Report on Corporate Governance

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Remuneration of Directors

Non-Executive Directors

  • The remuneration by way of commission to the Non-Executive Directors is decided by the Board of Directors and distributed to them based on their participation and contribution at the Board and Committee meetings and performance evaluation by the Board. A proposal to pay Commission to Non-Executive Directors of the Company, of a sum not exceeding 1% of the net profits of the Company for FY 2018-19 and onwards in terms of Section 197 of Act, computed in accordance with the provisions of Section 198 of the Act or such other percentage as may be specified from time to time, is also included in the Notice of this AGM. The Commission to the Non-Executive Independent Directors for FY 2018-19 is payable subject to the shareholders’ approval. The performance evaluation criteria for Non-Executive Directors, including IDs, is determined by the NRC.

    • An indicative list of factors that were evaluated include participation and contribution by a director, commitment, effective deployment of knowledge and expertise, effective management of relationship with stakeholders, integrity and maintenance of confidentiality and independence of behaviour and judgement.

  • A sitting fee of Rs.60,000/- for attendance at each meeting of the Board, Audit Committee, NRC and for IDs Meeting; Rs.20,000/- for attendance at each meeting of Stakeholders’ Relationship Committee; Safety, Health & Sustainability Committee; the Corporate Social Responsibility Committee; Risk Management Committee and other special need based committees, is paid to its Members (excluding Managing Director and Executive Director) and also to Directors attending by invitation. The sitting fees paid/payable to the Non Whole-time Directors is excluded whilst calculating the limits of remuneration in accordance with Section 197 of the Act. The Company also reimburses out-of-pocket expenses to Directors attending meetings held at a city other than the one in which the Directors reside.

    Given below are the Commission and Sitting Fees payable / paid by the Company to Non-Executive Directors during FY 2018-19:

  1. Payable subject to shareholders’ approval.
  2. As a policy, Mr N Chandrasekaran has abstained from receiving commission from the Company.
  3. Dr Speth is not paid any commission or sitting fees for attending Board meetings of the Company in view of his appointment as Chief Executive Officer and Director of Jaguar Land Rover Automotive PLC.

Some of the aforementioned Directors are also on the Board of the Company’s subsidiaries and associates, in a non-executive capacity and are paid remuneration and sitting fees. Other than the above and their shareholding in the Company, the Non-Executive Directors have no pecuniary relationship or transactions with the Company, its subsidiaries and associates.

Managing and Executive Directors

The remuneration paid to the CEO & Managing Director and the Executive Directors is commensurate with industry standards and Board level positions held in similar sized companies, taking into consideration the individual responsibilities shouldered by them and is in consonance with the terms of appointment approved by the Members, at the time of their appointment.

The NRC, reviews and recommends to the Board the changes in the managerial remuneration, generally being increment in basic salary and commission/incentive remuneration of the Managing and Executive Directors on a yearly basis. This review is based on the Balanced Score Card that includes the performance of the Company and the individual director on certain defined qualitative and quantitative parameters such as volumes, EBITDA, market share, cashflows, cost reduction initiatives, safety, strategic initiatives and special projects as decided by the Board vis-a-vis targets set in the beginning of the year. This review also takes into consideration the benchmark study undertaken by reputed independent agencies on comparative industry remuneration practices.

Whereas the basic salary of the CEO & MD is fixed for his entire tenure, the variable portion of the CEO & MD’s remuneration consists of incentive remuneration in the form of performance linked bonus and long-term incentive. The target performance linked bonus would be €550,000/- per annum upto a maximum of €825,000/- per annum. With the objective of achieving long-term value creation, through retention and continuity in leadership, a long term incentive plan is also provided with a value intended target of €550,000/- per annum upto a maximum of €825,000/- per annum.

The variable portion of the ED & COO remuneration consists of a profit-linked commission and/or merit based incentive remuneration. The profit-linked commission is awarded at the discretion of the NRC and the Board of Directors, based on the net profits of the Company for that financial year, subject to the overall ceiling limits stipulated in Section 197 of the Act, but in any case not exceeding 400% of the basic salary. In case the Net Profits of the Company are inadequate for payment of profit-linked commission in any financial year, an incentive remuneration, not exceeding 200% of the basic salary, may be paid at the discretion of the Board.

Given below are details pertaining to certain terms of appointment and payment of Managerial Remuneration to the CEO & MD and the ED & COO for FY 2018-19:


  1. Includes reimbursement of pension benefits of Rs.164.98 lakhs.
  2. Includes leave encashment of Rs.2.04 lakhs.
  3. Incentive remuneration would be payable as per agreement

The terms of appointment with respect to severance notice period and fees payable is reproduced below:

The Directors of the Company are not eligible to receive employee stock options and have accordingly not participated in the Employee Stock Option Scheme of the Company.

Retirement Policy for Directors

As per the retirement age policy adopted by the Company, the CEO & MD and the ED & COO retire at the age of 65 years. The retirement age for NINEDs is 70 years and for IDs is 75 years as per the Governance Guidelines on Board Effectiveness. Accordingly, all IDs have a tenure of 5 years or a tenure upto the retirement age of 75 years, whichever is earlier.

Succession Planning

The NRC works with the Board on the leadership succession plan to ensure orderly succession in appointments to the Board and in the senior management. The Company strives to maintain an appropriate balance of skills and experience, within the organization and the Board, in an endeavor to introduce new perspectives, whilst maintaining experience and continuity.

By integrating workforce planning with strategic business planning, the Company deploys necessary financial and human resources to meet its objectives. Succession planning and elevation within the organization, fuel the ambitions of its talent force, to earn future leadership roles.

Our Board includes 9 directors with broad and diverse skills and viewpoints to aid the Company in formulating and implementing its strategy.

STAKEHOLDERS' RELATIONSHIP COMMITTEE

The Stakeholders’ Relationship Committee functions in accordance with Section 178 of the Act and Regulation 20 read with Part D of Schedule II of the SEBI Listing Regulations. The suitably revised terms of reference enumerated in the Committee Charter, after incorporating therein the regulatory changes mandated under the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, are as follows:

  • Approve issue of duplicate certificates for securities and transmission of securities.
  • Resolve grievances of security holders of the Company, including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings, etc.
  • Review measures taken for effective exercise of voting rights by shareholders.
  • Review adherence to the service standards adopted by the Company in respect of various services being rendered by the Registrar & Share Transfer Agent.
  • Review various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the Company.
  • Oversee statutory compliance relating to all securities including dividend payments and transfer of unclaimed amounts to the Investor Education and Protection Fund.
  • Review movements in shareholding and ownership structures of the Company.
  • Conduct a Shareholders’ Satisfaction Survey to ascertain the level of satisfaction amongst shareholders.
  • Suggest and drive implementation of various investor-friendly initiatives.
  • Carry out any other function as is referred by the Board from time to time or enforced by any statutory notification / amendment or modification as may be applicable.