REMUNERATION
POLICY
The remuneration
policy for members of the Board of Management is drafted in a manner which aims
to improve the performance of the Board of Directors of XYZ Limited (the ‘Company’)
and subsequently enhance the value of the Company, to motivate and retain
them,
and to be able to attract other highly qualified executives to enter into XYZ’s
service, when required.
In determining the
remuneration policy, the Remuneration Committee ensures that a competitive
remuneration package for Board-level executives commensurate to their talent is
maintained and benchmarked with other similar companies operating in domestic
market.
The terms of
reference, objectives and key elements of the policy produced below is in line
with the provisions of Section 178(4) of the Companies Act, 2013, which
requires that the policy be formulated in a manner such that it ensures that the
level and composition of remuneration is reasonable and sufficient to attract,
retain and motivate directors of the quality required to run the Company successfully
and also that relationship of remuneration to performance is clear and meets
appropriate performance benchmarks.
Deviations from
elements of this remuneration policy in extraordinary circumstances, when deemed
necessary in the interests of the Company, will be disclosed in the annual
report or, in case of an appointment, in good time prior to the appointment of
the individual.
OBJECTIVES OF REMUNERATION POLICY
The objective of XYZ Limited’s
remuneration policy is to attract, motivate and retain qualified and expert
individuals that the Company needs in order to achieve its strategic and
operational objectives, whilst acknowledging the societal context around
remuneration and recognizing the interests of XYZ Limited's stakeholders.
BASIS
OF FORMULATION
The Company while deciding the
remuneration package of the senior management members takes into consideration
the following items:
- employment scenario
- remuneration package of the industry and
- remuneration package of the managerial talent of other industries.
KEY
ELEMENTS OF THE POLICY
The
following elements are taken into consideration:
a) XYZ Limited strives
for a high performance in the field of sustainability and aims to maintain a
good balance between economic gains, respect for people and concern for the
environment in line with XYZ Limited’s values and business principles as
reflected in the Company’s Code of Business Conduct. The remuneration policy
reflects a balance between the interests of the Company’s main stakeholders as
well as a balance between its short-term and long-term strategy. As a result,
the structure of the remuneration package for the Managing Board is designed to
balance short-term operational performance with the medium and long-term
objective of creating sustainable value within the Company, while taking into
account the interests of its stakeholders.
b) To ensure that highly
skilled and qualified senior executives can be attracted and retained, XYZ
Limited aims for a total remuneration level that is comparable to levels
provided by other companies that are similar to the Company in terms of size,
line of production and complexity.
c) The remuneration
policies for the members of the Managing Board and for other senior executives of
XYZ Limited are aligned.
d) The relationship of
remuneration to performance is clear and meets appropriate performance
benchmarks; and
e) The remuneration to
directors, key managerial personnel and senior management involves a balance
between fixed and incentive pay reflecting short and long-term performance
objectives appropriate to the working of the Company and its goals:
Features
of the Remuneration Policy for Members of the Board of Management:-
Terms
of reference
The terms of reference of the
Remuneration Committee, inter alia, consists of reviewing the overall
compensation policy, service agreements, performance incentive and other
employment conditions of Board Member(s). The recommendations of the
Remuneration Committee are considered and approved by the Board of Directors,
subject to the approval of the shareholders, where necessary. The Company
Secretary is the Secretary to the Committee.
The remuneration of the Executive
Director is recommended by the Remuneration Committee based on criteria such as
industry benchmarks, the Company’s performance vis-à-vis the industry,
responsibilities shouldered, performance/track record, review on remuneration
packages of heads of other organisations and is decided by the Board of
Directors, subject to the approval of the shareholders at the General Meeting
of the Company. The Company pays remuneration by way of salary, perquisites and
allowances (fixed component) to its Executive Director.
Constitution
The Remuneration Committee
currently comprises of three (3) Directors and is chaired by Mr. M C Singh, an
Independent Director. During the year under review one (1) Meeting was held on 15th
July, 2013.
The details of composition of
the Remuneration Committee along with attendance of the Committee Members at
the meetings held during the year under review, is as detailed herein:
|
Name
of Directors
|
Category
|
Number
of Meetings attended
|
|
Shri
M C Singh
|
Non
Executive – Independent
|
1
|
|
Shri
B M Rampuria
|
Non
Executive
|
-
|
|
Shri
R Tapadar
|
Non
Executive
|
1
|
Remuneration payable to Executive
Director
Shri R M Bayed, Executive
Director & CEO of the Company was re-appointed on a contractual basis in
terms of resolution passed by the shareholders at the Thirty-fifth Annual
General Meeting held on September 27, 2013 for a period of 3 years with effect
from August 1, 2013. The elements of the remuneration package of the Executive
Director comprises of salary, perquisites & allowances comprising of Company
maintained accommodation or house rent allowance, leave travel allowance and
other perquisites and allowances including Company’s contribution to provident
fund, gratuity and leave encashment facilities in accordance with rules of the Company.
There is no Annual Performance
linked incentive apart from increments offered at the time of re-appointment on
the recommendation of the Remuneration Committee.
The details of the remuneration
paid to Shri R M Bayed, Executive Director & CEO of the Company during the
year ended March 31, 2013 is as under:
|
Particulars
|
(Rs.)
|
|
Salary
& Allowances*
|
98257
|
|
Dearness
Allowance
|
30%
of Basic Salary
|
|
House
Rent Allowance
|
40%
of Basic Salary
|
|
Thus,
the Company pays remuneration by way of salary, perquisites and allowances
(fixed component) to its Whole-time Director. Salary is paid within the range
approved by the Shareholders. Annual increments effective 1st April each
year, is recommended by the Remuneration Committee and approved by the
Shareholders at the 35th Annual General Meeting. The ceiling on
perquisites and allowances as a percentage of salary is fixed by the Board.
Within the prescribed ceiling, the perquisites package is approved by the
Remuneration Committee.
Remuneration
payable to Non-Executive Directors
The
Non-Executive Directors have decided to forgo their sitting fees for
attending the meetings of the Company at the meeting of Board held on 15th
May, 2013.
None
of the Non-Executive Directors are entitled to any remuneration. The
Non-Executive Independent Directors of the Company do not have any other
material pecuniary relationships or transactions with the Company or its
directors, senior management, subsidiary or associate, other than in normal
course of business.
|
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|
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|
The contract may be terminated
by either party giving the other party six months' notice or the Company
paying six months' salary in lieu thereof.
There is no separate provision
for payment of severance fees.
|
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Contracts
of employment
Members of the Board
of Management have a contract of employment with the Company. The form of
contract used for members of the Board of Management is in line with the
standard form used for other XYZ’s Executives. The main elements of the
contract of a newly appointed member of the Board of Management shall be made
public no later than at the time of issuance of the notice convening the
General Meeting of Shareholders in which a proposal for appointment of a member
of the Board of Management is placed on the agenda.
Effective
Date
The policy comes into
effect from 1st April, 2014.
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