The Apollo Tyres board had last met on October 1 where it commissioned an independent report from Ernst & Young
Neeraj Kanwar, Vice Chairman and Managing Director of Apollo Tyres will take a 30 percent cut in salary following strong objections from institutional and private investors over a 42 percent increase in his pay package last year.
The board of India’s second largest tyre producer met on November 13 to approve the second quarter results of the company. It also said to have sought authorisation of the shareholders for re-appointing Kanwar as MD for a five-year period starting May next year.
The Apollo Tyres board had last met on October 1 where it commissioned an independent report from Ernst & Young (EY) to benchmark managing directors’ compensation structures and amounts.
“This twin process of consultation and external benchmarking has resulted in a significantly revised proposal from the Nominations & Remuneration Committee (NRC) for the compensation package to renew Neeraj Kanwar's contract from May 2019. The revised proposal would result in a reduction of approximately 30 percent in overall compensation for both the promoters, Neeraj Kanwar and Onkar S Kanwar,” Apollo Tyres said in a statement.
The father-son duo has voluntarily agreed to reduce their compensation for FY19 with immediate effect to fall in line with the new recommendations.
The board will also seek approval of the shareholders for a cap on total promoter compensation which is to be 7.5 percent of the profit before tax. Performance-based remuneration will be targeted at approximately 70 percent of the total compensation and annual increments for the fixed portion of promoter compensation to be in line with that of the senior professionals of the company.
The NRC has further recommended, and the board has taken on record, that the 7.5 percent cap be further reduced over a period of time.
“These adjustments take into account the feedback received from institutional shareholders and are in line with the independent external bench-marking study. In light of this, the board of Apollo Tyres strongly recommends that the contract is renewed under the revised terms,” added the company.
From Rs 30.03 crore in 2016-17, Neeraj Kanwar’s pay package surged to Rs 42.75 crore in 2017-18. Kanwar’s father Onkar Kanwar, Chairman of Apollo Tyres, did not see such a massive hike rise in his remuneration last year.
The chairman took home Rs 44.98 crore last year as against Rs 44.91 crore in 2016-17. Apollo Tyres reported its worst net profit in five years last year. At Rs 724 crore, the company’s consolidated net profit dipped 34 percent last year compared to Rs 1,099 crore recorded in 2016-17.
