The Companies Act of 2013 empowers all shareholders -- even minority stakeholders -- to approve or reject a company's decision. Shareholders have at times used that power and shot down salary hikes, promotions or reappointments of CEOs, MDs, whole time directors and even managers.

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Here's a look at some recent instances of shareholder activism in India.

Ajit Gulabchand, CEO of Lavasa

and MD of HCC, had to refund the excess salary to the company pocketed without sanction of the Centre in 2015. He was entitled to a salary of Rs. 1.72 crore in 2013 but he drew Rs 10.66 crore instead.

In 2014, nearly 30 percent of Tata Motors shareholders rejected a resolution to increase remuneration of three directors, Executive Director (commercial vehicles) Ravindra Pisharody, Executive Director (Quality) Satish Borwankar, and the legal heir of former managing director Karl Slym. The company had to seek approval from its shareholders because of “inadequacy of profits” at that time.

Two year later, Tata Motors had to seek government approval to pay MD Guenter Butschek after the management had agreed to pay him Rs 27.24 crore per annum as his salary.

Stakeholders have also been found to reject appointments of managing directors at times. Minority shareholders of Apollo Tyres rejected the re-appointment of Neeraj Kanwar as the MD of the company in 2018. The resolution was rejected, citing the high compensation proposal of Neeraj Kanwar.

Thereappointment with 10 percent salary hike of Siddhartha Lal, Managing Director & CEO, Eicher Motors was rejected by shareholders. The shareholders said in a pandemic year, a salary hike amid lower revenues and a dip in profits was not appreciated. Lal’s salary grew by 28 percent CAGR over the past three years while the company’s operation profit and net profit dipped by 14 percent and 8 percent, respectively over the same period. The employees’ salary grew by just 1 percent.

Lakshmi Vilas Bank in September 2020 saw its shareholders vote against the reappointment of seven of its 10 directors including the MD and CEO S. Sundar. They also rejected the reappointment of the statutory auditors of the bank at the AGM in September.

The following month, 90 percent of Thrissur-based Dhanlaxmi Bank’s shareholders ousted the MD and CEO Sunil Gurbaxani as they felt he was favouring north Indian investors. The shareholders of the old generation private bank had preferred to remain and retain its regional identity instead of having a national focus.

(Edited by : Shoma Bhattacharjee)