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8/19/13 Larsen & Toubro AGM to seek pay hike for AM Naik, others - Economic Times
articles.economictimes.indiatimes.com/2013-07-18/news/40657257_1_nine-independent-companies-k-venkataramanan-executive-chairman 1/4
Tags: Larsen & Toubro | L&T | India Inc | Ican Investment Advisors | Gujarat Ambuja | Anil Singhvi |
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Larsen & Toubro AGM to seek payhike for AM Naik, othersKala Vijayraghavan, ET Bureau Jul 18, 2013, 03.40AM IST
MUMBAI: Engineering and construction conglomerate
Larsen & Toubro (L&T) is seeking shareholders' approval to
increase the variable component of executive chairman AM
Naik's pay from 0.30% of net profit (excluding extraordinary
items) to up to 0.40%. This translates to a 37% or Rs 4.22
crore increase at FY13 profit level over his current variable
pay of Rs 11.29 crore. Naik also earned a fixed salary of Rs
2.68 crore in FY12, according to company statements.
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Slamming the proposal, shareholder activist Anil Singhvi, Founder Director of Institutional Investor Advisory
Services and Chairman ICAN Investment Advisors, said: "It makes no sense to hike salaries at a time when
the economy is in a bad shape."
Across India Inc, CEO compensation increased by only 9% during FY13, according to a December 2012
report by Global management consultancy Hay Group.
L&T is also seeking to increase the variable pay for other top managers including the CEO & MD, the deputy
MD and full-time directors to 0.30%, 0.25% and 0.20% respectively. Earlier, these officials were earlier
eligible for commission of 0.25%, 0.18% and 0.15% of profits respectively.
The proposals, cleared by the board of directors, are outlined in the notice to shareholders for the company's
68th AGM to be held next month.
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8/19/13 Larsen & Toubro AGM to seek pay hike for AM Naik, others - Economic Times
articles.economictimes.indiatimes.com/2013-07-18/news/40657257_1_nine-independent-companies-k-venkataramanan-executive-chairman 2/4
L&T declined to comment on the subject. "We regret we will not be able to discuss the proposal ahead of the
shareholder's discussion/ approval," a company spokesman said.
The notice to shareholders cited a restructuring of the company's businesses resulting in separation of some
of the businesses into subsidiaries as the reason for the proposed compensation change. Naik had
restructured L&T into nine 'independent companies' in 2011 to maintain growth, profitability and shareholder
value.
"What is the scope of additional accountability, value or responsibility that comes with restructuring L&T into
different companies? When you split a company into different businesses or merge it back, does that really
improve the fortunes?" quipped Singhvi.
The former CEO of cement maker Gujarat Ambuja had earlier also opposed a resolution that sought approval
to continue with Naik as executive chairman. Then, IIAS had argued that Naik should have stayed on as non-
executive chairman and handed over businesses reporting to him - 17 of them - to a successor, in this case
K Venkataramanan. Seventy year old Naik, who was due to retire in September 2012, got a five year
extension.
The proposal for a salary hike comes at a time when the $14-billion L&T, like the rest of industry, is hit by the
economic slowdown with a slowing capex and a weak order book.
Larsen & Toubro is tackling fierce competition for new orders in most of its business verticals and has even
lowered its order book guidance for this fiscal.
However, Naik has been credited for single-handedly building L&T into a massive engineering conglomerate
over the years. He joined the company as a Junior Engineer in 1965 and rapidly rose to positions of
increasing responsibility as he moved from General Manager to Managing Director and CEO, culminating in
his appointment as Chairman in December, 2003. L&T split the roles of chairman and managing director in a
major top-management rejig in 2012. It appointed Venkataraman as its CEO & MD, and retained Naik as
executive chairman for the next five years.
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8/19/13 Larsen & Toubro AGM to seek pay hike for AM Naik, others - Economic Times
articles.economictimes.indiatimes.com/2013-07-18/news/40657257_1_nine-independent-companies-k-venkataramanan-executive-chairman 3/4
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8/19/13 Larsen & Toubro AGM to seek pay hike for AM Naik, others - Economic Times
articles.economictimes.indiatimes.com/2013-07-18/news/40657257_1_nine-independent-companies-k-venkataramanan-executive-chairman 4/4
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Readers' opinions (22)
Sort by: Newest | Oldest
22 Jul, 2013 06:13 PM
Rajan (Chennai)
In fact, all the top honchos in L & T should take a voluntary wage cut in view of the lousy performance they have
put up, as exemplified by the recent quarterly results which sent the share price plunging by over 7 %.
22 Jul, 2013 04:38 PMKK (Mumbai)
Why increase their Salary when the share prices have stagnated and the results are not great? They are ripping
the company and shareholders.
20 Jul, 2013 04:55 PMsuresh kamath (mumbai)
A.M.Naik should now mentor the younger group and develop the middle and top level of the L&T and having done
so much for the Company already,groom the people while he is in position and must not go for hike in salary at
this stage of the Development of the L&T We hope better sense prevail and he retains what he gets and behappy about the progress made by his efforts so far
19 Jul, 2013 02:52 PMNitin (abroam)
L&T can grow faster by replacing him with young, fresh blood at lower cost
19 Jul, 2013 11:56 AM
gbss (hhh)
he should now pave way to new leaders.. L&T is stagnating at the moment...
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