After being rebuffed the first time around, Eicher Motors is seeking shareholders’ nod again on the remuneration to Managing Director (MD) Siddhartha Lal.
The Delhi-based company has opted for two ordinary resolutions this time — reappointment of Lal as MD for five years and approval of his remuneration — instead of presenting a combined special resolution, as was done previously. That resolution, proposed before shareholders on August 17, failed to get the requisite number of votes at Eicher Motors’ 39th annual general meeting.
While the root cause of shareholder resentment was Lal’s Rs 21.12 crore pay package for FY21, his reappointment as MD of the company also got stuck due to the proposals being combined. Lal was reappointed as MD on August 23 by the Eicher Motors board for a period of five years starting May 1, 2021.
The nomination and remuneration committee of Eicher Motors has tweaked Lal’s pay package. As per the revised structure, his fixed pay, including allowances, now stands revised at Rs 12 crore per annum as against his FY21 salary of Rs 7.38 crore.
Perquisites now have a maximum limit of Rs 1 crore per annum, as against Rs 7.04 crore last year. Lal has been operating out of the UK since 2015.
As per the details provided by Eicher Motors, Lal gets a fully furnished residence and reimbursement of utilities, two company-provided and maintained cars, reimbursement of hospitalisation expenses and insurance premium for self and family, leave travel reimbursement as well as club membership for self and family. Eicher Motors has not provided any estimate of such expenses.
Lal’s pay package also includes statutory contributions in accordance with UK laws and payment of commission subject to a maximum limit of 80 percent of fixed pay (Rs 9.6 crore). The commission paid shall be subject to the recommendations of the NomRem Committee and subsequent approval by the board, the company clarified. While Eicher Motors did not provide an estimate on the statutory and commission packages, Lal had received a commission of Rs 6.70 crore in FY21.
After his reappointment as the MD on August 23, Eicher Motors announced a revision of Lal’s total pay package. The company clarified that his overall remuneration, including fixed pay, perquisites, other benefits and commission, shall not exceed 1.5 percent of the net profits of the company in any particular financial year as computed in the manner referred to in Section 198 of the Companies Act, 2013. The previous cap was 3 percent.
The actual remuneration during FY21 was at 1.04 percent of profits, and it was at a lower percentage in the preceding years, Eicher Motors clarified.