Ashok Leyland Chairman Dheeraj G. Hinduja has come out in favour of linking the salaries of the company’s senior management to various incentives, including share price, as a means of combating the current slowdown.
The truck-maker reported its worst first quarter results in nearly a decade earlier this week.
Mr. Hinduja, in an interview with The Hindu, also pointed out that it was not fair to compare the compensation given to Non-Executive Vice-Chairman R. Seshasayee and Infosys co-founder Narayana Murthy, referring to a recent shareholder query at the company’s annual general meeting.
“You see increasingly senior management of various companies abroad having some component of their package linked to incentives, share price being one of them. I think it is a good measure to look at share price, because it is looking at shareholder value, maximisation and wealth creation,” Mr. Hinduja said.
“It is something the nominations committee of Ashok Leyland has looked at, and, in due time, we might introduce it as well,” he added.
Talking about a recent shareholder query on why Mr. Seshasayee shouldn’t take a lower compensation, Mr. Hinduja pointed out that it was an unfair distinction.
“Some of the statements that have come out are misinformed. The query [asking why Seshasayee shouldn’t take a compensation similar to that of Narayana Murthy] didn’t take into account that the compensation listed was for last year when Sesh [sic] was executive Vice- Chairman,” he said. Nevertheless, he said, there was a “big difference in comparing a promoter who has an equity stake versus somebody who is running the company as a professional.”
Ashok Leyland is also betting on supplies to Indian defence forces and is hoping to reap the benefits of investments it made in the fields of emission technology and IT services, according to V. Sumantran, Non-Executive Vice-Chairman.
“Some of our investments such as Albonair in Germany and Defiance Technologies will pay off this year. We are also part of a number of defence tenders, and have participated with different global players in very different applications but can’t name them,” Mr. Sumantran said, in an earlier interaction with a group of journalists.
