Shareholder activists force Apollo Tyres promoters Neeraj Kanwar, Onkar S Kanwar to take 30% salary cut
For the financial year 2017-18, the combined annual compensation of Onkar Singh Kanwar and his son Neeraj Kanwar stood at Rs 87.74 crore, a little less than a 10 per cent of the consolidated net profit for the year.
After the Board of Directors of Apollo Tyres Ltd approved Ernst & Young's report on benchmarking its managing directors' compensation structures, its promoters, Neeraj Kanwar and Onkar S Kanwar, have agreed to take around 30 per cent cut in their overall compensation for FY19. The E&Y report has also suggested some changes in promoter compensation, performance-based remuneration and annual increments to the company's Nominations & Remuneration Committee (NRC), and these proposals have been approved by the company board.
"Following on from its last meeting on October 1, where the matter of re-appointment of Neeraj Kanwar as Vice Chairman and Managing Director of the company was discussed, the Nominations & Remuneration Committee (NRC) of the Board of Directors of Apollo Tyres Ltd. engaged with a range of institutional shareholders to take their views into consideration, and commissioned an independent report from Ernst & Young (EY) to benchmark Managing Directors' compensation structures and amounts," Apollo Tyres said in a statement.
After consultation, the NRC has proposed to renew Neeraj Kanwar's compensation package from May 2019. "The revised proposal would result in a reduction of approximately 30 per cent in overall compensation for both the promoters, Neeraj Kanwar and Onkar S Kanwar," said the company.
The company also said that both Onkar and Neeraj have voluntarily agreed to reduce their compensation for FY19 with immediate effect to fall in line with the new recommendations.
Meanwhile, there are three substantive changes that the board now recommends to shareholders for approval.
- A cap on total promoter compensation is set at 7.5 per cent of Profit Before Tax (PBT)
- Performance-based remuneration will be targeted at approximately 70 per cent of the total compensation
- Annual increments for the fixed portion of promoter compensation will be in line with that of the senior professionals of the company
The NRC has also said the proposed cap of 7.5 of Profit Before Tax be further reduced over a period of time. The committee proposed these changes after taking into account the feedback received from institutional shareholders. It said these proposals are in line with the independent external bench-marking study.
Neeraj Kanwar earned an annual compensation of Rs 42.8 crore in 2017, a 43 per cent hike over his take-home of Rs 30 crore in 2016. For the financial year 2017-18, the combined annual compensation of Onkar Singh Kanwar and his son Neeraj Kanwar stood at Rs 87.74 crore, a little less than a 10 per cent of the consolidated net profit for the year. The maximum salary cap for the promoters in 2017-18 stood at Rs 99.18 crore.