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The glaring disparity in the compensation of Apollo Tyres managing director Neeraj Kanwar in comparison to his peers had compelled minority shareholders to vote against his reappointment as managing director for a fresh term of five years.

According to the company’s annual report for the financial year 2017-18, the total compensation of Apollo Tyres’ promoters — Neeraj Kanwar and Onkar Kanwar — for the year under review was Rs 87.74 crore. This is very close to the maximum ceiling permitted under the Companies Act — 88.8 per cent of the permissible limit of Rs 99.18 crore, which is 10 per cent of the company’s net profit. As compared to this, the compensation of the promoters of its peers such as MRF, CEAT and Balkrishna Industries hover in the range of 15-56 per cent of the maximum ceiling permitted under the company’s Act.

Apollo Tyres had sought shareholders’ approval for the reappointment of Neeraj Kanwar for five more years in the second week of September this year. Kanwar’s current term ends in May 2019. It was proposed that Kanwar’s new remuneration terms include a salary of Rs 42 lakh per month with a maximum increase of 15 per cent per year, commission up to 5 per cent of the total profit and perks restricted to 300 per cent of total salary. This structure had upset the company’s shareholders.

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About 27.2 per cent of the shareholders have voted against the reappointment of Neeraj Kanwar as MD while 72.7 per cent were in favour. Since those in favour are not three times the naysayers, the naysayers’ decision was approved.

Among the shareholders of the company are domestic mutual funds such as HDFC, DSP, UTI, and Reliance’s asset management companies. HDFC AMC has been increasing its stake in the company for the past four quarters. It currently holds a 4.8 per cent stake in the tyre maker. In the past one quarter, Reliance AMC’s stake has increased its stake by more than two times to 1.68 per cent, according to Bloomberg.

© copyright — The Economic Times

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