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Proxy advisory firm InGovern Research has raised a red flag against Religare Enterprises alleging “vested interest” of its Chairman Rashmi Saluja due to excessive remuneration as well as regulatory breaches.

In the last 3-4 years, the total valuation of options of Religare Enterprises Ltd (REL) and its subsidiary Care Health Insurance Limited (CARE) to Saluja is over Rs 480 crore, which is in addition to compensation paid at REL, said a report from InGovern.

Shares of CARE were issued to Saluja through ESOPs, despite rejection from IRDAI (Insurance Regulatory and Development Authority of India) and no approval from the shareholders of REL was also taken for that, said InGovern in its report.

Moreover, there was “no disclosure of CARE ESOPs in REL annual report as part of Saluja’s compensation,” it added.

Refuting the charges, Care Health Insurance independent director Pratap Venugopal said, “ESOPs were granted to Saluja only in her capacity as employee/Executive Director and Chairperson of REL. The ESOPs were not to be granted to her in her capacity as Non-Executive Chairperson of Care Health Insurance.”

The IRDAI (Remuneration of Non-Executive Directors of Private Sector Insurers) Guidelines 2016 (“Guidelines”) does not require any permission from the authority for the grant of the specified ESOPs to Rashmi Saluja since the remuneration to the Chairman of the Board can be decided by the Board of Directors, he said.

The proxy advisory firm suggested, “detailed investigations by IRDAI and SEBI needed on remuneration, conflicts of interest”.

A total of 1.05 crore options of REL have been granted to Saluja since her appointment in February 2020 as Executive Chairperson of the financial services holding company, which is valued over Rs 230 crore presently.

While in CARE, where Saluja is a Non-Executive Chairperson has “excessive grants of stock options,” which are valued at over Rs 250 crore, it added.

In CARE, ESOPs of 2.27 crore in number were given to Saluja in January 2022, which was “in contravention of IRDAI regulations” which contemplate the issuance of stock options only to Chief Executive Officers, Whole-time Directors and Managing Directors.

These “were issued without waiting for the outcome of IRDAI approval sought for such issue”.

The insurance sector regulator had rejected the issue of ESOPs to Saluja as it was in breach of the regulatory limit of profit-related commission that can be paid up to Rs 10 lakh per annum to Non-Executive Directors of private sector insurers, InGovern Research report said.

“IRDAI also pointed out that the remuneration of Saluja post the ESOP issue would not be in line with remuneration of other NEDs of CARE,” said InGovern.

Moreover, ESOPs were at a deep discount with exercise price of Rs 45.32 per share of CARE.

With the share options, Saluja owns 2.50% of the share capital of CARE.

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While in REL, frequent resolutions have been tabled seeking shareholders’ approval to grant ESOPs and revise her remuneration within a very short span of time of three years.

Earlier, Burman family, which has made an open offer for REL, approached SEBI through its entities, seeking a probe into the sale of shares by Saluja on September 20, 2023, when they informed about the open offer.

Religare, however, refuted the allegation of Saluja selling shares after being made aware of the open offer, saying the chairperson had sold ESOPs after a long process that was triggered several days prior to the September 20 meeting.

Burman family entities, which now collectively hold 21.24% in REL, have written to the Securities Exchange Board of India (SEBI) regarding this also.

Burman family, a promoter of Dabur India and other entities such as Eveready Industries, through its entities, had in September announced a Rs 2,116 crore open offer to the shareholders of REL to acquire up to 26 per cent stake in the company.

Earlier, the independent directors of the REL raised red flags alleging fraud and other breaches by Burman family entities.