Billionaire Kumar Mangalam Birla, chairman of Aditya Birla Group (Photographer: Dhiraj Singh/Bloomberg)

Proxy Firms Behind Parekh’s Scare Now Trigger Dissent Against Birla

Two proxy advisory firms that gave Deepak Parekh a scare also threw up a surprise for Kumar Mangalam Birla.

Birla got re-elected as a director on the board of Hindalco Industries Ltd. in the aluminium producer’s annual general meeting on Sept. 21. He received an overwhelming 91.6 percent of the total votes polled in his favour, but not without a dissent from a section of public shareholders who voted, according to the scrutinizer’s report disclosed to the BSE on Oct. 12. About 18 percent of them rejected the resolution.

That’s because two foreign proxy firms Glass Lewis and ISS Governance asked institutions to vote against his reappointment, according to their recommendations—BloombergQuint reviewed a copy. And the reasons cited were insufficient independence of the company’s remuneration committee and that Birla served on too many boards.

Almost similar to what the two advisory firms cited asking investors to vote against reappointment of Deepak Parekh as a non-executive director of the Housing Development Finance Corporation Ltd. beyond October 2019. A little less than a quarter of HDFC’s shareholders had voted against the special resolution—needed because he would have crossed 75 years during his term. Parekh just about got the required 75 percent of the votes polled. That had prompted veteran banker Uday Kotak, who led a SEBI-appointed panel on corporate governance, to seek regulation of foreign advisory investor firms.

To be sure, Birla just needed to cross the half-way mark as it was a simple resolution. Overall, just 8 percent of the total shareholders who voted against him. Still, it signifies increasing investor activism. More so on the recommendations of foreign proxy advisory firms.

Glass Lewis cited insufficient nomination and remuneration committee independence and Birla serving on too many boards as the reasons for asking investors to vote against the resolution, according to the document reviewed by BloombergQuint. ISS Governance cited that Birla was on the board of more than six companies.

Also read: How HDFC May Have Spared Itself Further Blushes

Birla is a director on the board of eight companies:

  • Idea Cellular
  • Birla Carbon (Thailand) Public Co
  • Thai Rayon Public Co
  • Grasim Industries
  • Pilani Investment & Industries Corp
  • Century Textiles & Industries
  • UltraTech Cement
  • Aditya Birla Capital

Public institutions hold nearly 50.4 percent in Hindalco, according to its filings as of June. Nearly 72.87 percent of the institutions cast their vote.

  • Of the institutions who participated, 81.37 percent voted in favour of Birla’s reappointment while 18.63 percent voted against it.
  • Overall, 91.6 percent of the total votes polled were in favour of his re-election.

Also read: At Least 30 India Inc. Veterans To Face Deepak Parekh Type Test