Reappointment of Siddhartha Lal as MD of Eicher Motors rejected by shareholders

Institutional shareholders have voted down a special resolution seeking Siddhartha Lal’s reappointment as managing director of Eicher Motors Ltd during the 39th Annual General Meeting (AGM) on August 17, as they were against a proposal to increase his salary by 10% in FY21, which outpaced the company’s revenue and profit growth last year amid the Covid-19 pandemic. They also questioned the rationale of the raise, even as the median employee salary had increased by only 1%. The special resolution of his reappointment was clubbed with the compensation hike.

As per the filling of postal ballots, 26.95% of total votes were polled against the special resolution, while 73.04% were in favour. Three-fourths of minority shareholders are required to approve a special resolution.

In the AGM, 72% of institutional investors who participated in e-voting rejected the resolution seeking Lal’s reappointment, stock exchange fillings showed.

However, an ordinary resolution seeking Lal’s reappointment as a director on the Eicher Motor’s board was approved by shareholders. Of the six resolutions put forth, the one pertaining to Lal’s reappointment as MD and his salary increase was thrown out. The company is yet to take a call on approaching shareholders again with a revised proposal.

IIAS supports Lal’s reappointment

The Economic Times reported that shareholders had no issue with Lal’s reappointment as MD, but were against the compensation increase.

Proxy advisory firm Institutional Investor Advisory Services (IIAS) said it supported the reappointment of Lal as MD but not his remuneration package as it has not been commensurate with the company’s overall performance.

Earlier, IIAS estimated that his proposed salary in FY 22 would be Rs 23.33 crore of which 32% is variable pay compared to Rs 21.13 crore in FY 21.