Engineering and construction major Larsen & Toubro management on Thursday gave chairman AM Naik and its entire top brass handsome pay increases despite a 12.5 % fall in its April-June net profit to Rs 756 crore. Its profit in the January-March 2013 quarter had fallen 7% to Rs 1,788 crore.
Going by the revised pay structure, Naik will receive close to Rs 20 crore as commission besides Rs 2.64 crore as salary and Rs 4.42 crore as retirement benefits. In 2012-13, he had received Rs 13.74 crore as commission. There is no change in his salary and retirement benefits.
Shareholders gave their unanimous approval to raise the commission paid to the chairman from 0.3% of net profit to 0.4%. It also raised the commission for L&T’s CEO & MD, deputy MD and wholetime directors to 0.3%, 0.25% and 0.2%, respectively, from 0.25, 0.18 and 0.15%.
The move had invited criticism from shareholder activists including Anil Singhvi, founder director of Institutional Investor Advisory Services for hiking executive compensations when the economy is in a bad shape.
Addressing shareholders, Naik said that the economic situation is extremely challenging and the company is taking measures such as expansion of overseas business to offset the negative impact of the domestic slowdown.
“Our order book has grown to Rs 1,75,000 crore from Rs 1,50,000 crore last year. We expect this to increase by another Rs 10,000-15,000 by the end of the fiscal,” he said.
The chairman added that the company has expanded its presence in the Gulf region as its order book there has grown to Rs 25,000 crore from Rs 12,000 crore. “We are developing markets in CIS countries and far east,” he said.
About the domestic economy he said “It will be a year before any improvement will be seen.”