Tata Motors, India’s carmaker that has been fighting with loses recently, proposed raising the compensation for three of its executive managers, but the legally required shareholders approval did not come.
Tata Motors, which is India’s largest automaker and the parent company of British luxury carmaker Jaguar Land Rover announced the compensation plan for three of its senior directors was rejected. The proposed pay raise was surpassing the law set limits – exceeding the allowed 5% of company net income – for Ravindra Pisharody, executive director commercial vehicles, Satish Borwankar, executive director quality, and the legal heir of Karl Slym, the managing director who committed suicide back in January.
“This sort of shareholder rejection of executive compensation hasn’t happened at a large company,” said Paras Bothra, from Ashika Stock Broking Ltd. “There is increased shareholder awareness these days.”
“The company takes cognizance of the shareholders’ views,” said a spokesman for Tata. “At the same time, it is necessary to balance this with recruiting and retaining an industry-proven management team through the long term.”
The Indian law says government and shareholder approval are needed before a company can pay a director in excess of the 5% limit, and Tata did not meet the necessary 75% positive vote when it asked its shareholders to remunerate the three directors.