Mumbai, July 6: Proxy advisory firm Institutional Investor Advisory Services (IiAS) has recommended that ITC shareholders vote against a company proposal to pay a monthly salary of Rs 1 crore to non-executive chairman Y. C. Deveshwar.

At ITC's 106th annual general meeting (AGM) on July 28, one of the resolutions to be put up for shareholder approval relates to the remuneration and benefits payable to Deveshwar.

At the AGM held in July last year, the shareholders had approved the appointment of Deveshwar as non-executive director, not liable to retire by rotation, and chairman for a period of three years with effect from February 5.

The shareholders also approved that apart from the salary applicable for non-executive directors, Deveshwar will be entitled to "additional remuneration" and benefits as may be determined by the company's board, subject to their approval.

ITC said in the AGM notice that Deveshwar, at the request of the nomination & compensation committee and the board, had agreed to continue as chairman in non-executive capacity and also play the role of a mentor to the new management, given the need for an orderly transition in a company of ITC's size and complexity.

The additional remuneration for Deveshwar with effect from February 5 includes a monthly remuneration of Rs 1 crore, rent-free furnished accommodation, medical expenses for him and his spouse and a chauffeur-driven company car for personal use.

He will also be entitled to a commission of Rs 30-60 lakh as sitting fees for attending the meetings of the board and the committees of the company for each financial year.

"IiAS believes the board structure, and the proposed remuneration, signal Yogi Deveshwar's continuing control over the company, which undermines the recently appointed CEO Sanjiv Puri. Once Yogi Deveshwar has stepped down, he must let go," the proxy advisory firm said in the note.

According to the board's proposal, Puri will get a remuneration of Rs 12 lakh a month as basic/consolidated salary, perquisites not exceeding Rs 15 lakh per annum and a performance bonus of not more than 300 per cent of the basic, consolidated salary, payable annually.

Acknowledging the fact that Deveshwar's tenure at ITC has created tremendous value for shareholders, IiAS said the board's recent decision to pay a monthly remuneration to Deveshwar undermines the position and responsibilities of the CEO.

Deveshwar's aggregate pay of Rs 12.7 crore is higher than 90 per cent of the CEOs and wholetime directors of S&P BSE 500 companies.

"The need for Deveshwar to continue after having relented his executive position raises concerns on whether he provided the appropriate level of leadership development while he was in the driver's seat," IiAS added.