Naina Lal Kidwai was left with no choice but to give up or waive her compensation of about $250,000 from Nestle SA,the $93-billion global food giant,on whose board she is a non-executive director since April 2006 so that she could be appointed as the chief executive officer of HSBC India.
When Kidwais application for continuing as the HSBC India CEO came up for annual review with the Reserve Bank of India in 2008-end,the Indian banking regulator issued a query about her compensation from Nestle. The RBI had information that she was a beneficiary of shares or stock options besides fees from her non-executive board membership at Nestle SA.
Kidwai,51,was elected to the board of Nestle on April 6,2006 for a 5-year term. The next month,she took over as HSBC India chief after Niall Booker stepped down. HSBC had then said the appointment met the exacting standards of corporate governance and was in line with global practice where bankers sat on the boards of international companies.
Story continues below this ad
Sources in RBI said Kidwai had committed to the central bank that she would only accept an honorarium from Nestle when it had allowed her to be a non-executive board member in Nestle. The central bank had,in August 2006,rejected her appointment as HSBC CEO citing conflict of interest between her role as the head of a foreign bank in India and her board membership in a company that could be a prospective borrower.
Subsequently though,RBI relented and approved her application in January 2007,perhaps acknowledging that an invitation to a global companys board was an acknowledgement of Indian managerial talent. The central bank,however,said Nestle must not have a relationship with HSBC and also extracted a commitment that Kidwai would not receive anything more than an honorarium from the global food major.
The RBI query last November followed information that Kidwai had received shares or stock options in Nestle in addition to cash fees. The 2007 Financial Statements of Nestle SA show that Kidwai held 669 shares including those subject to a two-year blocking period as on December 31,2007.
Her total remuneration including cash and discounted value of shares for the year-ending December 31,2007 was shown to be less than $250,000 (Swiss Franc 279,662 to be precise). In the footnote though,the company clarified that Kidwai waived her compensation (cash fees and shares) as per the requirements of the Reserve Bank of India.
Story continues below this ad
When contacted,Kidwai told The Indian Express that she had waived the shares and fees which Nestle contributed towards charity. The remuneration included Swiss Franc 155,000 in cash and a discounted value of shares of Swiss Franc 124,662.
The cash amount included an expense allowance of Swiss Franc 15,000. The shares,allotted as part of the Board membership and the Committee fees,were valued at the ex-dividend closing price of Nestle shares at the dividend payment date,discounted by 11 per cent to account for the blocking restriction of two years.
3 min read
