The auto maker said that its board on Monday (23 August 2021) unanimously decided to reappoint Siddhartha Lal as managing director, with effect from 1 May 2021.
The company held its 39th Annual General Meeting (AGM) on 17 August 2021. At the AGM, the company's shareholders rejected a special resolution to reappoint managing director Siddhartha Lal for five years with effect from 1 May 2021. Of the total 21.74 crore votes cast, around 15.88 crore were in his favour while 5.86 crore were cast against him.
The shareholders also rejected the payment of remuneration to Lal. The shareholders, however, approved reappointment of Siddhartha Lal as a director of the company.
As per media reports, Lal's reappointment as MD was voted down by the shareholders over a 10% hike in his salary proposed amid the COVID-19 pandemic when the revenues and profits have been slow.
Lal's salary of Rs 21.13 crore in FY21 was 340 times the average employee salary and grew at a compound annual growth rate of 28% over the past three years, while the company's operating profit and net profit declined by 14% and 8%, respectively, over the same period, reports indicated.
At the meeting held on Monday, 23 August 2021, the company's board discussed the outcome of the AGM. 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 1 May 2021.
The board will now go back to shareholders for approval through postal ballot.
S Sandilya, chairman of Eicher Motors, 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 upto 3% of profits.
Over the last four years, we have had the same limit of 3%, but in reality, we have paid only a fraction of that amount. The actual remuneration during FY2021 was at 1.04% of profits, with the preceding years being at a lower percentage."
Given the background of 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% of profits as per the Companies Act.
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% 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% 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."
Eicher Motors is the listed parent of Royal Enfield, the global leader in middleweight motorcycles. In addition to motorcycles, Eicher has a joint venture with Sweden's AB Volvo - Volvo Eicher Commercial Vehicles which operates in India's commercial vehicle space.
The company posted a consolidated net profit of Rs 237 crore in Q1 FY22 compared with net loss of Rs 55.18 crore in Q1 FY21. For the quarter ended 30 June 2021, Total revenue from operations was recorded at Rs 1,974 crore, up 141% compared with Rs 818 crore in the corresponding quarter of FY 2020-21.
The scrip rose 0.90% to currently trade at Rs 2566.50 on the BSE.
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