Reliance Industries Ltd is seeking approval from shareholders to extend Mukesh Ambani’s tenure as the Chairman and Managing Director of the company until 2029. In a remarkable move, Ambani has elected not to receive any salary during this period.
Ambani, who is currently 66 years old, will surpass the prescribed age limit of 70 years for the chief executive of the company. Therefore, his continuation as Chairman beyond that age requires a special resolution to be approved by shareholders. Reliance has submitted a special resolution, seeking shareholders’ consent to appoint Ambani as the head of the company until April 2029.
Mukesh Ambani has been a part of Reliance Industries since 1977. Following the passing of his father and group patriarch, Dhirubhai Ambani, in July 2002, Mukesh Ambani assumed the position of Chairman of the company.
Reliance seeks shareholders’ consent
In the special resolution put forth to shareholders, Reliance stated that its Board of Directors approved the reappointment of Mukesh D. Ambani as Managing Director for a duration of 5 years starting from the expiration of his current term, i.e., April 19, 2024.
According to the information provided, Mukesh Ambani had set a limit of Rs 15 crore as his annual remuneration from the financial year 2008-09 until FY20 (April 2008 to March 2020). Due to the impact of the COVID-19 pandemic, he decided to forgo his salary from FY21 until the company and its businesses fully recovered to their earnings potential. As a result, he did not receive any salary or profit-based commission for three consecutive years, starting from FY21.
No salary or profit-based commission for Ambani
Upon Ambani’s request, the Board has recommended that no salary or profit-based commission be paid to him for the proposed term from April 19, 2024, until April 18, 2029. However, he will be entitled to reimbursement of expenses incurred for business trips, including expenses for spouse and attendants, as well as the provision of company cars for business use. Additionally, communication expenses at his residence will be reimbursed, and the company will arrange for his and his family’s security without considering it as a perquisite.
Reliance stated that Mukesh Ambani will reach the age of 70 on April 19, 2027. Given the significant growth of the company under his leadership, it is in the company’s best interest for him to continue leading even after he turns 70. Therefore, shareholder approval is being sought to pass the proposed resolution for his 5-year term as a special resolution.
Ambani’s eligibility for the position
As per the statement, Ambani meets all the conditions specified in the company law and has not been disqualified from being appointed as a director. Therefore, he is fully eligible for the position and does not have any disqualifications that would hinder his appointment.
“In terms of Article 86(1) of the Articles of Association of the company, Shri Mukesh D. Ambani is not liable to retire by rotation. Regulation 17(1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that in such cases, the continuation of the director shall be subject to the approval of the shareholders in a general meeting once every five years,” it further stated. His reappointment until April 18, 2029, is being sought.
Ambani has voluntarily chosen to forgo his salary from his flagship firm for the third consecutive year, as the business and economy were severely impacted by the COVID-19 pandemic. In the latest annual report, Reliance stated that Ambani’s remuneration for the financial year 2022-23 was “nil”.
Mukesh Ambani’s voluntary salary forfeiture
In June 2020, Mukesh Ambani voluntarily decided not to receive a salary for the financial year 2020-21. This decision was made in response to the significant impact of the COVID-19 outbreak on India’s society, economy, and industry. By forgoing his salary, Ambani aimed to show solidarity and support during these challenging times. He continued to forgo his salary in 2021-22 and now in 2022-23 as well.
During these three years, Ambani did not receive any allowances, perquisites, retiral benefits, commission, or stock options from Reliance Industries for his role as Chairman and Managing Director. His voluntary decision to forgo these benefits exemplifies his dedication and commitment to the company’s welfare and financial stability.
Prior to this, the Chairman and Managing Director had his salary capped at Rs 15 crore since 2008-09 to set an example of moderation in managerial compensation levels. The salary remained at Rs 15 crore in 2019-20, the same as the previous 11 years. Ambani has forgone over Rs 24 crore per annum by keeping his salary, perquisites, allowances, and commission together at Rs 15 crore since 2008-09.
Nita Ambani’s remuneration
The remuneration of Ambani’s cousins, Nikhil and Hital Meswani, rose to Rs 25 crore each, including a commission of Rs 17.28 crore (unchanged from the previous fiscal year). Executive Directors P M S Prasad and Pawan Kumar Kapil also saw an increase in their remuneration.
While Prasad received Rs 13.50 crore in 2022-23, including performance-linked incentives for 2021-22, Kapil’s remuneration increased from Rs 4.22 crore in 2021-22 to Rs 4.40 crore. Kapil completed his 5-year term on May 15, 2023, and has since ceased to be a director of the company.
Ambani’s wife, Nita, a non-executive director on the company’s board, earned a sitting fee of Rs 6 lakh (up from Rs 5 lakh in 2021-22) and a commission of Rs 2 crore for 2022-23 (unchanged from the previous fiscal). Other non-executive directors, including Dipak C Jain, Raghunath A Mashelkar, Adil Zainulbhai, Raminder Singh Gujral, Shumeet Banerji, former SBI chairperson Arundhati Bhattacharya, former CVC K V Chowdary, and Saudi sovereign wealth fund nominee Yasir Othman H Al Rumayyan, received a commission and sitting fee of Rs 2 crore each.
All the independent directors, including K V Kamath, who was appointed to the Reliance board in January 2023, also received a commission and sitting fee. Kamath was paid a sitting fee of Rs 3 lakh and a commission of Rs 39 lakh.
(With PTI inputs)
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
