Big Investors Reject Exec Pay Proposals
- ByAyushi Ray | August 23, 2021
Big investors reject exec pay proposals. Institutional shareholders are increasingly fighting company boards and managements’ proposals that seek significant raises for top executives amid tepid revenue growth and salary cuts for employees. The latest episode in the rising tide of shareholder activism is the striking down of Eicher Motor Ltd’s proposal to give a 10% raise to its managing director Siddhartha Lal amid the pandemic. Over the past two months, shareholders, including foreign institutions and mutual funds, have overwhelmingly voted against the remuneration proposals for the chairman of Hero MotoCorp Ltd, Bajaj Auto Ltd, and Balkrishna Industries Ltd. Year to date, five of the 15 members of the BSE Auto Index have sought shareholders’ approval for remuneration of their chairmen.
Except for for Tata Motors, which sought approval for former chief executive Guenter Butschek for about four months to June 30, institutional shareholders have voted against all resolutions seeking higher remuneration for chairman and managing directors of the four companies. However, unlike Eicher’s case, resolutions of remuneration payable to chairmen at the two-wheeler firms, Hero MotoCorp and Bajaj Auto, and the tyre maker, Balkrishna Industries, were ordinary resolutions, requiring a simple majority. A higher promoter stake helped each of these resolutions win shareholders’ approval despite opposition from minority shareholders. For instance, Hero MotoCorp, India’s largest two-wheeler maker, sought shareholders’ approval to pay higher remuneration to chairman and chief executive Pawan Munjal on August 4. Munjal, who earned about ₹87 crore in the year ended March, stands to get a 10% increase in his remuneration to about ₹95 crore in the current fiscal year, which proxy advisory firm Institutional Investor Advisory Services India Ltd (IiAS) has called “higher than peers”.
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