US advisory co votes to oust Bina Modi from board of Godfrey Phillips, backs son Samir

In a fresh twist to the ongoing boardroom battle at Godfrey Phillips India, Glass Lewis, a leading US proxy advisory firm, advised the company's shareholders to vote against Bina Modi's reappointment as the chairperson and managing director at an annual general meeting slated for September 6.

Glass Lewis also advised shareholders to vote against Samir Modi's ouster from the company's board, according to a report by the firm, seen by ET.

Bina Modi, 79, is the mother of Samir Modi. Her reappointment proposal will require the approval of 75% of shareholders because of her age. She is entitled to get 5% of the company's net profits for each financial year as commission.

"Having considered the overall structure of the remuneration plan, we bring to shareholder attention the following concern: No defined performance conditions for the payment of commission. Appointment is as combined chairman and managing director," Glass Lewis said in its report. "Given our concerns, we do not believe shareholders should support the proposed appointment and remuneration of this executive at this time," it said.

Tobacco maker Godfrey Phillips India is 25% owned by US-based Phillip Morris Inc. The Modi family owns a 47% stake in the publicly-listed company.

The report also noted that there was no concrete reason for Samir Modi's ouster from the company.

"There have been disputes within the promoter group, which involves Ms. Bina Modi and her children. We have observed that there has been a recurring pattern of removing directors that are in dispute or had raised governance issues with the promoter group or with Ms. 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 which require their decisions," Glass Lewis said.

The firm noted that while it was within the remit of the board, and the nomination and remuneration committee (NRC) to deliberate upon the appointment and termination of directors, there was not enough disclosure to show why Samir was removed by the NRC.

Samir has alleged in a Delhi court that certain board members conspired to have him assaulted at a board meeting on 30 May. Those directors have filed defamation charges against those claims.

"Although the board has concluded that Mr. Modi's actions and performance constitute misconduct, there has been no public disclosure from the Company to substantiate any of these claims. The only issue highlighted in the Notice of the Meeting that aligns with recent public disclosures is the allegation made by Mr. Modi against directors concerning the recent assault. In any case, even if the NRC's deliberation on Mr. Modi has merit, we believe shareholders still have a right to make a determination on his candidacy as a continuing director, and the absence of such a choice sends a negative signal to shareholders," Glass Lewis said.