Shareholders of Tata Motors have rejected proposals to pay higher salaries to three of the auto major's top executives including late Karl Slym.
The proposals that entailed doling out higher pay packets - beyond the permissible limit - were put for shareholders' approval and were rejected "due to inadequacy of profits in company for FY 2013-14".
Salary proposals for Tata Motors' executive directors -- Ravindra Pisharody (Commercial Vehicles) and Satish Borwankar (Quality) -- and Slym (late managing director) have been rejected by the shareholders through postal ballot.
Announcing the results of the postal ballot today, Tata Motors said the three proposals were not passed with requisite majority by the shareholders.
"These three resolutions on senior executive remuneration secured 70 per cent approval of voting shareholders, marginally below the approval threshold of 75 per cent. The company takes due note of the postal ballot results," a Tata Motors spokesperson told PTI.
Noting that it has taken cognisance of the shareholders' views, Tata Motors said that at the same time, it is necessary to balance this with recruiting and retaining an industry- proven management team through the long-term.
"This involves ensuring that the company's leadership and talent base is appropriately remunerated, notwithstanding cyclical phases. This is particularly important when the company has ongoing significant turnaround and growth strategies under execution," the spokesperson said.
Results of the postal ballot, held on May 22, were disclosed by the company in a filing to the BSE today.
"These resolutions require shareholder approval as per the Companies' Act due to the inadequacy of profits in the company for FY 2013-14," the spokesperson said.
According to Tata Motors, structure of the remuneration proposals were first cleared by the company in the 2012-13 fiscal, but needed to be approved by shareholders.
"The proposals are consistent with market benchmarks and based on a series of metrics relating to the company's overall performance and health, and aggressive implementation of strategies for future growth.
"So far as the inadequacy of profits is concerned, this comes in a situation of unprecedented and prolonged economic slowdown in the national economy, weak consumer sentiment, and subdued infrastructure activity," the spokesperson said.
Emphasising that this slowdown impacted the entire auto industry last fiscal, she said the commercial vehicle segment -- a mainstay of Tata Motors' business and profitability -- declined by 22.4 per cent over the previous financial year.
Meanwhile, shareholders approved three other proposals relating to sanction borrowing up to Rs 30,000 crore.
Asserting that the company remains committed to pursuing the long-term interests of all stakeholders, Tata Motors said it was "currently considering its options".
Shares of the company rose 3 per cent to close at Rs 468.80 on the BSE.
Citing the postal ballot results, proxy advisory from InGovern Research Services said that institutional investors have decisively voted against the ratification of excess remuneration - aggregating Rs 20.28 crore - to the executive directors.
Executive directors and managing director are tasked with setting the company's long-term and short-term strategy besides being also responsible for operational performance, it noted.
"Hence their remuneration and incentives should ideally be aligned with the financial performance of the company.
"InGovern is against increase in remuneration in case of decline in financial performance or payment of excessive remuneration to directors of perennially underperforming companies," it said in a statement.