How Religare chief got Care Esops after Irdai's NO

Care Health Insurance is seen as the crown jewel of Religare, which has attracted takeover interest from the Burman family office of Dabur’s founders. (Bloomberg)
Care Health Insurance is seen as the crown jewel of Religare, which has attracted takeover interest from the Burman family office of Dabur’s founders. (Bloomberg)


  • InGovern Research Services said Care Health Insurance issued Esops to Rashmi Saluja, executive chairperson of its parent Religare Enterprises Ltd, despite the insurance regulator specifically rejecting the proposal

MUMBAI : Care Health Insurance Pvt. Ltd issued employee stock options (Esops) to Rashmi Saluja, executive chairperson of its parent Religare Enterprises Ltd (REL), despite the insurance regulator specifically rejecting the proposal, proxy advisor InGovern Research Services said. After the rejection, the Care board claimed that insurance regulator’s approval was not really required for granting the options.

Care Health Insurance is seen as the crown jewel of Religare, which has attracted takeover interest from the Burman family office of FMCG company Dabur’s founders. After the Burmans’ proposal met resistance, Saluja’s remuneration became a bone of contention.

According to Religare, Saluja was paid 43 crore in 2022-23, while the Burmans told The Economic Times last week that it was above 150 crore. Wednesday’s InGovern report said Saluja stood to gain around 250 crore solely from Care Esops, and that this had not been specifically declared to Religare shareholders.

Care Health Insurance differed. Pratap Venugopal, an additional non-executive independent director at Care Health Insurance, who spoke on behalf of the Care board, said Saluja was granted 22.7 million options at 45.32 each; however, this was subject to several terms and conditions. The options did not require regulatory approval and none of them had yet vested, he added.

According to Venugopal, these options will vest in multiple stages—33% after one year of grant, and on condition that Care raise 250 crore primary capital; another 33.33% two years from the date of grant, and two years from the vesting commencement date; and the last 33.34% five years from date of options grant, or a Care IPO, whichever is earlier.

“The remuneration includes perquisite value of Esops exercised only, and not of unexercised Esops, as the gain (if any) accrues only at the time of exercise of Esops," Venugopal said.

Venugopal also said these options were allotted to Saluja in her capacity as a Religare employee, and not as a Care Health Insurance employee, and therefore, the grant of options did not require the insurance regulator’s sanction.

A 4 June, 2022 Care Health AGM notice said that in May 2022, the Insurance Regulatory Development Authority (Irdai) had denied approval for Saluja’s options under the Remuneration of Non Executive Directors of Private Sector Insurers Guidelines, which permit payment of only profit-related commissions of 10 lakh per annum for non-executive directors of private sector insurers. Irdai’s observation was that the role of Saluja as non-executive chairperson was equivalent to a non-executive director.

Subsequently, the Care board told shareholders that Irdai approval was not required. “The initial request made to Irdai seeking grant of Esops to Dr Rashmi Saluja was not required to be made at all, as she was being granted Esops in her capacity of an employee of REL (as clearly specified in approval granted by Kedaara and Trishikhar (a Kedaara vehicle)".

Kedaara had acquired 6.39% in Care Health Insurance in 2020 valuing the insurer at 4,183 crore at the time.

Care said that to attain clarity, “legal opinions were sought for and obtained from two renowned individuals who possess in-depth knowledge and experience in the relevant regulatory and company law aspects".

Care Healthcare shareholders then approved the Esops. On Wednesday, Venugopal also cited a Irdai 2016 notification which states “that for the chairman of the board, remuneration may be decided by the board of directors of the respective company." Irdai chairperson Debasish Panda did not immediately respond to a request for comment.

Ritesh Kumar, partner at consultancy firm BDO said that executive compensation is regulated by insurance regulators to protect policyholder interests. “It’s not uncommon in India for regulators to have oversight of the executive compensation. From a risk-reward point of view, the regulators have had a view that excessive incentive pay purportedly encourages excessive risk-taking by executives. Regulating executive pay ensures transparency in the insurance sector and discipline in the spending to protect the interests of the policy holders," he said.

Kumar said Care Healthcare has taking a different reading on the compensation matter compared to Irdai.

“Care has adopted a very defensible technical view on the matter qua executive remuneration. It appears that Irdai is looking at the substance of the arrangement vis-a-vis the roles and of the person in question, and in doing so, has equated the role of the person to that of a director. Essentially, one is looking at form and the other claims substance is different from the form," Kumar said.

Meanwhile, the question of whether Saluja’s options grant required Religare shareholder approval remains. Religare owns 67% of Care Health Insurance. In response to a question on whether Care Esops grants were explicitly approved by Religare shareholders, a Religare spokesperson messaged over WhatsApp, “Dr Rashmi Saluja’s perquisite for CHIL (care Health Insurance Ltd) Esops is part of remuneration approved by REL shareholders."

InGovern has argued that Care options were not explicitly declared to REL shareholders and no approval was sought.

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