The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 50 lakh on the National Stock Exchange (NSE) for the compensation paid to former MD and CEO Chitra Ramkrishna.
The exchange had paid Ramkrishna Rs 44 crore for her three-year tenure and a further Rs 23 crore as total remuneration in the last eight months of her tenure. Sebi got a letter from the finance ministry drawing its attention to the high compensation paid during the last eight months of the tenure.
Ramkrishna had resigned from the NSE in December 2016 amid allegation of unfair practices at the exchange’s co-location facility.
Following the ministry’s letter, Sebi started an examination and sought clarification from the exchange. Upon examination, the regulator found that the NSE had permitted Ramkrishna leave encashment for 528 days on cessation of her service. According to its policy, the NSE allows leave encashment of up to 360 days for an employee. Sebi directed the NSE to provide the applicable provisions under which the additional leave encashment of 168 days was approved.
The exchange submitted its policy allowed senior staffers to encash their leave without limit at the time of retirement or resignation. However, this was done by way of a policy change, which even though was approved by the NSE’s board and the compensation committee, the implementation was done without the requisite prior approval of the regulator.