Corporate Governance

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Corporate governance of Hindustan Unilever


Hindustan Unilever Limited

By

Rohan Rishi

Shanti

Rahul

Vishweshwara rao

Ravindranath.S

(PGDM B)


History

Hindustan Unilever is India’s largest fast moving consumer goods company.

The Anglo company Unilever holds an majority stake of 52%.

HUL was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.


Headquarters and stakeholders

• HUL is headquartered in Mumbai.• It has a employee strength of 15000.• It indirectly contributes to employment of over

52000.• Hindustan Unilever's distribution covers over

1 million retail outlets across India directly and its products are available in over 6.3 million outlets in the country, nearly 80% of all retail outlets in India.

• It is estimated that 2 out of 3 Indians use HUL products.


Headquarters at Mumbai


Brands

• HUL has brands in almost all FMCG sectors like

• Food brands like 3 roses, Brooke bond Annapurna etc.

• Home care brands like Rin, Wheel, Domex etc.

• And several other personal, Water, nutrition and health related brands.


Segmental Revenue of HUL products


Empirical data

• Net Sales =17524 crores

• Net profit=2202 crores

• Earning per share=Rs.10.10

• Economic Value added=1791 crores


• As on the date of this report, the Board consists of 9 Directors comprising 4 Executive Directors, one Non-Executive Director and 4Independent Directors. The Chairman of the Board is a Non-Executive Director


Board of directors

Mr. Harish Manwani on the left is the Chairman and Mr. Nitin paranjpe is CEO and Managing Director.


Mr.R.Sridhar (Chief Financial officer).

Mr.Gopal Vittal, Executive Director

Mr. Pradeep Banerjee, Executive director

Mr.D.S.Parekh, Independent Director


Mr.A.Narayan, Independent director

Mr.S.Ramadorai, Independent director

Dr.R.A.Mashlekar, Independent director


Corporate Governance

• I believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or more petty than a business, however large, governed without honesty and without brotherhood.” -William Hesketh Lever


Company’s approach to CG

• Transparency and accountability are two basic tenets of corporate governance.

• To succeed, HUL believes that it requires the highest standards of corporate behavior towards everyone they work with, the communities they touch, and the environment on which they have an impact.

• They are having sustainable, profitable growth and creating long-term value for their shareholders, their people, and their business partners.


Appointment & Tenure

• The Directors of the Company are appointed by shareholders at the General Meetings.

• All Directors, except for the Managing Director, step down at the Annual General Meeting each year and, if eligible, offer themselves for re-election, in accordance with the Articles of Association of the Company.

• The Executive Directors on the Board serve in accordance with the terms of their contracts of service with the Company.


• The Company also follows the policy of having a ceiling of nine years on the term of office of Independent Directors after revised Clause 49 of Listing Agreement has come into effect in October 2004.

• As on the date of this report, the Board consists of 9 Directors comprising 4 Executive Directors, one Non-Executive Director and 4Independent Directors. The Chairman of the Board is a Non-Executive Director.

• Prof. C. K. Prahalad, an Independent Director of the Company, ceased to be a Director of the Company on 17th April, 2010, due to his sudden and untimely demise.


Board Meetings

• The agenda for the Board / Committee meetings is generally accompanied by background notes and other material information which is circulated to Directors in advance to facilitate discussion for taking an informed decision.

• During the financial year ended 31st March, 2010, six Board meetings were held.

• The maximum interval between any two meetings was well within the maximum allowed gap of four months.


Attendance of BOD

• Harish Manwani 6 of 6 • Nitin Paranjpe 6 of 6 • Sridhar Ramamurthy$ 4 of 4 • D. Sundaram$$ 2 of 2 • D. S. Parekh 6 of 6 • C. K. Prahalad 4 of 6 • A. Narayan 6 of 6 • S. Ramadorai 5 of 6 • R. A. Mashelkar 6 of 6 • Gopal Vittal 5 of 6 • Pradeep Banerjee* NA • Dhaval Buch** 6 of 6


Boards business

• Strategies for shaping of a portfolio.

• Corporate annual plan and operating frame work.

• Discussing quarterly performance reports.

• Declaration of dividend.

• Review of subsidiary companies.

• Risk evaluation and control.


Audit Committee

• The Audit Committee of the Company comprises of Non-Executive Independent Directors only.

• The Committee is headed by Mr. D.S. Parekh, and comprises of Mr. S. Ramadorai, Mr. A. Narayan and Dr. R. A. Mashelkar as its Members. Prof. C. K. Prahalad, who was a member of the Audit Committee during the financial year ended 31st March, 2010.

• The Audit Committee of the Company is entrusted with the responsibility to supervise the Company's internal control and financial reporting process.

• The Audit Committee met six times during the financial year ended 31st March, 2010 on 10th May, 2009, 3rd July, 2009, 28th July, 2009, 31st October, 2009, 15th December, 2009 and 26th January, 2010.


Remuneration and Compensation Committee

• The Remuneration and Compensation Committee comprises of Independent Directors -Mr. A. Narayan, Mr. S. Ramadorai and Dr. R. A. Mashelkar. Mr. A. Narayan is the Chairman of the Remuneration and Compensation Committee of the Company.

• In addition to the above Independent Directors, Mr. Harish Manwani and Mr. Nitin Paranjpe are members of the Compensation Committee.

• The Compensation Committee administers Stock Option Plan and Performance Share Plan of the Company and determines eligibility of employees for Stock Options.

• The Remuneration Committee deals with all elements of remuneration package of all the Executive Directors


Remuneration

• The Independent Directors are paid sitting fees of Rs. 20,000/- for attending every meeting of the Board or Committee thereof and commission on profits at the rate of Rs. 5 lakhs for each year.

• The Non-Executive Directors who continuously serve minimum three terms of three years each, are also entitled or a cash retirement commission of Rs. 10 lakhs at the time of retirement.


Remuneration for executive directors for financial year ended 31st march (in

Lakhs) Name Salary Bonus Contributio

n to PFPerquisites Total

Nitin Paranjpe

158.75 102.84 19.28 38.06 318.93

Sridhar Rammurthy

119.34 35 8 25 188

D.Sundaram

582.80 34 3.5 17 638

Gopal Vittal 170.30 41 11 24 248

Dhaval Buch

99.68 28 8 39 176


Shareholders / Investors Grievance Committee

• The Shareholders/Investors Grievance committee comprises of Mr. A. Narayan as Chairman with Mr. Nitin Paranjpe and Mr. Sridhar Ramamurthy as members of the Committee.

• Mr. D. Sundaram ceased to be a member of the Committee w.e.f. 3rd July, 2009.

• The Committee is entrusted with the responsibility to address the shareholders and investors complaints with respect to transfer of shares, non-receipt of annual report, non-receipt of declared dividends, etc. and ensures an expeditious share transfer process in line with the proceedings of the Share Transfer Committee.

• The Committee also evaluates performance and service standards of the Registrar and Share Transfer Agent of the Company, and also provides continuous guidance to improve the service levels for investors.


Share Transfer / Transmission Committee

• The Share Transfer / Transmission Committee is formed exclusively to look into share transfer and related applications received from shareholders, with a view to accelerate the transfer procedures.

• The Committee comprises of three Directors of the Board and it considers application for transfer of the Company's shares, for splitting up, for consolidating share certificates and to comply with provisions in this regard.

• The Committee is authorized to order for cancellation of any share certificate and to sign, seal or issue any new share certificate either as a result of transfer, consolidation, splitting or in lieu of share certificates lost, defaced or destroyed.


Committee for Allotment of Shares Under ESOPs

• The Committee for Allotment of Shares under ESOPs has been constituted to expedite the process of allotment and issue of eligible shares to the employees of the Company under the Stock Option Plan of the Company.

• The ESOP Committee comprises of three directors of the Board. The Committee is specially constituted for approval, issue and allotment of shares under ESOPs.

• The Committee is fully authorized to take necessary steps to give effect to sale and transfer of the ownership rights, interest and title in the said property, for and on behalf of the Company.


COMPANY POLICIES• Preventing Conflict of Interests

• Code of Business Principles

• UN Global Compact

• Whistle Blower Policy

• Share Dealing Code• AFFIRMATION AND DISCLOSURE

• COMPLIANCE WITH THE GOVERNANCE FRAMEWORK


CSR of Hindustan Unilever

• Greening Barriers

• SHAKTI - Changing Lives in Rural India

• Health & Hygiene Education

• Economic Empowerment of Women

• Special Education & Rehabilitation


Awards

• HUL is one of the country's largest exporters; it has been recognized as a Golden Super Star Trading House by the Government of India.

• In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25 years by Business world, one of India’s leading business magazines. The rating was based on a compilation of the magazine's annual survey of India’s most reputed companies over the past 25 years.

• HUL was one of the eight Indian companies to be featured on the Forbes list of World’s Most Reputed companies in 2007.

• HUL was ranked 39th in The Brand Trust Report published by Trust Research Advisory in 2011.


Thank You

Corporate Governance

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