[avishar]

In quite a dramatic turn of events, the much celebrated MD of Eicher and the man who is said to be responsible for the making Royal Enfield the modern, cool success that it is today, was given a shock by Eicher's shareholders.

The re-appointment of Mr Lal as the MD of Eicher Motors (Royal Enfield's parent) was up for a vote which entailed a 10% hike of his salary. This was rejected by shareholders.

According to Economic Times this salary hike would have taken his remuneration from Rs 21.2 crore in FY21 to Rs 23.23 crore in FY22. The shareholders argued that this was unacceptable during a period where Royal Enfield and Eicher has been struggling with volumes with the commercial vehicle industry and premium bike sales both falling off a cliff thanks to Covid.

Mr Lal's salary would be 340 times the median employee salary and the growth of his salary over the past three years has been might higher than the 1% hike that average employee is receiving, this year.


The story is behind a paywall but it is front page news in the print version.

There is a Moneycontrol article about it too.

Is the angst justified? Royal Enfield's sales haven't actually recovered all that well to what it was pre-COVID. A year of travel restrictions have sapped consumers dreams of roaming the highways on Enfields. Cautious spending has also put paid to many plans of upgrading to the 650s. The story is the same in their export markets too.

Royal Enfield's CEO, Mr Vinod Dasari also departed a few days back.

The drawdown in the commercial vehicle industry is also well known, with the slowdown in that market having started even before the pandemic (although expected to recover by later this year).


A case of shareholders finally saying enough of fat pay-packets? The auto industry heads in India actually earn very well, with some of the expatriate CEOs earning as well as they would anywhere else in the world.

[srini1785]

This topic has been debated ad nauseam:

https://www.team-bhp.com/forum/india...-industry.html (Analysis: CEO/MD pay, median salaries & worker wages in the Indian automobile industry)

[pannags]

Originally Posted by avishar

Mr Lal's salary would be 340 times the median employee salary and the growth of his salary over the past three years has been might higher than the 1% hike that average employee is receiving, this year.

We can talk all year long about the disparity in pay, but this was possible because the controlling stake was able to overturn the proposal. In many cases, these jumbo jumps are approved without a hint of resistance.

[TusharK]

The re-appointment of Siddhartha Lal to the post of Managing Director of Eicher Motors Ltd. has been voted down following a proposal to raise his salary by 10%.



The 'special resolution' seeking his re-appointment and compensation hike could not be passed during the company's 39th annual general meeting (AGM). The shareholders questioned the salary hike, proposed at a time when its CV and motorcycle businesses have reported lower profits due to the pandemic and the global chip shortage.

It is said that 26.95% voted against the special resolution, while 73.04% were in favour. However, three-fourths of minority shareholders are required to pass a 'special resolution'. Also, 72% of institutional investors who participated in the e-voting rejected the resolution.

It has been reported that shareholders had no issue with Lal's re-appointment as MD, but they were not in favour of the salary hike.

Source: ET Auto

[sandeepmohan]

Did they forget what he has done slowly and gradually over the last 20 years? If it were not for Lal, Royal Enfield would have been long gone. I'd give him that 10% or atleast negotiate on the figure and not rule it straight away. Royal Enfield's books have never looked so good. Lal and his Team are responsible for that.

[Theyota]

Originally Posted by sandeepmohan

Did they forget what he has done slowly and gradually over the last 20 years? If it were not for Lal, Royal Enfield would have been long gone. I'd give him that 10% or atleast negotiate on the figure and not rule it straight away. Royal Enfield's books have never looked so good. Lal and his Team are responsible for that.

He is a promoter CEO and not the average employee CEO. If his company is successful, then he is making exponential times more money through his equity in the company. So it is not normal for a promoter CEO to pay himself that kind of money as salary. He was already paying himself ~20 crores per year. I think Rajeev Bajaj is no different either.

[Thilak29]

This is a good reminder to those who see employer as an extension of themselves, slogging late hours at the cost of personal interests.
At the end of the employer can just boot an employee, despite the value creation, such is this transactional relationship.

In this case I see the perspective and dynamics where his father founded the organisation and contributed to growth.

[prasanna.vps]

10% increase of compensation does not seem to be really bad. Is it the increase of the salary per se that was the thorn?

I also see that majority who voted against were institutional investors who want better RoI, and if an outsider can see the value then why not them?

Is there something here that is more than what meets the eye? Smells almost like a coup, a leader not liked by the majority shareholders has just been taught a lesson, old story that has repeated many times. What do you all think?

[amvj]

Royal Enfield survived only because of Sid. He is quite a visionary and I respect the man for proper planning, making right moves and acquisitions. These short term minded people will ruin the company. Hope some sense prevails.

[Nilesh5417]

These are times when people have lost jobs and have no income since months. And when it's also been a bad year for the company, average hikes have been 1% in the company, the promotor-CEO whose absolute pay is 20 something crores wanting to hike his own pay to me is plain immoral. Even if he is the smartest most hardworking, roll up the sleeve guy. If not immoral then absolutely bad timing and bad press! It doesn't matter if veto is by institutional or small retail investors.

[Nithesh_M]

Always hilarious when companies cut down on staff Citing budget crunch yet behind the doors they give themselves crores of rupees worth of raise even during a pandemic when the people laid off are almost guaranteed to not be able to find jobs or even attend interviews without putting their lives at stake.

While these rich honchos sit in their AC homes and decide how many people should be let go so they can usurp their monthly income for individual gain.

[warrioraks]

Originally Posted by sandeepmohan

Did they forget what he has done slowly and gradually over the last 20 years? If it were not for Lal, Royal Enfield would have been long gone. I'd give him that 10% or atleast negotiate on the figure and not rule it straight away. Royal Enfield's books have never looked so good. Lal and his Team are responsible for that.

Annual hikes are supposed to be based on last year’s performance. If the company did not grow last year, and median employee increment was 1%, then can’t see the logic of CEO getting 10%.

[SmartCat]

By the way, this does not mean end of the road for Siddhartha Lal or future of Eicher Motors/Royal Enfield. The Board will just have to revise the payment terms, and Mr. Lal's appointment will be confirmed. These activist shareholders can be a thorn, but they are not stupid to keep Mr. Lal away from the company.

And this is not new - it happened to Apollo Tyres MD too.
https://www.livemint.com/Companies/p...alary-cut.html

[msdivy]

A simple search tells me he owns 750C worth of Eicher shares. Curious to know why he wanted 10% hike? What could he have done with an extra 2C, that he couldn't do with the current 21C + shares? (all before tax, BTW).

[giri1.8]

Originally Posted by msdivy

A simple search tells me he owns 750C worth of Eicher shares. Curious to know why he wanted 10% hike? What could he have done with an extra 2C, that he couldn't do with the current 21C + shares? (all before tax, BTW).

Shares = Asset, salary = cash in hand.