The Board of Eicher Motors Ltd has decided to re-appoint Siddhartha Lal as Managing Director, with effect from May 1, 2021. The Board will now go back to shareholders for approval through postal ballot.
On August 17, the shareholders, at the company’s 39th Annual General Meeting (AGM) have rejected the proposal for re-appointment of Siddhartha Lal as MD. The shareholders have also rejected the payment of remuneration to Lal.
As per media reports, Lal’s reappointment as MD was voted down by the shareholders over a 10 per cent hike in his salary proposed amid pandemic when the revenues and profits have been slow.
Speaking about the outcome of the AGM and specifically on the remuneration issue, S Sandilya, Chairman of Eicher said, “The Nomination and Remuneration Committee (NRC) of the Company has considered all the factors, including inputs from various stakeholders including institutional investors before recommending remuneration for key managerial persons.”
“Given the background of actual remuneration paid to the MD in preceding years, the Board has now approved a revised remuneration structure for the post, with a maximum cap of 1.5 per cent of profits as per Section 198 of the Companies Act,” Eicher said in a filing.
Sandilya said the primary concern with investors was not Siddhartha’s re-appointment as MD or the proposed compensation, but it was the lack of clarity regarding the enabling provision that potentially allowed payment of remuneration upto 3 per cent of profits.
“Over the last four years, we have had the same limit of 3 per cent, but in reality have paid only a fraction of that amount. The actual remuneration was at 1.04 per cent of profits, with the preceding years being at a lower percentage.”
Manvi Sinha, Independent Director, and Chairperson of the Nomination and Remuneration Committee, clarified that the remuneration increase for MD in FY21 is in line with the average 9.7 per cent increment given to all company employees for the year. The median, which is a measure of central tendency, is impacted by entry and exits of employees.
During FY21, 267 employees joined the company, out of which 77 per cent were hired at below the median salary and 284 employees exited the company out of which 66 per cent were drawing higher than the median salary. Owing to this, despite there being a 9.7 per cent average increase in salaries at EML in FY21, the median shows an increase of just 1 per cent, reports quoted Sinha as having said.