The Eicher Motors Ltd. board has re-appointed Siddhartha Lal as the Managing Director, the company announced in a regulatory filing. Earlier this month, the board had voted against Lal to renew his designation in the company over a remuneration tussle. But the board has now approved a revised remuneration structure for Lal with a cap of 1.5 per cent profits as per Section 198 of the Companies Act. Siddhartha Lal has been appointed as the Managing Director with effect from May 1, 2021, for a period of five years. The Board will now go back to shareholders for approval through a postal ballot.
Siddhartha Lal is credited with the revival and 'meteoric' rise of the Royal Enfield brand over the past decade in the global middleweight motorcycle segment
Clarifying the MD's remuneration increase for FY2021, Manvi Sinha, Independent Director, and Chairperson of the Nomination and Remuneration Committee at Eicher Motors said, "The remuneration increase in FY2021 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 FY 2021, 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% average increase in salaries at EML in FY2021, the median shows an increase of just 1 per cent. 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."
Speaking about the outcome of the AGM about the remuneration issue, S Sandilya, Chairman of Eicher Motors 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 up to 3 per cent of profits. 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 FY2021 was at 1.04 per cent of profits, with the preceding years being at a lower percentage."
Also Read: Royal Enfield's Parent Company Eicher Motors Reports PAT Of Rs. 237 Crore In Q1FY22
During Eicher Motors' 39th AGM, the board had rejected the proposal of increasing Lal's remuneration hike. The motion had received a vote of 73.05 per cent against a majority 75 per cent. The board argued that the hike wasn't justified in the wake of the pandemic when profits were affected. Over the past decade, Lal's remuneration increased from Rs. 1.06 crore in 2010 to Rs. 21.12 crore in 2020-21, the company shared.
The new generation Royal Enfield Classic 350 is all set to be launched in a few days
The move does come at a time when Eicher Motors' Royal Enfield is all set to introduce its next crucial product in the market. The Classic 350 will arrive towards the end of this month and is a cash cow for the brand. Lal is credited for reviving the ailing motorcycle brand and transforming it into a powerful player in the global middleweight motorcycle segment.
