Shareholders grill boards on sexual harassment, pay disparity, ESG

“In the past, we have not seen investors ask too many questions or focus on gender," said Amit Tandon, founder and managing director at Institutional Investor Advisory Services (IiAS). “That they are doing so is a welcome sign and reflects a changing mindset. We can expect progress on gender related issues—from hiring to pay parity—now that this is both on the regulators’ and the fund managers’ agenda."

Tandon's views come on the back of shareholders asking India’s largest IT firm Tata Consultancy Services (TCS) about the rise in harassment cases (110 in FY24 and 49 in FY23), and the difference in median salaries of men and women employees ( ₹14.8 lakh versus ₹10.4 lakh) who are not on the board or are not key managerial personnel, during the firm's annual general meeting (AGM) last Friday.

Also read: TCS faces questions on harassment, pay disparity

Praveen Purohit, deputy chief human resources officer at Vedanta Group, said shareholders are looking at gender diversity and the number of women in senior positions closely. The focus is now beyond P&L and capex and, moving on, leadership must be prepared to be asked questions on people agenda in AGMs.

Shriram Subramanian, founder and MD, InGovern Research Services Pvt. Ltd, a Bengaluru-based independent corporate governance research and advisory firm, has seen the change in shareholders over the past decade and more. “Instead of asking about corporate restructuring or impact of mergers and acquisitions, shareholders are monitoring compensation of CEOs and what a firm has done to up its environmental, social, and governance (ESG) numbers," he said.

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For instance, last week, in a rare episode, more than three-fourth of Wipro’s public shareholders voted against awarding the IT firm’s former CEO Thierry Delaporte $4.33 million ( ₹36.15 crore) in cash severance.

Gender to the fore

Gender diversity is one of the top agenda items for senior management nowadays, and many CXOs are getting trained on how to work with the rise in harassment cases.

“The senior leaders are often unaware of POSH (prevention of sexual harassment) guidelines," said Kanti Joshi, founder of consulting firm SASHA (Support Against Sexual Harassment). “But when the number of cases getting flagged are increasing and companies have lost critical talent because of harassment cases, the management has to take notice."

Also read: India Inc sees increase in overall percentage of women in senior roles

Joshi’s team had 405 inquiry and conciliation cases in 2023 where they were called by companies to train leaders and, in some cases, investigate harassment allegations.

“This year has already seen a large number of cases registered and will cross last year's numbers," Joshi said. “Senior management of firms want to get trained on how the first respondent or an observer in a harassment case should react or what are the different conflicts of interest in a harassment allegation between a senior and subordinate, etc."

The higher number of men in boards compared to women also has a role to play. “Shareholders are asking questions because the reputation of a firm gets impacted and there is money on the line," said Mitali Nikore, an economist at Nikore Associates, an economic research firm. “In our studies, men perceive harassment as one of the biggest threats to women in the workplace and that is why they ask for these training programs more."

Nikore’s studies have shown that women perceive the lack of acknowledgement and fewer responsibilities given as the biggest hurdle.

Also read: IT firms must renew efforts to boost women's representation, experts say

According to a study by Centre for Economic Data & Analysis (CEDA), of the 300 listed companies on the National Stock Exchange (NSE), only 81 reported any POSH cases in FY23, while most of the set stated that they had zero cases. A few did not disclose.

In FY 2013-14, the first year when the POSH Act came into force, the companies in focus together reported 161 cases, which increased to 767 in FY 2021-22, and then jumped 51.2% in the subsequent year to 1,160.

Shareholders are asking for more data from their companies. "Management cannot hope that when they release data, the shareholders will not read and question them about it," said J.N. Gupta, founder and MD of Stakeholders Empowerment Services (SES), a not-for-profit proxy advisory firm.