Debt-hit Gammon wants shareholders’ nod for excess pay to CMD Rajan

The ministry of corporate affairs (MCA) has directed financially distressed engineering company Gammon India to recover the excess remuneration paid to its chairman and managing director, Abhijit Rajan.

In an order in March, the ministry rejected the company’s application to approve the remuneration for financial years 2012-13 and 2013-14. Following this, the company has moved a resolution to take shareholder approval for the higher remuneration and to again appeal to MCA.

While the total excess remuneration paid to Rajan stood at ~26.29 crore at the end of March 2016, the company is seeking approval for payments totalling ~17.2 crore for the period between April 2012 and September 2014. The resolution will come up for approval at an Extraordinary General Meeting on Thursday.

Under Schedule V of the companies act, the government has defined the monetary limits for remuneration beyond which approval of central government is necessary. These limits based on capital of the company are applicable to all loss making companies and those with inadequate profits. Proxy advisory firm Stakeholders Empowerment Services (SES) advised shareholders to vote against the proposal. “The company has not disclosed reasons for such rejection. SES is of the opinion that the reasons behind the nonapproval by ministry of corporate affairs are important information to be considered by shareholders before making an informed decision regarding the waiver of executive remuneration. Further approval by shareholders will amount to nullifying rejection of ministry without knowing proper reasons. Therefore, due to lack of adequate disclosure, SES recommends that the shareholders vote against the resolution,” it said in a report.