Rama Kirloskar's appointment kicks up row
Mumbai: Kirloskar Brothers Limited (KBL), a leading pump manufacturer, has appointed Rama Kirloskar as its Joint Managing Director at its AGM, held on September 9. The proxy advisory firm Institutional Investor Advisory Services (IiAS) is firm on its stand. The firm had recommended to vote against a resolution to reappoint 31-year-old Rama to the board of KBL.
The resolution was approved with 64.3 per cent of the shareholders voting in favour of her appointment.
Not to mention that the episode, which took place early this month, had triggered a row between Rama's father and KBL CMD, Sanjay Kirloskar, and the proxy advisory firm.
"I will not go over our recommendations and rationale, as our voting recommendations are self-explanatory. These have been detailed in our voting rationale", Amit Tandon, MD, IiAS (a proxy advisory firm), told Bizz Buzz in an exclusive interview.
"Let me mention, when we recommend voting against a resolution, companies usually object. Therefore, we carry the company's response in our report for investors to get both perspectives. To this extent, we have been fair and our stand serves the principles of natural justice," Tandon said.
Even though IiAS, a Sebi registered research entity, had opposed Rama's reappointment to the board and also her appointment as joint managing director citing lack of experience. Sanjay Kirloskar has accused the proxy firm of inconsistency in its recommendations by saying that the advisory firm, in the past, recommended in favour of some other individuals of lower age for a similar position in much larger promoter-led companies.
Commenting on it, Tandon said: "As far as the accusations of inconsistency are concerned, we have no motive to give differential treatment to any single company or individual. IiAS' recommendations are based on IiAS Voting Guidelines that are reviewed every year. Our voting guidelines are available for a free download on our website and every year, our voting guidelines are modified based on changing regulations, feedback from market participants (investors, companies, and board members), and voting patterns across shareholder resolutions. The guidelines are revised taking into account current market realities and changing governance practices and trends."
Kirloskar Brothers had proposed to reappoint Rama, who holds a double major degree in Mathematics and Biology from Bryn Mawr College, USA, as director and appoint her as joint managing director for five years since August 03. Rama is the Managing Director of Kirloskar Ebara Pumps Limited (KEPL), a joint venture between KBL and Ebara Corporation, Japan.
She has been non-executive director on the KBL board since 2018. Her proposed FY22 remuneration is estimated at Rs3.62 crore. Notwithstanding, she is also entitled to remuneration from KEPL on which she will continue to be Managing Director. The company has not disclosed past remuneration received by her from KEPL.
"We do not encourage payment of remuneration from joint ventures/subsidiaries without adequate disclosures, as it does not allow shareholders a say in fixing remuneration. We do not support Rama Kirloskar's board appointment because we believe 31 years of age, she does not possess sufficient experience to be on the board of a listed company," an IiAS report said.
As per IiAS, individuals must have an established track record and work experience of at least ten plus years before being appointed director on boards of listed companies.
Tandon rather goes on that the firm's goals are to improve corporate governance practices of the country's capital markets.
"In deciding on our voting recommendations, we endeavour to be unbiased, transparent and fair. Our voting recommendations are decided by a committee process, which ensures objectivity in the decision-making process.Rama Kirloskar's appointment kicks up row