SEBI imposes a penalty of Rs. 50 lakhs on NSE for compensation paid to former MD and CEO Chitra Ramkrishna

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.

SEBI had received a letter from  the Ministry  of  Finance  which stated that Ms. Chitra Ramkrishna, former MD and CEO of NSE, earned about Rs. 44 crore in a period of three years during which she held the aforesaid position at NSE and that she earned Rs.  23  crore  as  total  remuneration  in  the  last  eight  months  of  her  tenure.  Based  on  the reference,  SEBI initiated  examination  into  the  said  matter  and  sought  clarification  from  NSE regarding the same.

She resigned from NSE in December 2016 after allegations of unfair practices at the exchange’s co-location facility.

On receipt of such information from the Ministry of Finance, SEBI conducted an examination. Upon examination, SEBI observed the following:

1. As per NSE policy, leave encashment of up to 360 days is permitted for an employee. However, on comparing the approved compensation and actual gross compensation paid for the period of eight months and two days to Ms. Chitra Ramkrishna, for the financial year 2016-2017, it was observed that the board of NSE (hereinafter referred to as ‘NSE Board’), based on the recommendation of its Nomination and Remuneration Committee (‘compensation committee’ or ‘CC’), permitted an additional encashment of 168 days i.e. a total of 528 days for Ms. Chitra Ramkrishna on cessation of her service with NSE.

• The extra remuneration paid to Ms. Chitra Ramkrishna on account of encashment of this additional 168 days of leave was Rs. 1,54,23,781.

The NSE submitted that its policy allowed senior staffers to encash their leave without limit at the time of retirement or resignation. It is to be noted that all this was done by way of a policy change, which was appro­ved by the NSE’s board and the compensation committee. However, the imple­mentation was done without seeking the requisite prior ap­p­roval of SEBI.

The SEBI order read, “Taking into consideration all the facts and circumstances of the case including the aforesaid 15J factors and exercising the powers conferred upon me under section 15I of the SEBI Act read with Rule 5 of the Adjudication Rules, I hereby impose a monetary penalty of Rs. 50,00,000/- (Rupees Fifty Lakh Only) on the Noticee under section 15HB of the SEBI Act. In my view, the said penalty is commensurate with the violation of regulation 27(4) of the SECC Regulations as committed by the Noticee in this case.”