BackEicher Motors reappoints Siddhartha Lal as MD, board clarifies on remuneration
The board further clarified that average employee increment for FY21 was 9.7% and said that 10% increment for Lal is in line with average salary hikeThe actual remuneration during FY21 was at 1.04% of profits, with the preceding years being at a lower percentage, the board further states
PremiumAmid remuneration tussle, Eicher Motors' Ltd board Monday said it has decided to reappoint Siddhartha Lal as Managing Director with effect from 1 May, 2021.
“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 May 1, 2021," the company said in a regulatory filing.
The board further clarified that average employee increment for FY21 was 9.7% and said that 10% increment for Lal is in line with average salary hike.
“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," said Manvi Sinha, Independent Director, and Chairperson of the Nomination and Remuneration Committee at Eicher Motors.“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," she added.
Speaking about the outcome of the Annual General Meeting and specifically about the remuneration issue, S Sandilya, Chairman of Eicher Motors Ltd 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 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 Section 198 of the Companies Act, the company further stated.
Earlier on 17 August, shareholders in the AGM had rejected a proposal for re-appointment of Siddhartha Lal as the company's managing director for a period of five years with effect from May 1 this year.
During the company's 39th AGM, which was held earlier this week, the members also rejected the proposal of increasing Lal's remuneration.
While 73 per cent of the votes favoured the re-appointment, the rest 27 per cent were against it.
As a special resolution, it needed support from 75 per cent of the votes cast to pass the proposal.
Royal Enfield, a part of Eicher Motors, is a leading player in the mid-sized motorcycle segment with presence across domestic as well as international markets.
Making specific note of Siddhartha’s contribution to the growth of the company, Sandilya said, “Siddhartha has been the architect of Eicher Motors’ growth story over the last two decades. When he took over as CEO of Royal Enfield in 2000, the division was making large losses and was slated for closure. Siddhartha has transformed Royal Enfield into a formidable premium motorcycling brand in India, pioneering the leisure riding segment. Royal Enfield grew the premium >250cc market in India exponentially, and has maintained a >90% market share in it for the last decade, resulting in EBITDA margins for EML at over 30% during the pre-pandemic peak. Subsequently Siddhartha moved to the UK in 2015 to personally drive the company’s ambition of becoming the first global premium consumer brand to emerge from India; there he was directly overseeing the product development and international expansion"
In addition to motorcycles, Eicher motors has a joint venture with Sweden's AB Volvo — VE Commercial Vehicles Limited (VECV).
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