International proxy advisory firm Glass Lewis has recommended shareholders of Godfrey Phillips India oppose the reappointment of Bina Modi as Managing Director of the company.
The US-based advisory firm has also recommended a vote against the proposal to fill the vacancy caused by removal of Executive Director Samir Modi from the board.
Moreover, it has expressed concerns about the independence of the Godfrey Phillips board and its nomination and remuneration committee. “We have observed that there has been a recurring pattern of removing directors who are in dispute or have raised governance issues with the promoter group or with Bina Modi, who is not only the executive chair, but also the Managing Director and CEO of the company. We have concerns regarding the independence of the chair and members of the nomination committee in matters that require their decisions,” the Glass Lewis report said.
In 2021, Ruchir Modi, son of Lalit Modi, was removed from the board after he wrote a letter to the Serious Fraud Investigation Office and the Ministry of Corporate Affairs raising questions over Bina Modi’s appointment as Managing Director and corporate governance issues within Godfrey Phillips.
These concerns arose amid an ongoing family dispute, further intensified by an incident on May 30, where Samir Modi alleged that he was assaulted during a board meeting by Bina Modi’s personal security officer.
Last month, in a controversial move, Godfrey Phillips appointed Charu Modi, Bina Modi’s daughter, to the board.
Glass Lewis also criticised Bina Modi’s remuneration, particularly the commission of 5 per cent of the company’s net profits, noting that the commission lacks defined performance conditions.
On the proposal to keep Samir Modi’s board position vacant, following the NRC’s unanimous recommendation against his reappointment, the proxy advisory firm said shareholders should have been given the opportunity to vote on his candidacy. The absence of such a choice sends a negative signal to shareholders and raises questions about corporate governance practices within the company, the report said. It added that “there has been no public disclosure from the company to substantiate the NRC’s recommendation.
It is pertinent to mention that several NRC members, including Lalit Bhasin, a director of Godfrey Phillips and head of the NRC, have filed defamation cases against Samir Modi, underscoring the conflict of interest within the board.
Godfrey Phillips is scheduled to hold its Annual General Meeting on September 6.