Eicher Motors board approves revised remuneration structure for Siddhartha Lal

Following shareholders’ rejection of Siddhartha Lal’s reappointment as MD, the board of Eicher Motors has now come up with a revised remuneration structure for Lal while unanimously backing him for the post of Managing Director from May 1 for the next five years.

The company will now approach shareholders for approval through a postal ballot.

After factoring in the quantum of remuneration paid to the MD in the preceding years, the board has now approved a revised remuneration structure for the MD, with a maximum cap of 1.5 per cent of profits as per Section 198 of the Companies Act. Specific details of the remuneration are being shared via the postal ballot, the company said.

The Board on Monday discussed the outcome of the 39th Annual General Meeting (AGM) held on August 17 and the matter pertaining to the appointment of Lal as MD and the remuneration proposal was discussed comprehensively, the company said in a statement.

“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 MD or the proposed compensation, it was the lack of clarity regarding the enabling provision that potentially allowed payment of remuneration up to 3 per cent of profits,” S Sandilya, Chairman of Eicher Motors Ltd, said.

The shareholders had, at the company’s 39th AGM, rejected the special resolution on the grounds that the proposed increase in Lal’s remuneration was more when looked against the subdued overall sales of the Group in the recent period.

“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 during fiscal year 2021 was at 1.04 per cent of profits, with the preceding years being at a lower percentage,” Sandilya explained.

Clarifying the MD’s remuneration increase for FY21, Manvi Sinha, Independent Director, and Chairperson of the NRC at Eicher Motors, said, “The remuneration increase 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. The board fully supports Siddhartha’s appointment as MD and his proposed compensation, and we are confident that our shareholders will support these resolutions as well,” she added.

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