According to reports, debt-laden wind turbine maker Suzlon Energy Ltd won approval from shareholders for the reappointment of its managing director Tulsi Tanti and a proposal to raise his annual compensation by 50%.
Proxy advisory firms had asked shareholders to vote against the company’s proposals to increase Tanti’s compensation and his reappointment to the post. These firms suggested that any increase in compensation must be linked to an improvement in the money-losing wind turbine maker’s financial performance.
In a filing to BSE, Suzlon Energy on Thursday said the shareholders of the company approved Tanti’s reappointment as managing director for a period of three years with effect from 1 April 2014. Though some of the shareholders have voted against the proposal, the resolutions were passed with a majority.
On 25 February, Suzlon Energy had sought shareholders approval through postal ballots. Tanti’s remuneration was proposed to be increased to Rs.3 crore from Rs.2 crore among other proposals. The voting on the proposals had ended on Wednesday.
“Tanti, who founded Suzlon in 1995, has been instrumental in establishing the company among top five wind turbine suppliers globally. Despite the tough times, the company has managed to retain its prized customers and he remains sanguine about bringing a positive turnaround for Suzlon in the future,” Suzlon said in a statement on Thursday after securing the majority of votes from shareholders.
Institutional Investor Advisory Services India Ltd (IiAS), in its report released to the media on 26 March, said Suzlon’s performance has continued to falter under Tanti’s leadership adding that it “believes that promoters’ interests will also be served by bringing in new management”.
“Given that IiAS recommends voting against the reappointment of Tanti as managing director, any discussion over his compensation is moot,” it had said.
Another proxy advisory firm InGovern Research Services had also opposed the resolutions of Suzlon Energy. These criticisms come at a time when Suzlon Energy, which is going through a Rs.9,500 crore corporate debt restructuring exercise, had reported a loss of Rs.1,075.25 crore for the quarter ended 31 December, compared to a loss of Rs.1,154.53 crore in the year earlier.
“I dont see only 14% of institutional investors voting as a half empty glass. Given that Suzlon Energy has an atypical list of shareholders—mostly government owned banks—and yet 71% of the investors who had exercised their rights, voted against the reappointment of Tanti, shows that the glass is filling up,” said Amit Tandon, founder and managing director of IiAS referring to the results of postal ballot. He indicated that shareholders are increasingly becoming vigilant.
State-owned banks hold sizeable stakes in Suzlon following the conversion of their debt into equity. IDBI Bank Ltd holds 6.5% in Suzlon. State Bank of India (3.5%), Life Insurance Corp. of India (2.6%), Punjab National Bank (1.8%) and Bank of Baroda (1.4%) are other prominent shareholders.