Shareholders reject re-appointment of Apollo Tyres’ MD: report

If there was any doubt about the growing clout of institutional and minority shareholders in the corporate affairs of India Inc., it was laid to rest on Friday when it came to light that the shareholders of Apollo Tyres had rejected a proposal to re-appoint Neeraj Kanwar as managing director.

According to a report in The Economic Times (ET), some institutional shareholders voted with their feet on the proposal of re-appointing Kanwar, son of Onkar Singh Kanwar, Apollo Tyres’ chairman, due to the high compensation that the company proposed to pay him, despite declining revenue and profitability at the company.

“Apollo Tyres’ board of directors will discuss the resolution in the next meeting and determine the course of action to be taken with respect to it. The company would like to reiterate that it is the vision and resolve of the company, and its senior leadership, to deliver value to all its stakeholders including employees, shareholders, customers, partners and other relevant communities,” the company said in a statement.

The development took a toll on Apollo Tyres’ share price on Friday. At 11:05 am, Apollo Tyres’ share price was down 1.83% at ₹217.70 apiece on the BSE. The bourse’s benchmark index, S&P BSE Sensex was up 0.19% around the same time at 36,394.87 points.

According the ET report, Kanwar took home an annual compensation of ₹42.8 crore in 2017-18, 43% higher than in 2016-17. However, Apollo’s annual consolidated net profit in fiscal 2017-18 declined 34% year-on-year to ₹724 crore.

Minority shareholders, including large institutional investors, of Indian companies are increasingly exercising their right to vote on company matters, whether it is on proposals to appoint key management personnel or on related party transactions, aided by a bunch of proxy advisory firms that conduct research on these companies and issue voting recommendations to institutional shareholders.