Over the years, remuneration levels of promoters and executive directors have been a cause of concern – in the past, remuneration has exceeded revenue and profit growth. During the COVID years, the experience was mixed – while some promoters voluntarily took pay cuts, several others continue to pay themselves even as profits declined, workers were laid-off, and salaries and wages were ‘rationalized. These have since moved back to their earlier trajectory. old way of compensating promoters.

What is more, the promoters compensation structures almost always lack clarity with respect to the expected performance outcome. In several instances, promoters give themselves a flat share of the commission. This is reflected in a handful of promoters paying themselves between Rs. 500.0 mn to Rs. 1.0 bn in salaries and commissions, independent of the size of their companies. Do shareholders support these?

IiAS’ assessment of 201 remuneration resolutions for promoters presented in 2022 shows that 68 (34%) of these would have been defeated had promoters not been allowed to vote.

The level of compensation of promoters, the structuring of the compensation, and the disclosure levels in these resolutions remain concerns for investors. That some of these promoters are members of the Nomination and Remuneration Committee adds another layer of conflict of interest.

Regulators must put promoter compensation to a majority of the minority vote and prescribe a set of minimum disclosures that companies must make on an annual basis while seeking shareholder approval.

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