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CS Professional · Compliance Management, Audit and Due Diligence · Compliance Framework

Arvind Steels Ltd. restated its FY 2023-24 statements for fraud. Its CEO, Ms. Menon, received Rs 90 lakh as salary and incentive. On the restated figures, Rs 70 lakh would have been payable. She also had stock options granted in the period. The board says the stock options are outside Section 199. Which statement is correct?

The excess is Rs 20 lakh, being Rs 90 lakh received less Rs 70 lakh payable on restated figures. Section 199 defines remuneration as including stock option, so the board is wrong to exclude stock options from the comparison.

  1. ARs 20 lakh is the excess, and stock option benefits are to be included in the remuneration comparedCorrect
  2. BRs 90 lakh must be recovered, with stock options excluded
  3. CRs 70 lakh must be recovered, being the amount payable after restatement
  4. DRs 20 lakh is recoverable only from cash pay, as stock options are excluded

Explanation

The excess is Rs 90 lakh minus Rs 70 lakh, which is Rs 20 lakh. Section 199 refers to remuneration including stock option, so stock options are part of the comparison. Rs 70 lakh is the proper entitlement and is not recoverable.

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