Mumbai: Shareholders of Tata Motors Ltd have approved salary proposals for top executives at the company, after these proposals were put to vote for a second time. According the results of a postal ballot released by the company on the BSE on Wednesday, more than 75% of the company’s shareholders voted in favour of the proposals which sought a certain minimum remuneration to three top executives in case of inadequacy of profits for the fiscal years 2013-14, 2014-15 and 2015-16. The executives include late managing director Karl Slym (remuneration for 2013-14), Ravindra Pisharody, executive director (commercial vehicles), and Satish Borwankar, executive director (quality). “We are happy to note the strong positive voting from the shareholders in favour of our resolutions,” said Tata Motors. “These positive results are an endorsement of the company’s disclosure and governance policies and indicate the shareholders’ faith in the company’s management especially as it works towards a turnaround in a challenging market situation,” the company added. The pay proposals, which had been rejected by minority shareholders in July after certain proxy advisory firms raised concerns, were put forward to shareholders again in December. This time the company sought to explain the proposals in greater detail to shareholders and highlighted that the remuneration being sought was in line with the average salary increase of about 10%, citing a survey by consultant Aon Hewitt. “Remuneration paid/payable to the two EDs (executive directors) and late MD (managing director) for FY2013-14 is commensurate with industry standards and board-level positions held in similar-sized companies, taking into consideration the individual responsibilities shouldered,” said Tata Motors. In response, domestic proxy advisory firms such as Institutional Investor Advisory Services (IiAS) and InGovern Research Services had recommended that shareholders vote in favour of the proposals. Boston-based Institutional Shareholder Services (ISS) had recommended approving the remuneration proposals for fiscal 2014, but had recommended a vote against the salary proposals for fiscal 2015 and fiscal 2016. A number of foreign investors tend to vote based on ISS ratings via automatic voting systems. Foreign institutional shareholders held 26% in Tata Motors as of 30 September, according to publicly available data. In the case of the pay proposals for fiscal 2015 and fiscal 2016, 69.3% of public institutional shareholders who voted, did so in favour of the proposals, while 66.7% of other public shareholders voted in favour of these proposals. However, since 100% of the promoter group voted in favour, the overall vote in favour of the proposals stood at 80.96%—enough to get the proposals through. A company that seeks to pay a whole-time director more than 5% of its net profit must secure approval from 75% of its minority shareholders. J.N. Gupta, founder of proxy advisory firm SES, said his firm had earlier advised the shareholders against it purely on technical grounds, which had more to do with transparency and disclosure than the remuneration itself. “The remuneration wasn’t high and well within the norms. We were successful in convincing the company into giving all details and we were satisfied with information they shared,” said Gupta. The first time the resolutions were defeated was primarily on account of a large number of ADR holders taking a narrow interpretation of the rules governing the remuneration and consequently not supporting the resolution, said IiAS, a domestic proxy advisory firm. “The investors seem to have realized that the two executive directors, are professionals, with significant experience in the automobile industry. Further that their proposed remuneration is in line with industry peers, and commensurate with the size and nature of a large and complex company like Tata Motors,” said IiAS in a note released after results of the postal ballot were released.
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