Bonanza For Part-Time Bosses In Escorts Likely

The part-time directors of Escorts Ltd may look forward to an unexpected bonanza the next time they sit down to talk shop. The windfall could come about if the companys shareholders approve an enabling provision to pay them as remuneration an aggregate not exceeding 1 per cent per annum of the companys net profit.

In contrast to last year when the company paid Rs 2,000 per board meeting to a part-time director, the company this year proposes to shell out a commission of at least Rs 30,000 per board meeting to each of its part-time directors, translating into a mammoth hike of at least fifteen times.

 

The increase would mean that a part-time director on the Escorts board can rake in over Rs 1.5 lakh as annual remuneration as the company holds at least five board meetings in a year. The board of directors, in fact, met six times in the financial year 1996-97.

The 15-member board of directors of Escorts Ltd has only two whole-time directors Rajan Nanda and Anil Nanda who will be outside the ambit of this provision. The enabling provision will, however, cover Nikhil Nanda who was inducted on the board in June.

The biggest windfall is expected to fall to the lot of the two financial institution directors on the Escorts board who are there not as financial nominees but as directors of choice.

While the law prohibits a financial nominee who is a nominee director of the financial institution that is a lender to the company from taking

such a remuneration, a financial institution director who has been appointed by choice can avail of such a scheme, said an Escorts executive.

The two financial institution appointees on the Escorts board are from the LIC and the UTI two institutions which would emerge as meagre paymasters in comparison to the proposed Escorts bonanza and are directors by virtue of these two institutions being equity investors in the company. The third institution, the GIC, has not appointed any director.

The proposed remuneration scheme, which is being finalised by the company, will translate into an average payout of about Rs 20 lakh this year by Escorts. Once finalised, it will catapult Escorts into the highest-paymasters bracket among Delhi-based companies, and make it one of the top paying companies in the country.

Escorts Ltd will seek the approval of its shareholders at its 52nd annual general meeting scheduled to be held in New Delhi on July 30. Apart from the scheme, the company will also seek approval for raising $200 million ECB as well as for its employees stock-option scheme upto 5 per cent of its equity capital.