FY21.

At the request of Mr. Ambani, “the Board has recommended that no salary or profit-based commission be paid to him for the proposed term from April 19, 2024 till April 18, 2029,” the resolution said.

“He shall, however, be entitled to reimbursement of expenses incurred for travelling, boarding and lodging including for spouse and attendant(s) during business trips and provision of car(s) for use on company’s business and communication expenses at residence shall be reimbursed at actuals and not considered as perquisites,” the special resolution said.

“The company shall arrange to provide security to Ambani and his family members and the expenses borne by the company for the same shall not be considered as perquisites.”

Reliance said Mr. Ambani will attain the age of 70 years on April 19, 2027. “The company has grown multifold under his leadership and it would be in the interest of the company that he continues to lead the company even after he attains the age of 70 years. Accordingly, approval of the members (shareholders) is sought for passing the resolution proposed (to give him another 5-year term) as a Special Resolution.”

Mr. Ambani, it said, satisfies all the conditions set out in company law and has not been disqualified from being appointed as director.

“In terms of Article 86(1) of the Articles of Association of the company, Shri Mukesh D. Ambani is not liable to retire by rotation. Regulation 17(1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that in such cases, the continuation of the director shall be subject to the approval by the shareholders in a general meeting once in every five years,” it said, adding he is being sought to be reappointed till April 18, 2029.

Mr. Ambani has for a third year in a row drawn no salary from his flagship firm in the last fiscal as he voluntarily gave up remuneration in light of the pandemic hitting the business and economy.

In its latest annual report, Reliance said Ambani’s remuneration for the financial year 2022-23 was “nil”.

In June 2020, he voluntarily decided to forego his salary for the year 2020-21, in light of the COVID-19 outbreak in India, which exacted a huge toll on the societal, economic and industrial health of the nation.

He continued to forgo his salary in 2021-22 as well and now in 2022-23.

In these three years, Mr. Ambani did not avail of any allowances, perquisites, retiral benefits, commission or stock options from Reliance for his role as the Chairman and Managing Director.

Prior to that, the Chairman and Managing Director had his salary capped at Rs 15 crore since 2008-09 in order to set a personal example of moderation in managerial compensation levels.

The ₹15-crore salary in 2019-20 was the same as in the previous 11 years.

Mr. Ambani has kept salary, perquisites, allowances and commission together at Rs 15 crore since 2008-09, forgoing over ₹24 crore per annum.

The remuneration of his cousins Nikhil and Hital Meswani rose to ₹25 crore each, including ₹17.28 crore commission (unchanged from previous fiscal year).

Executive Directors P M S Prasad and Pawan Kumar Kapil saw their remuneration rise.

While Prasad drew ₹13.50 crore in 2022-23 including performance linked incentives for 2021-22 which was paid in 2022-23. In 2021-22, he drew ₹11.89 crore.

Kapil got ₹4.40 crore, up from ₹4.22 crore in 2021-22. He completed his 5-year term on May 15, 2023 and has since ceased to be a director of the company.

Mr. Ambani’s wife Nita, a non-executive director on the company’s board, earned ₹6 lakh as a sitting fee (up from ₹5 lakh in 2021-22) and another ₹2 crore commission for 2022-23 (unchanged from previous fiscal). She had in 2020-21 got ₹8 lakh sitting fee and another ₹1.65 crore commission.

Besides Nita Ambani, other non-executive directors include Dipak C Jain, Raghunath A Mashelkar, Adil Zainulbhai, Raminder Singh Gujral, Shumeet Banerji, former SBI chairperson Arundhati Bhattacharya, former CVC K V Chowdary and Saudi sovereign wealth fund nominee Yasir Othman H Al Rumayyan.

While all independent directors got a Rs 2 crore commission and sitting fee.

K V Kamath who was appointed on Reliance board in January 2023 was paid a sitting fee of Rs 3 lakh and a commission of Rs 39 lakh.

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