Bengaluru: Shiv Nadar’s decision to continue as President and CEO of HCL Technologies Ltd. and the 72-year-old founder does not specify when he plans to forego the fourth largest IT services company in India has been enough to voting certain shareholders when they voted for a resolution extending its mandate for a period of five years last month. It is significant that this opposition from shareholders on the twin issues of a CEO continuing as President and CEO and silence on the retirement age comes in support of the general reforms proposed by the Securities and Exchange Board of Regulators India.
Last week, a panel appointed by Sebi made a number of recommendations, including ensuring that listed companies with more than 40% public ownership shares as President and Chief Executive Officer or Chief Executive Officer commence April 1, 2020. According to HCL Technologies’ stock exchange announcements, 13.185% of the voting public shareholders opposed the re-election of Nadar as CEO. Public institutions and retail shareholders hold 40.12% shares, while the Nadar developer and the family own 59.88% of the shares. It is not surprising that the Nadar renewal was approved by 96% of the shareholders, leaving only 4% of the votes against the resolution. A HCL spokeswoman declined to comment.
In addition to extending Nadar’s mandate, HCL Technologies has called on shareholders to approve five other resolutions, including the re-election of an independent director and the approval of shareholder buybacks. The remaining five resolutions saw the unanimous vote of all shareholders and for this reason several believe that some shareholders were dissatisfied with the appointment of Nadar as president and CEO of HCL. “The distribution of roles (President and CEO / MD) is meritorious, especially since a large majority of listed companies in India are controlled by groups of promoters.
Therefore, it will be rewarding for all shareholders because the chairman is better placed to oversee management and work without the conflicts facing a CEO or other leaders, “said an investment manager, a US home fund, which is one of HCL’s top 20 shareholders owning more than 0.35% of the shares. The director did not want to be named. HCL shareholders expressing regret founder should serve as a reminder to captains of other listed companies, as this suggests that shareholders are not only satisfied with the good returns and that the company is growing stronger but is now pushing management to also focus on better practices.
HCL posted revenue growth of 11.9% in dollar terms, reaching $ 6.975 million in revenue at the end of March 2017. Last year, HCL’s growth was higher than that of Tata Consultancy Services Ltd. Bombay, Infosys Ltd and Wipro Ltd. Again, HCL’s shares outperformed the BSE-IT index, with HCL shareholders posting a 5.1% return, while the BSE IT index fell by 9%. To be sure, at least one foreign consulting firm, Glass Lewis & Co. LLC, believed that Nadar was a non-retired director and played both roles as president and CEO. “We see an independent chairman who is better able to oversee corporate executives and establish a pro-active program without the management conflicts that a CEO or other management personnel often face .
This leads to a more proactive and efficient board of directors, “writes Glass Lewis in a note to shareholders. In addition, this proposal also aims to prevent Mr. Nadar from retiring on a rotating basis. We believe that periodic rotation of directors or executives is essential to bringing new ideas and long-term accountability to board or company oversight. In addition, we believe that shareholders should have the right to periodically review the service of the executive officers and to give their consent to the continuation of the service. Therefore, we do not believe that shareholders should support this proposal at this time. “