Gautam Singhania’s proposed appointment as executive chairperson of Raymond Lifestyle has stirred controversy, with corporate governance advisory firms voicing strong opposition. Empowerment Services (SES) and Institutional Investor Advisory Services India (IiAS) have called on shareholders to reject the proposal, citing concerns over governance, transparency, and potential reputational risks, according to The Economic Times.
SES flagged several governance issues linked to the appointment. The advisory firm criticized the announcement of Singhania’s role before securing formal approval from the company’s board. Concerns were also raised regarding his dual full-time roles at Raymond Ltd and Raymond Lifestyle, lack of a cap on variable pay, and insufficient clarity on restructuring plans.
Highlighting governance best practices, Empowerment Services (SES) stated, “No individual should hold more than one full-time position unless the roles are in closely aligned businesses.”
The e-voting process, which began on November 5, 2024, and will continue until December 4, 2024, seeks shareholder approval for Singhania’s five-year tenure, spanning September 1, 2024, to August 31, 2029. However, the concerns raised by SES cast doubt on the outcome.
Institutional Investor Advisory Services India (IiAS) criticized the lack of detail in the proposed remuneration package, particularly the absence of:
Maximum caps on pay
Performance-linked metrics for commission payouts
Malus or clawback clauses
The firm labeled the pay structure as “open-ended” and potentially problematic.
Additionally, IiAS raised reputational concerns tied to Gautam Singhania’s ongoing divorce proceedings, during which allegations of domestic violence and misuse of company funds have surfaced. IiAS noted the board’s failure to update shareholders on these allegations since December 2023, further undermining trust in the proposed leadership.
Raymond Lifestyle, demerged from Raymond Ltd on September 5, 2024, saw its stock debut at ₹2,850. However, it has since experienced a 28.5% drop, closing at ₹2,026 on the Bombay Stock Exchange as of Monday.
Separately, Raymond Ltd announced significant progress in its real estate business restructuring. The company received no-objection certificates from both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The demerger, approved in July 2024, aims to consolidate Raymond’s real estate ventures under a single entity, Raymond Realty, unlocking growth potential and attracting fresh investments. The listing of Raymond Realty on the stock exchanges is expected to follow regulatory approvals.
Governance Violations: Concerns over Singhania’s appointment announcement without board approval.
Dual Roles: SES questions the feasibility of Singhania’s simultaneous full-time roles.
Open-Ended Pay Structure: IiAS calls out the lack of a remuneration cap and performance metrics.
Missing Safeguards: Absence of malus and clawback clauses raises eyebrows.
Allegations of Misconduct: Accusations of domestic violence and misuse of funds highlight reputational concerns.
Lack of Board Communication: Shareholders left in the dark about investigations.
The shareholder vote on Gautam Singhania’s appointment represents a crucial juncture for Raymond Lifestyle’s governance journey. With sharp opposition from advisory firms and significant concerns raised, the decision could shape the future of the company’s leadership and its stock performance.
As Raymond Lifestyle navigates these challenges, its ability to address governance and transparency issues will be critical to regaining shareholder confidence and ensuring sustained growth.
IiAS is a leading independent proxy advisory firm in India, dedicated to promoting good corporate governance and empowering investors.1 The firm provides insightful analysis and voting recommendations on shareholder resolutions for a wide range of Indian listed companies.2
Key Services Offered by IiAS:
Voting Recommendations: IiAS analyzes shareholder resolutions and provides detailed voting recommendations to its clients, including institutional investors, mutual funds, and pension funds.
Corporate Governance Research: The firm conducts in-depth research on corporate governance practices of Indian companies, focusing on issues such as board composition, executive compensation, and related-party transactions.
ESG Analysis: IiAS assesses the Environmental, Social, and Governance (ESG) performance of companies, helping investors make informed decisions.
Proxy Solicitation: The firm assists companies in effectively communicating with shareholders and soliciting votes on important resolutions.
Investor Engagement: IiAS facilitates constructive dialogue between investors and company management, promoting transparency and accountability.
The Impact of IiAS
IiAS has played a significant role in improving corporate governance standards in India. By providing independent and unbiased analysis, the firm empowers investors to make informed decisions and hold companies accountable.8 Its recommendations have influenced voting behavior and led to positive changes in corporate practices.
Through its research and advocacy efforts, IiAS has contributed to a more transparent and responsible corporate India.