Proxy advisory firm Institutional Investor Advisory Services (IiAS) has urged Raymond shareholders to vote against the re-election of Gautam Singhania as the Chairman and Managing Director (CMD), ahead of the firm's AGM scheduled on June 27.
IiAS suggested that Raymond's board of directors remove Singhania, along with his estranged wife Nawaz Modi, from their positions until their divorce proceedings are completed. Gautam Singhania has been on the board of Raymond since April 1, 1990.
The proxy advisory firm said, "Until the time the divorce related issues are settled, and the results of an independent investigation are received, we expect the board to have both directors — Gautam Singhania and Nawaz Modi — step off the board."
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Singhania has faced accusation of domestic violence by estranged spouse Nawaz Modi, who also stated that he misused company funds for personal use. However, Raymond has suggested that Singhania be reappointed to the board for another five-year term.
"The board has not issued an update since their last statement in December 2023, and it is unclear if an independent investigation into these accusations has been sought," IiAS added. "It is now for the shareholders to shield the company from this intra-promoter dispute."
Additionally, IiAS posed another concern: Singhania's proposed remuneration was too high for the size of the business, and was not comparable to peers.
The remuneration structure from July 2024 to June 2027 is in excess of the rules imposed by the regulator, said the proxy service.
According to the structure, based on the profit in the fiscal year 2024, the remuneration could come in around Rs 35 crore, or over five percent, which is over the regulatory limit.
In FY24, Singhania was paid around Rs 20 crore, almost 500 times higher than the median salary of Raymond's employees.
Also Read | IiAS urges independent directors to 'protect' Raymond from promoters, if needed
On November 28, 2023, IiAS had urged the independent directors of Raymond to investigate the allegations against Gautam Singhania made by Nawaz Modi and ask both of them to keep off the Board during the course of the investigation.
"If need be, we expect you to protect the company from its own promoters," said the letter from Institutional Investor Advisory Services.
Nawaz Modi accused the CMD of domestic violence and misusing company funds. "Despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don’t want stakeholders thinking that these accusations are to be tolerated," IiAS wrote in the scathing open letter.
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