Reports suggest that minority shareholders have rejected the re-appointment of Neeraj Kanwar as Managing Director of Apollo Tyres due to compensation issues.
About 72.7 percent votes were in favour, while 27.2 percent votes were against the re-appointment of Kanwar, whose annual compensation jumped 43 percent on year to Rs 42.8 crore in 2017.
The company told CNBC-TV18 that Apollo Tyres' board will discuss the resolution in the next meeting and determine future course of action.
Amit Tandon, MD of proxy advisory firm Institutional Investor Advisory Services India Ltd (IiAS), spoke to CNBC-TV18 about the developments at Apollo Tyres.
"This is the first instance when institutional investors questioning the right of the promoter to run their own company, which does not usually happen unless there is a family dispute or something similar," said Tandon. Institutional investors own 44 percent of equity in the company and roughly about 56 percent of these voted against, he added.
"The institutional investors have been unhappy with the compensation and could be the principle reason for their voting against the re-appointment. Last year also 57 percent of institutional investors had voted against Neeraj Kanwar’s compensation. Moreover, the performance of the company has also not been impressive, which was also concerning to investors," he said.
"For Apollo Tyres it is a very strong signal with institutional investors vocalising their concerns but company has time to deal with this. This is also a very strong signal for other promoter companies that they have to be in-line with performance and the graph between companies’ performances and the pay check cannot deviate in a significant manner," said Tandon.