Saturday, November 11, 2017

InterGlobe pitching for free tickets to its independent directors

New Delhi:  A proposal by InterGlobe Enterprises, the Gurugram-based parent of IndiGo airline, for travel benefits to the two independent directors (IDs) on its board and their family has caught the eye of a proxy advisory firm.

The Stakeholders' Empowerment Services (SES) has objected to the plan and asked shareholders to vote against the move in a postal ballot that is currently open and is slated to close on Tuesday. The company is seeking shareholders' approval for unlimited free tickets, for leisure purposes, to the two IDs- Devadas Mallya Mangalore and Anupam Khanna-- and their family members (spouse and dependent children) in the ballot.

SES contends Section 197(7) of the Companies Act does not allow any such payment to IDs. Further, this proposal has been referred by the Nominations and Remuneration Committee (NRC) and the Audit Committee -- both panels comprise three directors, including Mangalore and Khanna.

"Did these directors participate in recommending the proposal? If yes, it raises a question over their independence, the company's intentions in providing such perquisites and the oversight mechanism of the board. If they did not participate, it would, then, amount to a single member of the committee mooting the proposal, unless some other person whose identity is not disclosed initiated it," the SES said in its report.

Of InterGlobe's six directors, one is an executive director, designated President and whole-time director. Of the other five, three are non-executive promoter directors and two are independent non-executive directors. Approvals for the facility to the promoter directors were taken before its initial public offer (IPO) of equity.
In its response, the company said it clearly stated in the proposed resolution that it was seeking approval from its members for extending the travel benefits to the IDs. "The company has not sought any general approval from the members for extending any benefit to its directors (present or future). We have taken specific approval for the two independent directors within the parameters of present laws."
10/11/17 N Sundaresha Subramanian/Business Standarrd