One97 Communications – the parent entity of digital payments major Paytm – will be holding its annual general meeting (AGM) later today in which the company will, among other things, seek shareholder approval on the reappointment of founder Vijay Shekhar Sharma as MD & CEO and his remuneration along with the financial statements for 2021-22.
The AGM – scheduled at 4:30 pm today -- assumes significance as it would be the first for the digital major after its listing on the stock exchanges in November 2021.
More importantly, it comes close on the heels of the proxy advisory firm Institutional Investor Advisory Services (IIAS) advising shareholders to oppose Sharma’s reappointment along with his remuneration.
In a report released on August 9, IIAS had stated that the company should consider “professionalising the management” while highlighting the fact that the shares of the company have lost nearly 64 per cent since listing last year.
It had further raised concerns over the fact that he is “not liable to retire by rotation, and that he will get board permanency if he continues in a non-executive capacity following the end of his term as Managing Director.”
Incidentally, the proxy advisory firm had also advised shareholders to oppose the resolution related to the remuneration of Sharma on grounds that the company is still loss-making and Sharma’s proposed remuneration is quite high compared to chief executives of other companies that are part of the S&P BSE Sensex.
“His overall remuneration is higher than the remuneration levels of all S&P BSE SENSEX companies’ CEOs – and most of these companies are profitable. The company is seeking shareholder approval for the proposed remuneration as minimum remuneration – which will be paid to him even if the company continues to report losses,” it said while estimating his FY23 remuneration at around Rs 796 crore, which comprises 21 million stock options.
There is no disclosure regarding the vesting conditions relating to the stock option grants and thus, no alignment with the interest of shareholders, the report added.
Among other things, the proxy advisory firm had also advised shareholders to oppose the resolutions related to the remuneration of group chief financial officer Madhur Deora.
It also recommended voting against the reappointment of Ravi Chandra Adusumalli, who is the Managing Partner of Elevation Capital and a nominee director of SAIF and Elevation Capital on the board of the company.
“He has attended 47% (9 out of 19) board meetings in FY22. We expect directors to take their responsibilities seriously and attend all board meetings, and at the very least 75 per cent board meetings,” stated the report.
Paytm, however, does not have a high institutional holding – the typical target audience of proxy advisory firms -- as mutual funds and foreign portfolio investors combined have a stake of just around 6.6 per cent, as per data available on BSE.
Sharma directly holds a stake of 8.92 per cent in the company while some of the largest stakeholders include Antfin (Netherlands) Holding B.V. (24.88 per cent), SVF India Holdings (Cayman) Limited (17.46 per cent), Saif III Mauritius Company Limited (10.59 per cent), Alibaba.com Singapore E-Commerce Private Limited (6.26 per cent) and Saif Partners India IV Limited (4.50 per cent), as per the shareholding data available on BSE.
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