Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
In a rare show of activism, the shareholders of popular film and television production company, Balaji Telefilms, recently scuttled the proposal to pay salary to the firm’s Managing Director Shobha Kapoor and its Joint Managing Director Ekta Kapoor, according to the company filings. The board of Balaji Telefilms had approved a basic salary of Rs 2.40 crore each along with perquisites for Ekta and Sobha Kapoor starting from November 10, according to a report in BloombergQuint. A very small percentage of shareholders participated in the voting and rejected the resolution for salary to top executives, the company revealed in its fillings.
In an unusual voting pattern, the promoters did not vote, neither did the institutional shareholders. A fraction of the total shares got voted—just 0.21%, BloombergQuint reported quoting an official of proxy firm Institutional Investors Advisory Services.
Concerns over continued losses
The popular TV and film production company has been reporting losses for the past seven years. The loss widened in the pandemic-marred FY21. In 2020, Ekta Kapoor had forfeited her salary of Rs 2.4 crore to provide financial aid to employees.
The promoters own 34.34% of Balaji Telefilms while public shareholders own 65.6% as of June, according to disclosures, the report added. Among public shareholders, foreign portfolio investors hold 18.43%, retail shareholders own 12% and Reliance Industries Ltd has a 24.9% stake. The FPIs and RIL did not vote on the two resolutions that failed. In fact, they didn’t vote on any of the six resolutions at the Annual General Meeting.
Growing ‘shareholder activism’
The special resolutions, regarding the remuneration of the firm’s Managing Director and Joint Managing Director, require at least 75% of the vote as per the existing norms. However, the growing phenomenon of ‘shareholder activism’ is said to have been behind the nixing of annual packages to the two members of the Kapoor family, which have been running Balaji Telefilms since 1994.
According to BloombergQuint, this show of ‘shareholder activism’ is recently growing in India as large institutional investors push for it by voting against resolutions related to executive pay to the reappointment of directors.
Last month the shareholders of Eicher Motors Ltd rejected the proposal for reappointment of Siddhartha Lal as managing director for next five years over increased compensation.
In 2021, several companies’ employee stock option programs have been vetoed by institutional shareholders, the BQ report added.