The board of Eicher Motors will approach shareholders again to allow Siddhartha Lal to continue as the managing director (MD) after a resolution for re-appointment was shot down recently over a proposed salary hike.
The company fell short of the 75 percent vote share required for Lal’s re-appointment and remuneration. Around 26.95 percent of the shareholders voted against this Special Resolution during an annual general meeting (AGM) on August 17.
“The Eicher Motors board has been informed and we are considering the quick next steps,” the company said on August 20. Since Lal continues to be the director and CEO, there were no changes in the way Eicher Motors is governed and operates, it said.
Lal’s reappointment proposal was voted down by the shareholders over a 10 percent hike in salary proposed amid the COVID-19 pandemic when the revenues and profits have been slow, a report in The Economic Times said.
The re-appointment proposal was combined with a 10 percent hike in Lal’s salary, which most public institutional shareholders rejected at the company’s 39th Annual General Meeting (AGM) on August 17, even as the average employee’s salary had increased by only 1 percent, the report cited sources as saying.
Lal, however, got 86.18 percent votes for his re-appointment as director, allowing him to continue as the director and CEO of Eicher Motors, the maker of Royal Enfield bikes and trucks and buses under VE Commercial Vehicles.
The board would meet soon to revise the terms of the resolution for Lal’s appointment.
“They will have to present (the resolution) to shareholders again with revised terms. The ‘vote against’ is mainly against the remuneration,” said a senior member of a proxy advisory company that advises shareholders on corporate matters.
Lal’s remuneration for FY21 was Rs 21.12 crore, which included salary, perquisites and commission, a 9.97 percent hike from FY20. No sitting fees were paid nor any stock options given to Lal during FY21, Eicher Motors said.
Hit by the coronavirus pandemic, the company’s net consolidated profit for FY21 stood at Rs 1,347, the lowest since FY16. During the same period, Lal’s remuneration more than doubled from Rs 9.51 crore in FY16.
Following uncertain business conditions, shareholders in recent years have shot down hikes for Tata Motors directors Guenter Butschek, Ravindra Pisharody and Satish Borwankar.
Butschek, the former managing director of Tata Motors, saw opposition from the shareholders twice during his five-year tenure.
In 2018 Neeraj Kanwar, Vice Chairman and Managing Director of Apollo Tyres took a 30 percent cut in salary following strong objections from institutional and private investors over a 42 percent increase in his pay package.
Whole-time Director and CEO of Royal Enfield Vinod Dasari, who left the company a few days ago, drew a salary of Rs 25.33 crore for FY21.