Eicher Motors on Monday said its board has re-appointed Siddhartha Lal as managing director (MD) of the company with effect from May 1, 2021.
"The Board of Directors of Eicher Motors Limited today discussed the outcome of the 39th Annual General Meeting held on Aug 17, 2021. The matter pertaining to the appointment of Siddhartha Lal as Managing Director and the remuneration proposal was discussed comprehensively, and the Board unanimously decided to reappoint Siddhartha Lal as Managing Director, with effect from May 1, 2021. The Board will now go back to shareholders for approval through postal ballot," Eicher Motors said.
On the actual remuneration paid to the managing director in preceding years, the Board has now approved a revised remuneration structure for the Managing Director, with a maximum cap of 1.5 percent of profits as per Section 198 of the Companies Act, the company said.
Speaking about the remuneration issue, S Sandilya, chairman of Eicher Motors Ltd 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."
"The primary concern with investors was not Siddhartha’s reappointment as managing director or the proposed compensation; it was the lack of clarity regarding the enabling provision that potentially allowed payment of remuneration up to 3 percent of profits. Over the last four years, we have had the same limit of 3 percent, but in reality have paid only a fraction of that amount. The actual remuneration during FY2021 was at 1.04 percent of profits, with the preceding years being at a lower percentage," Sandilya said.
Clarifying the MD’s remuneration increase for FY 2021, . Manvi Sinha, independent director, and Chairperson of the Nomination and Remuneration Committee at Eicher Motors, said, "The remuneration increase in FY2021 is in line with the average 9.7 percent 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 FY 2021, 267 employees joined the company, out of which 77 percent were hired at below the median salary and 284 employees exited the company out of which 66% were drawing higher than the median salary. Owing to this, despite there being a 9.7% average increase in salaries at EML in FY2021, the median shows an increase of just 1%. The board fully supports Siddhartha’s appointment as Managing Director and his proposed compensation, and we are confident that our shareholders will support these resolutions as well," Sinha said.
On August 20, shareholders of Eicher Motors at the company's 39th Annual General Meeting (AGM) rejected a proposal for re-appointment of Siddhartha Lal as the company's managing director for a period of five years with effect from May 1 this year.
During the company's AGM, the members also rejected the proposal of increasing Lal's remuneration. While 73 percent of the votes favoured the re-appointment, the rest 27 percent were against it. As a special resolution, it needed support from 75 percent of the votes cast to pass the proposal.
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Out of the total 21,74,67,139 votes, 15,88,49,543 (73.04 percent) were in favour of the re-appointment, while 5,86,17,596 (26.95 per cent) votes disapproved the proposal.
The company's public institutional shareholders particularly opposed the move. Out of the total 8,13,98,998 votes received in the category, 5,86,16,986 (72 percent) disapproved the proposal and just 2,27,82,012 (27.98 percent) favoured the move.
Royal Enfield, a part of Eicher Motors, is a leading player in the mid-sized motorcycle segment with presence across domestic as well as international markets. In addition to motorcycles, Eicher motors has a joint venture with Sweden's AB Volvo — VE Commercial Vehicles Limited (VECV).