Eicher Motors re-appoints Enfield's turnaround man Siddhartha Lal as MD

In a relief for Siddhartha Lal, who faced a blowback from the shareholders over his reappointment and pay hike, the board of directors of Eicher Motors decided to unanimously reappoint him managing director (MD) with a revised remuneration package.

The decision will be subject to the shareholders’ approval and the board going back to them for fresh clearance through postal ballot, the company said in a stock exchange filing.

The board has approved a revised remuneration structure for Lal, with a cap of 1.5 per cent of profits. This comes after the shareholders voted down the reappointment and pay hike of 10 per cent for Lal in the company’s annual general meeting held on August 17.

The company said the primary concern of the investors was not Lal’s reappointment or the proposed compensation. It was the lack of clarity regarding the provision that potentially allowed paying a remuneration of up to 3 per cent of profits.

“Over the past four years, we have had the same limit of 3 per cent, but in reality have paid only a fraction of that amount. The remuneration during FY21 was 1.04 per cent of profits, with the preceding years being at a lower percentage,” the statement said.

Another important aspect highlighted was that in FY21, Lal got a hike of around 9.97 per cent when the median employee hike was 1 per cent.

The remuneration increase in FY21 is in line with the average 9.7 per cent increment given to all employees for the year.

“The median, which is a measure of central tendency, is impacted by entries and exits of employees,” said Manvi Sinha, independent director and chairperson of the Nomination and Remuneration Committee at Eicher Motors.

During FY21, 267 employees joined the company. Of those 77 per cent were hired at below the median salary and 284 employees left the firm. Of the 284, 66 per cent were drawing higher than the median salary. Owing to this, despite there being a 9.7 per cent average increase in salaries in FY21, the median shows an increase of just 1 per cent, the statement said.

Lal was credited with reviving the brand image of Royal Enfield since he took charge as MD in 2006-07. The annual sales volume in the two-wheeler segment, which was a mere 32,612 units in 2006-07, increased over 18-fold to 609,403 in 2020-21. The two-wheeler sales volume had even touched 822,724 in 2018-19, just before the pandemic set in.

His remuneration increased multifold from Rs 1.06 crore in 2010 to Rs 21.12 crore in 2020-21.

“Since taking over as MD and chief executive officer in 2006, Siddhartha has been instrumental in building this foundation and a razor-sharp business focus for EML. His first major initiative was to shed a wide number of under-performing businesses in the portfolio, and to focus on Royal Enfield motorcycles and Eicher trucks and buses,” said S Sandilya, chairman of Eicher Motors.

The company’s revenues have grown from Rs 375 crore in calendar year 2009 to Rs 8,720 crore (consolidated revenues) in FY21, while the joint venture with Volvo - VE Commercial Vehicles Ltd had revenues of Rs 8,676 crore. This has resulted in unprecedented shareholder value growth of over 17,500 per cent in 12 years, Sandilya said. 

Earlier in the day, the Royal Enfield Employees Union came out in public, seeking his re-appointment, stating he was good for the company and employees.