Proxy advisors call for Rashmi Saluja's ouster from Religare; co backs her

Two leading proxy advisory firms have recommended Religare Enterprises investors Ltd (REL) to vote against giving a fresh five-year term on the company's board to chairperson Rashmi Saluja, further turning the odds against her re-appointment that was already hanging in the balance amidst her ongoing feud with the company's largest shareholders, the Burman family. Religare has issued a rebuttal to the opinion of the proxy advisors, standing behind Saluja. Justifying their call for Saluja's ouster, proxy advisors InGovern and Institutional Investor Advisory Services (IiAS) said that the protracted battle between the Saluja-led management and the Burman family and the resultant litigation could be a distraction for the company's board. Also Read: Kalyani "The various legal disputes and police cases may be potential distractions to the board and to her in her ability to execute her responsibilities as Executive Chairperson of the company," the IIAS report read. InGovern also raised concerns over her compensation of almost 69 crore a year, which it said was much higher than industry peers. "The ongoing scrutiny of Religare raises questions about the effectiveness of governance under her leadership, which reflects poorly on her oversight and governance capabilities," read the InGovern report released over the weekend. "There are also concerns about her compensation practices and adherence to regulatory guidelines regarding executive remuneration." The proxy advisors' opinion was also influenced by the episode of Religare subsidiary Care Health Insurance issuing stock options to Saluja despite a denial from Insurance Regulatory and Development Authority of India (Irdai). Shareholders will now put to vote the future of Saluja at Religare at the company's annual general meeting (AGM) on the last day of 2024. In August, Religare had moved the Registrar of Companies to delay its AGM by three months to 31 December. Also Read: An ordinary resolution seeking Saluja's re-appointment as a director will need at least half the shareholder votes to be cast in her favour to go through. Passing the shareholder muster seems to becoming ever more difficult for Saluja following the proxy advisor report that institutional investors generally rely upon. Institutional investors like mutual funds own a 13.43% stake in the company. The largest amongst these are Motilal Oswal (7.3%) and Samco (1.37%). Religare's largest shareholders, the Burman family, which control 25.12% shares of the company through four entities, are also expected to vote against Saluja's re-appointment. Saluja joined the board of Religare in 2018 as an independent director when the company was in the midst of a crisis that culminated in its erstwhile promoters being impeached. "It is particularly noteworthy that these attempts to question and malign Dr. Saluja and the board come only after the company has achieved remarkable success, transforming from a 17 share price to touching 315, creating substantial shareholder value," read a statement from Religare. "This timing, coupled with the Burmans' pending legal cases that remain unquestioned, paints a clear picture of the motivations behind these recent developments." Regarding Saluja's compensation and the Care Health Insurance ESOPs, Religare said that the matter was sub-judice. However, it reiterated that the company was in compliance with all legal and regulatory framework. Religare's board, including its independent directors, continues to back Saluja's re-appointment, the statement added. "As REL stands at the cusp of its next growth phase (Religare 2.0), Dr. Saluja's continued leadership as executive chairperson is crucial." Also Read: Earlier this month, the Reserve Bank of India approved the open offer of the Burman family, promoters of FMCG company Dabur, to acquire an additional 26% stake in Religare to become it promoters. The central bank also directed maintaining the current board and management structure of the company.