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RELAXO FOOTWEARS LIMITED Aggarwal City Square, Plot No -10, Manglam Place, District Centre, Sector-3 Rohini, Delhi -110085 Phone – 011-46800500, FAX – 011-46800598, Email – [email protected], Website - www.relaxofootwear.com, CIN – L74899DL1984PLC019097 www.relaxofootwear.com ww.relaxofootwear.com www.relaxofootwear.com

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NOMINATION AND REMUNERATION POLICY

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NOMINATION AND REMUNERATION POLICY 1

NOMINATION AND REMUNERATION POLICY

Document Title Nomination & Remuneration Policy

Owner Finance

Document Version Control Version 2

Distribution Electronic / Hard Copies / Upload on website

Date of first approval 9th August , 2014

Amended on 2nd February,2019

Issue Date 2nd February,2019

Effective Date 2nd February,2019


CONTENTS

1. INTRODUCTION ........................................................................................................... 3

2. DEFINITIONS ............................................................................................................... 3

3. OBJECTIVE .................................................................................................................. 4

4. CONSTITUTION OF NRC COMMITTEE....................................................................... 5

5. APPOINTMENT/ELIGIBILITY CRITERIA ..................................................................... 6

6. DIVERSITY ................................................................................................................... 7

7. TENURE OF DIRECTORS ........................................................................................... 8

8. EVALUATION CRITERIA AND MECHANISM .............................................................. 8

9. REMOVAL .................................................................................................................... 8

10. RETIREMENT ............................................................................................................... 9

11. DUTIES OF COMMITTEE IN RELATION TO NOMINATION MATTERS ...................... 9

12. GUIDING PRINCIPLES .............................................................................................. 10

13. REMUNERATION TO DIRECTORS, KMP and SM .................................................... 11

14. DUTIES OF COMMITTEE IN RELATION TO REMUNERATION MATTERS.............. 11

15. REVIEW AND AMENDMENT ..................................................................................... 12

16. DISCLAIMER………………………………………………………………………………….12


1. INTRODUCTION

1.1 The Company strives that its Nomination & Remuneration Policy should attract, motivate, improve productivity and retain manpower, by creating a congenial work environment, encouraging initiatives, personal growth and team work, and inculcating a sense of belonging and involvement, besides offering appropriate remuneration packages and benefits.

1.2 In pursuance of the Company’s policy to consider human resources as its

invaluable assets, to pay equitable remuneration to all Directors, Key Managerial Personnel and Employees of the company, to harmonize the aspirations of human resources consistent with the goals of the company and in terms of the provisions of Section 178 of the Companies Act, 2013 (“CA 2013”), this policy on nomination and remuneration of Directors, Key Managerial Personnel and Senior Management has been formulated by the Nomination and Remuneration Committee and approved by the Board of Directors of the company at its meeting held on 9th August, 2014. The policy harmonises the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

2. DEFINITIONS

Unless the context otherwise requires, the words, terms, expressions and derivations used in this Policy shall have the same meaning given in the Companies Act, 2013 and/ or SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

2.1 “Applicable laws” shall mean the Companies Act, 2013 and Rules made

thereunder, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.

2.2 “Board of Directors” or “Board” shall mean the Board of Directors of

Relaxo Footwears Limited, as constituted from time to time.

2.3 “Company” shall mean Relaxo Footwears Limited.

2.4 “CA 2013” shall mean Companies Act, 2013 read with related rules framed thereunder.

2.5 “Director” shall mean a director pursuant to sub-section (34) of Section 2

of CA 2013.

2.6 “Independent Director” shall mean an independent director referred to in sub-section (6) of Section 149 of the CA 2013

2.7 “Key Managerial Personnel” or “KMP” shall mean –

i. the Chief Executive Officer or the Managing Director or the Manager and in their absence a Whole-time Director;

ii. the Company Secretary;


iii. the Chief Financial Officer; and iv. such other officer, not more than one level below the directors

who is in whole-time employment, designated as key managerial personnel by the Board; and

v. such other officer as may be prescribed in the Act.

2.8 “Listing Regulations” shall mean Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

2.9 “NRC” or “Committee” means Nomination and Remuneration

Committee.

2.10 “Other employees” means all employees other than the Directors, KMPs and the Senior Management Personnel.

2.11 “Policy” shall mean Nomination and Remuneration Policy.

2.12 “Senior Management” or “SM” shall mean officers/personnel of the

Company who are members of its core management team excluding Board of Directors and normally this shall comprise all members of management one level below the chief executive officer/managing director/whole time director/manager (including chief executive officer/manager, in case they are not part of the Board) and shall specifically include company secretary and chief financial officer.

3. OBJECTIVE

The objective of this policy is to lay down a framework in relation to remuneration of Directors, KMP, Senior Management Personnel and other Employees. The Key Objectives of the NRC Committee would be:

3.1 To lay down criteria and terms and conditions with regard to identifying

persons who are qualified to become directors (executive and non-executive including Independent Directors), KMP and persons who may be appointed in senior management positions.

3.2 To lay down criteria for determining the Company’s approach to ensure

adequate diversity in its Board.

3.3 To guide the Board in relation to appointment and removal of Directors, Key Managerial Personnel and Senior Management.

3.4 Formulate the criteria for determining qualifications, positive attributes and

independence of a director and recommend to the Board a policy relating to the remuneration of Directors, key managerial personnel and other employees.

3.5 Formulation of criteria for evaluation of Independent Director and the Board.


3.6 To evaluate the performance of the members of the Board and provide

necessary report to the Board for further evaluation of the Board.

3.7 To recommend to the Board on Remuneration payable to the Directors, Key Managerial Personnel and Senior Management keeping in view all relevant factors including industry trends and practices.

3.8 To provide to Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Company’s operations.

3.9 To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

4. CONSTITUTION OF NRC COMMITTEE

4.1 The Board of Directors shall constitute the NRC Committee as follows: 4.1.1 the Committee shall comprise of at least three directors; 4.1.2 all Directors of the committee shall be non-executive directors;

and 4.1.3 at least fifty percent of the Directors shall be independent

directors.

4.2 The Chairman of the NRC Committee shall be an Independent Director. The Chairman of the Company, whether executive or non-executive, may be appointed as a member of the NRC Committee and shall not chair such Committee.

4.3 The quorum for a meeting of the NRC Committee shall be either two members or one third of the members of the Committee, whichever is greater, including at least one independent director in attendance.

4.4 The Chairman of the NRC Committee may be present at the Annual General Meeting, to answer the shareholders' queries; however, it shall be up to the chairman to decide who shall answer the queries. In case of his absence, any other member of the Committee authorised by him in this behalf shall attend the general meetings of the Company.

4.5 The NRC Committee shall meet at least once in a year.


PART A - NOMINATION POLICY

5. APPOINTMENT/ELIGIBILITY CRITERIA

5.1 The Committee shall identify and ascertain the integrity, qualification,

expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment.

5.2 A person should possess adequate qualification, expertise and experience

for the position he / she is considered for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position.

5.3 The Committee shall ensure that the proposed director is eligible for appointment as a Director on the Board of the Company as stipulated in the Articles of Association of the Company and is not disqualified in terms of provisions of Section 164 and other applicable provisions of the CA 2013;

5.4 A Managing Director or Whole-time Director should in addition to the above fulfill the conditions specified in Section 196 read with Schedule V of the CA 2013.

5.5 The Company shall not appoint or continue the employment of any person as Whole-time Director who has attained the age of seventy years. However, he can be appointed provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice indicating the justification for extension of appointment beyond seventy years.

5.6 The Company shall not appoint or continue the directorship of any person as a non-executive director who has attained the age of seventy-five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice indicates the justification for appointing such a person.

5.7 While evaluating a person for appointment/ re-appointment as an Independent Director, the Committee shall ensure that the proposed appointee meet the baseline definition and criteria of “independence” as set out in the Articles of Association of the Company and Section 149 of the CA 2013 and Regulation 16(1)(b) and Regulation 25of the Listing Regulations and other applicable laws.


5.8 While evaluating a person for appointment of Director, KMP, Senior

Management, the Committee shall ensure that the proposed appointee have relevant experience and track record in finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines etc. related to Company's business and relevant to the role he / she is required to perform and is willing to devote sufficient time and efforts in carrying out their duties and responsibilities effectively.

6. DIVERSITY

6.1 The Company recognises and embraces the benefits of having a diverse Board, and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background, race, gender and other distinctions among Directors.

6.2 The Committee will periodically review board diversity to bring in expertise

and experience in diverse areas and disciplines to improve the standards of corporate governance, transparency, operational efficiency and risk management. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

6.3 The Committee will discuss succession planning and board diversity at the time of nominating Directors. It will be the Committee's endeavour to have Board members from diverse backgrounds/disciplines including but not limited to the following so as to bring diversified skill sets on board or succeed any outgoing director with the same expertise:

Accounting;

Corporate Finance;

Legal;

Corporate laws;

Information Technology;

Business Strategy;

Risk Management;

Marketing;

Business Development;

Operations management;

Engineering; and

Any other background/discipline as deemed necessary by the Committee.


7. TENURE OF DIRECTORS

7.1 The Term / Tenure of the Directors shall be governed as per provisions of the Companies Act, 2013 and rules made thereunder as amended from time to time.

8. EVALUATION CRITERIA AND MECHANISM

8.1 The Committee shall carry out evaluation of performance of every Director at regular intervals (yearly).

8.2 The Committee shall specify the manner for effective evaluation

of performance of Board, its committees and individual directors to be carried out either by the Board, by the NRC Committee or by an independent external agency and review its implementation and compliance.

8.3 The performance of the Directors shall be evaluated in the context of the Company’s performance from a business and compliance perspective. The criteria to be used in the evaluation of performance will be those duties and responsibilities that the Board and the Director mutually agreed upon. The evaluation criteria may be supplemented, when appropriate, with specific initiatives, projects or professional development objectives.

8.4 The Committee shall carry out evaluation of performance of every Director with a view to increase effectiveness as a governing body as well as participation of the Independent Director on the Board proceedings. The evaluation process shall be led by the Chairman of relevant meeting of the Company who shall be supported by an Independent Director and the Company Secretary for completion of the evaluation process.

8.5 Performance evaluation of the Independent Directors shall be carried out by the entire Board, except the Independent Directors being evaluated

9. REMOVAL

9.1 Due to reasons for any disqualification mentioned in the CA 2013 or any other applicable laws, Act, rules and regulations or any other reasonable ground, the Committee may recommend to the Board with reasons recorded in writing, for removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the said Act, rules and regulations.


10. RETIREMENT

10.1 The Directors, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Act and the prevailing policy of the Company. The Board will have the discretion to retain the Director, KMP, Senior Management Personnel in the same position/remuneration or otherwise even after attaining the retirement age, for the benefit of the Company.

11. DUTIES OF COMMITTEE IN RELATION TO NOMINATION MATTERS

11.1 Ensuring that there is an appropriate induction & training program in place for new Directors and members of Senior Management and reviewing its effectiveness.

11.2 Ensuring that on appointment to the Board, Non-Executive Directors

receive a formal letter of appointment in accordance with the provisions of CA 2013.

11.3 Identifying and recommending Directors who are to be put forward for retirement by rotation.

11.4 Determining the appropriate size, diversity and composition of the Board.

11.5 Developing a succession plan for the Board and Senior Management and regularly reviewing the plan.

11.6 Evaluating the performance of the Board members and Senior Management in the context of the Company’s performance from business and compliance perspective;

11.7 Making recommendations to the Board concerning any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company subject to the provision of the law and their service contract.

11.8 Considering any other matters, as may be requested by the Board.


PART B – REMUNERATION POLICY

12. GUIDING PRINCIPLES

The guiding principles for remuneration of the Directors, KMP and SM of the Company are as follows:

12.1 The level and composition of remuneration is competitive, reasonable and

aligned to market practices and trends to attract, retain and motivate talent required to run the Company successfully and ensure long term sustainability of the Company.

12.2 The Committee considers pay and employment conditions with peers /

elsewhere in the competitive market to ensure that the pay structures are appropriately aligned and the levels of remuneration remain appropriate in this context.

12.3 The remuneration to Directors, KMP and SM has a fair balance between fixed and variable pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

12.4 Quantitative and qualitative assessments of performance are used to make informed judgments to evaluate performances.

12.5 Adequately flexible to take into account future changes in industry and compensation practice.

12.6 The pay takes into account both external market and achievements of Company performance targets to a balanced ‘fair’ outcome along with strong alignment of interest with Stakeholders.

12.7 Where any insurance is taken by the Company on behalf of its Directors, Whole-time Director, Chief Executive Officer, Chief Financial Officer, the Company Secretary and any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. However, if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.

12.8 The Company shall undertake Directors and Officers Insurance (‘D and O Insurance’) for all their Independent Directors of such quantum and for such risks as may be determined by the Board of Directors and in terms of Listing Regulations.


13. REMUNERATION TO DIRECTORS, KMP and SM

13.1 Remuneration to Executive Directors

13.1.1 The remuneration and increments thereon to be paid to the Managing Director or Whole-time Directors shall be governed as per the Company’s Policy and in accordance with the provisions of the CA 2013 and Listing Regulations.

13.1.2 If in any Financial Year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managing Director or Whole-time Directors in accordance with the provisions of the CA 2013 read with rules made thereunder and Schedule V of the CA 2013 and Listing Regulations.

13.2 Remuneration to Non-Executive / Independent Directors

13.2.1 The non-executive/ Independent Directors may receive remuneration/ compensation/ commission as per the provisions of the CA 2013. The amount of sitting fee shall be subject to limits as provided under the CA 2013 and rules made thereunder and Listing Regulations or any other enactment for the time being in force.

13.2.2 They will also be entitled to reimbursement for out-of-pocket expenses. Any deviation from the same shall be recorded in the minutes of the meeting of the Committee with proper justification for the same.

13.2.3 An Independent Director shall not be entitled to any stock option, if any, of the Company.

13.3 Remuneration to KMPs and SMs

13.3.1 The remuneration, compensation and other perks and emoluments to the KMPs and SMs will be determined by the Company on the basis of discussions with the Committee after taking into account general market practice, evaluation of their respective Key Responsibility Areas, performance of the Company and other relevant factors as prescribed by the Committee from time to time.

14. DUTIES OF COMMITTEE IN RELATION TO REMUNERATION MATTERS

14.1 To consider and determine the Remuneration Policy, based on the performance and also bearing in mind that the remuneration is reasonable and sufficient to attract retain and motivate members of the Board and such other factors as the Committee shall deem appropriate all elements of the remuneration of the members of the Board.


14.2 To approve the remuneration of the Senior Management including KMP of

the Company maintaining a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company.

14.3 To delegate any of its powers to one or more of its members of the Committee, if any.

14.4 To consider any other matters as may be requested by the Board.

15. REVIEW AND AMENDMENT

15.1 The NRC or the Board may review the Policy as and when it deems necessary.

15.2 This Policy may be amended or substituted by the NRC or by the Board

as and when required and where there is any statutory changes necessitating the change in the policy. Any subsequent notification, circular, guidelines or amendments under CA 2013 and Listing Regulations as may be issued from time to time shall be mutatis mutandis applicable without any further modification or amendment in this policy.

16. DISCLAIMER

In any circumstances, where the terms of this Policy differ from any existing or newly enacted law, rule, regulation or standard governing the Company, the newly enacted law, rule, regulation or standard will take precedence over this Policy until such time the Policy is changed to conform to the law, rule, regulation or standard.