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The board of Apollo Tyres has stood its ground and pushed the reappointment of Neeraj Kanwar as MD, despite rejection of the proposal by minority shareholders. However, the board agreed to review the compensation package of Kanwar, apparently looking to open talks on the issue, which has emerged as a bone of contention between the promoters, and institutional and non-institutional public shareholders.
The board met in the wake of the decision of minority shareholders to reject the proposal of Kanwar’s (who is also the vice-chairman of the company and son of chairman Onkar Kanwar) reappointment, reportedly after being miffed by the increase in his compensation package, despite a fall in the company’s profit.
“The board of directors… has reiterated its unanimous approval on Neeraj Kanwar’s leadership… The board has full confidence in Kanwar to continue with Apollo’s sustainable development and expansion,” the company said in a statement released to the stock exchanges on Wednesday.
The statement, however, said the board agreed to take a re-look at Kanwar’s compensation, though not based on the performance but in line with his “position”. “The board will now seek shareholder guidance and independent counsel, on a compensation level commensurate with the position.”
Analysts are not happy with the board’s stance.
“Please remember that this issue has more to do with Kanwar’s compensation with regards to the company’s performance, and not his position. The board should use this opportunity for introducing structural fixes in governance,” said Amit Tandon, MD at Institutional Investor Advisory Services (IiAS), a proxy advisory firm.
Giving an example from the corporate sector, Tandon said Reliance Industries chairman and MD Mukesh Ambani has kept his compensation capped at Rs 15 crore per annum for 10 straight years.