Page 47 - The Insurance Times August 2024

FEATURE

Care contests IRDAI's power to regulate

stock options

T he controversy over Care Health Insurance Ltd's Care apologised to Irdai for creating the "confusion" and
award of hefty stock options to its chairperson
asked the regulator to consider the fresh grant of Esops to
Rashmi Saluja has taken a turn that may delay the
Saluja on its "own individual merits".
billionaire Burman family's bid to take over the
company's parent entity, Religare Enterprises Ltd. Queries sent to Care Health, Saluja, Religare, Irdai and the
Burman family remained unanswered. Care Health had in
In a move that may spark a fresh legal tussle, Care Health December 2021 sought Irdai's approval to grant 27.7 million
has argued against the insurance regulator's powers over stock options to Saluja. The regulator rejected the proposal
stock options granted to anyone in an Indian insurance in May 2022, arguing that a non-executive director was not
company. qualified to earn a remuneration of more than Rs. 10 lakh.
Recently, Care Health wrote to the Insurance Regulatory and Care Health later approved 22.7 million stock options to Saluja
Development Authority of India that no action should be taken at Rs. 45.32 per share. That same year, it launched a rights
against the company for awarding equity stock options (Esops) issue of shares at Rs. 110 per share, basis which Saluja's shares
to Saluja despite the regulator rejecting its proposal. via stock options are valued at about Rs. 250 crore now.
Irdai's approval was not "not required" for granting the Care Health argued in its reply to Irdai's show cause notice
Esops, Care Health said in its letter. The letter was in that since the stock options were issued to Saluja as an
response to a 14 June show-cause notice by Irdai asking why employee of Religare Enterprises, and not in her capacity
Care Health should not be penalised for granting Esops to as the non-executive chairperson of Care Health, Irdai's
Saluja despite the regulator's rejection. approval was not required.
Saluja's stock options from Care Health, issued in 2022, are Care Health is worth at least Rs. 10,000 crore, based on the
worth at least Rs. 250 crore, as per the last valuation of price of its shares at Rs. 110 apiece in its last rights issue in
the company's shares. 2022. The company, India's second-largest standalone health
The Burman family, which owns over 25% in Religare, has insurance firm, underwrote a premium of Rs. 6,864.5 crore in
alleged in a complaint to Indian financial regulators that fiscal year 2023-24, recording a 33.51% year-on-year growth.
Saluja was drawing an excessive remuneration worth over Religare trading on NSE at Rs. 251.50 per share.
Rs. 450 crore by granting herself bulky stock options from
Care Health and Religare, both of which are chaired by her. Care Health revealed in its latest letter to Irdai that Narayan
had in his legal opinion on 23 May, 2022 said neither India's
In its reply to Irdai's notice, Care Health revealed for the company law nor its guidelines on remuneration to non-
first time that it had cancelled all prior stock options of Saluja executive directors made any distinction between a
after receiving the regulator's letter of rejection.
chairman and a non-executive chairman.
Care Health said it had subsequently issued fresh stock
"Accordingly, Narayan was of the view that no approval or
options to Saluja after obtaining advice from former Irdai permission of Irdai is required for the grant of Esops to Dr.
chairman J. Hari Narayan and senior advocate Arvind P. Saluja," Care Health said in its letter.
Datar. Only then did it issue fresh stock options, which
cannot be construed as contravening any regulation or letter Care Health added that senior advocate Datar had also opined
of Irdai, Care Health argued. that since the company had issued Esops to Saluja in her
capacity as the executive director and chairperson of Religare,
The insurer said confusion regarding Saluja's stock options
was created because the regulator was allegedly under the and not in her capacity as non-executive chairperson of Care
impression that the same Esops for which Care had sought Health, it was not required to seek Irdai's approval.
Irdai's permission in December 2021 were issued to Saluja Both Narayan and Datar declined to comment for this
despite the rejection. report. (Source: Mint)

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