Home / Companies / News /  ‘Focus on building internal resources than exec salaries’

Recent shareholder concerns about compensation of the senior management of companies is good for the overall industry and managements should focus on building internal resources of companies rather than increasing their own remunerations, said RC Bhargava, chairman, Maruti Suzuki India Ltd at the 40th annual general meeting on Tuesday.

He also added that India should not follow developed nations while formulating policies for achieving a net-zero carbon future and should take longer than the developed countries since consumption of energy per capita in India is lower than the developed ones.

Last week, institutional shareholders of Eicher Motors Ltd voted against a special resolution to reappoint Siddhartha Lal as the managing director at the annual general meeting. The resolution was rejected due to proposed increase in remuneration at a time when sales of the company’s products and overall operational performance have remained subdued.

The company though re-appointed Siddhartha Lal as the managing director, yesterday, and will seek an approval through a postal ballot in the coming days.

In 2018, Onkar S Kanwar and Neeraj Kanwar, promoters of Apollo Tyres Ltd, were forced to take a salary cut of around 30% after minority shareholders rejected appointment of Neeraj Kanwar as the managing director of the company, as a result of a subdued financial performance of the company.

According to Bhargava, Covid pandemic has showed that building internal resources has to be the priority for companies and style of management should also be frugal wherein management needs to curtail expenditure on them personally.

“Recent shareholder actions indicate that shareholders share this view and are voting on this line. I think it is a good development for the whole industry," said Bhargava.

He further added that companies which have been successful in building internal resources have been able to withstand the disruption better than others and have also been able to take care of their employees.

As financial performance of companies has taken a beating due Covid-19 induced economic slowdown and other factors, minority shareholders are showing concerns about approving increase in remuneration of senior management.

With Indian government pushing for adoption of electric vehicles especially in the two-wheelers, three- wheelers and bus segment, Bhargava opined that India shouldn’t follow the developed countries while formulating climate and energy transition policies due to the low per capita consumption of energy.

“If India has to provide respectful lifestyle to bulk of its people and reduce the gap in living standards with the rest of the world it will require higher level of per capita energy consumption. We cannot follow the west and need to make our own schedules and programme, and ensure that we don’t get pressurized into adopting regulations that will result in people of India not being reduce the gap with the rest of the world. We should take longer than the developed world to get to carbon neutrality," said Bhargava.


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