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Saturday, September 7, 2013

Gammon 'non executive' director Pervez Umrigar remuneration-will this set a trend in India Inc?

While reading the Gammon annual general meeting(AGM) notice(http://www.gammonindia.com/investors/pdfs/GILnotice-91st-agm.pdf), I noticed an interesting point as described in Item 6-
Mr. Parvez Umrigar, a Chartered Accountant and a Cost Accountant, has been associated with Gammon group and has over two decades of industry experience. Mr. Umrigar was appointed as a Whole-time Director designated as Group Director on the Company’s Board effective from 2nd January, 2013. Effective 1st April, 2013 he ceased to be a Whole-time Director. He however, continues to be on the Company’s Board as a Non-Executive Non-Independent Director(emphasis added)

Item 7 laid out the rationale for the payment as follows-
Mr. Parvez Umrigar with his rich infrastructure industry experience and expertise in the areas of finance and strategic planning continues to guide the Board and the Company’s management on various financial and strategic issues. The Board of Directors (the “Board”) is of the opinion that Mr. Umrigar should be remunerated for the valuable services being rendered by him(emphasis added).

These bring out very interesting points

  1. Since he resigned within 3 months of assuming the executive director post(yet retained his board seat), maybe this was for better prospects since he joined Piramal.  So he did not have the inclination to devote full time attention but is more than willing for part time remuneration, while being involved elsewhere
  2. Guidance on financial/strategic issues(and being paid for that) stretches the boundaries of being a 'non executive' director. Granted that under company law, directors are anyways supposed to do that so remunerate under sitting fees/commissions-why have a specific fixed fee contract for that? Other companies like Dabur award a performance bonus basis objective assessment of the directors contribution at year end, this is an ex-ante process
Now, he's not related to the promoters/management and given his track record, there is not a whisper of impropriety. Still, this sort of arrangement does raise eyebrows, about someone relinquishing a full time position, yet earning a consulting assignment as an non executive director. Yet, with its P/B<0 .1="" albeit="" all="" and="" at="" be="" being="" cannot="" cdr="" circumstance="" company="" contract="" counsel="" culture="" div="" earlier="" else="" ethics="" even="" expert="" financial="" fit="" for="" from="" gammon="" have="" he="" interesting="" issues="" it="" its="" just="" links="" makes="" money.="" nbsp="" of="" part="" price="" probably="" requires="" resignation="" severed="" that="" the="" time="" under="" value="" which="" would="">



1 comment:

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