Proxy adviser seeks update on ₹480 cr ESOP clawback from Rashmi Saluja

Mint

8 hours ago

Mumbai: Five months after Dabur India Ltd chairman Mohit Burman took control of Religare Enterprises Ltd, a proxy advisory firm has sought an update on the issue of recovering shares of a subsidiary worth ₹ 480 crore from former Religare chair Rashmi Saluja.
On Sunday, InGovern Research Services issued a note asking that Religare and its subsidiary, Care Health Insurance, provide details and an update on the employee share options awarded to Saluja.
The Bengaluru-based proxy advisor also asked for the recovery of fees paid by Care Health to its former independent director, Pratap Venugopal, who provided legal opinion to the insurance firm.
When contacted, Religare on Sunday said, 'Irdai issued an order holding the issuance of ESOPs to Dr Saluja illegal. Care Health Insurance Limited had filed an appeal before the Securities Appellate Tribunal (SAT) under instructions from Dr Saluja, who was then the non-executive chairperson of the board. Subsequent to Dr. Saluja's removal from the board, the board of directors of the company decided to withdraw the appeal. The said appeal before the SAT now stands withdrawn. We offer no further comments as these issues are being examined internally.'
Saluja received ESOP grants representing about 2.5% of Care's share capital. More than four-fifths of the insurance firm's ESOPs were allotted to her.
InGovern has also raised conflict of interest concerns about Venugopal, a senior advocate, counselling Care Insurance on the ESOPs, as he was also an independent director on the company's board. Venugopal was advising and approving Care's decisions on the ESOPs, as per InGovern.
As per the proxy adviser's report, the Nomination and Remuneration Committee, which approves pay and stock options, also lacked independence as Venugopal was a part of it. The dual role of Venugopal was not clearly disclosed to shareholders, InGovern said.
'Venugopal played dual roles, as an advisor and an ID (independent director), in a critical matter like the issuance of ESOPs, especially after IRDAI had disapproved the issuance of ESOPs, yet the company relied on his legal opinion to proceed with it,' said Shriram Subramanian, managing director of InGovern.
Such roles create potential conflict of interest in list companies if full disclosures are not made, he said.
Mint could not immediately reach Venugopal for comment.
Religare owns 62.91% of Care Health, while Kedaara Capital and Union Bank of India own 15.84% and 5.28%, respectively. Public shareholders own the remaining 16%.
The issue raised by InGovern is about the grant of 22.7 million ESOPs by Care Health to Saluja, a non-executive director at the time, even after the Insurance Regulator and Development Authority of India rejected the proposal. Saluja had exercised 7.57 million of those options.
In July 2024, IRDAI took action and imposed a ₹ 1 crore penalty on Care Health and ordered the company to buy back the 7.57 million exercised shares at ₹ 45.32 each within 30 days and cancel all unvested ESOPs within 15 days.
IRDAI had found the grants in violation of Section 34A of the Insurance Act.
Section 34A of the Indian Insurance Act, 1938 gives IRDAI the authority to approve the appointment, reappointment, termination, and remuneration of key managerial personnel in insurance companies.
InGovern has now demanded a public disclosure of the minutes of the board and Nomination and Remuneration Committee meetings, legal opinions on ESOPs, full IRDAI correspondence, and conflict of interest declarations.