Apollo Tyres promoters agree to take 30 per cent cut in compensations for 2018-19
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Apollo Tyres Tuesday said its promoters O S Kanwar and Neeraj Kanwar, who is Chairman and Vice-Chairman respectively, have agreed to take 30 per cent cut in their compensations for 2018-19 after a proposal from its nominations and remuneration committee (NRC).
The company's board has also recommended capping of promoter compensation at 7.5 per cent of Profit Before Tax (PBT) while the NRC has pitched for it to be further reduced over a period of time.
In September, minority shareholders of the company had rejected reappointment of Neeraj as Managing Director(MD), who is also the vice-chairman, over his compensation.
Subsequently, in October the NRC engaged with a range of institutional shareholders to take their views into consideration, Apollo Tyres said in a regulatory filing.
Further, an independent report from EY was also commissioned to benchmark MDs' compensation structures and amounts, it added.
"This twin process of consultation and external benchmarking has resulted in a significantly revised proposal from the NRC for the compensation package to renew Neeraj Kanwar's contract from May 2019," the board said in a statement.
It further said the revised proposal would result in a reduction of approximately 30 per cent in overall compensation for both the promoters.
"Respecting the spirit of this change, both Onkar S Kanwar and Neeraj Kanwar have voluntarily agreed to reduce their compensation for 2018-19 with immediate effect to fall in line with the new recommendations," the statement added.
In 2017-18, OS Kanwar received Rs 49.58 crore as total compensation, while Neeraj received Rs 44.64 crore.
Stating that "three substantive changes" related to compensation for promoters have been recommended, the board said it has recommended to shareholders for their approval of the same.
These include a cap on total promoter compensation is set at 7.5 per cent of Profit Before Tax (PBT) and performance-based remuneration will be targeted at approximately 70 per cent of the total compensation.
Besides, annual increments for the fixed portion of promoter compensation will be in line with that of the senior professionals of the company, it added.
"The NRC has further recommended, and the board took on record, that the 7.5 per cent cap be further reduced over a period of time," it said.
These adjustments take into account the feedback received from institutional shareholders, and are in line with the independent external benchmarking study, the statement said.
"In light of this, the board of Apollo Tyres strongly recommends that the contract is renewed under the revised terms," it said.
In September, a special resolution for reappointment of Neeraj Kanwar as MD was not passed as the votes cast in favour (72.72 per cent) were less than three times the number of votes cast against (27.28 per cent).
(With inputs from agencies.)