Cairn shareholders attack top company salaries

Vol 18, PW 24 (30 Jul 15) People & Policy

Angry shareholders lambasted Cairn India bosses with accusations of "poor corporate governance" and excessive pay for the company's top executives despite the company's disappointing performance, at the company's ninth annual shareholders meeting in Mumbai on July 21.

"We're saddened by questions on corporate governance," responded Cairn India chairman Navin Agarwal, brother of Anil Agarwal, chairman of (Cairn owner) Vedanta Resources, "We take pride in our track-record." One shareholder, announced only as Mr Bapat, a chartered accountant, set the tone when he said despite a 64% fall in post-tax profit in 2014-15 "chief financial officer (Sudhir Mathur) received a 24% pay rise and CEO (Mayank Ashar) received a Rs92 lakh ($144,000) performance bonus." Bapat demanded details of Ashar's bonus and blamed "poor governance" for the steep fall in Cairn's share price to Rs165/share ($2.59), almost equal to the 2006 stock exchange launch price of Rs160/share ($2.50). Vedanta Resources bought a controlling stake in Cairn India from UK-based Cairn Energy in 2011 for Rs350/share ($5.50).

Bapat further criticised Cairn India's $1.2bn two-year unsecured loan last year to a Vedanta group company at a 'subsidised rate of' LIBOR+3% when it could have earned more elsewhere. He said between 2006 and 2011 Cairn reported a profit of Rs8000cr ($1.3bn) of which 30% should have come to minority shareholders and the rest to Cairn Energy.

But Cairn Energy, said Bapat, walked away with Rs25,000cr ($3.9bn).