Mahindra & Mahindra Ltd has reported its biggest-ever annual jump in executive compensation in FY25, thanks to a surge in sport utility vehicle (SUV) sales and a robust rise in its stock price in a slowing auto market.
According to the company’s latest annual report, the total remuneration for top executives jumped 84% in FY25, significantly up from a 44% increase the previous year.
The company’s executive director and CEO (auto and farm sector), Rajesh Jejurikar, saw the biggest jump in annual remuneration, which includes exercise of employee stock ownership plans (Esops), at 99%. Mahindra Group’s managing director and CEO, Anish Shah, saw his annual pay go up by 95%.
According to a person directly aware of the matter, the increase in the top executives’ annual pay was largely due to the good performance of the company’s shares, as managerial personnel hold Esops.
In the last five years, Mahindra’s stock price has increased by over five times while Nifty Auto has seen a three-fold jump. Analysts attribute the strong performance of the company’s shares to its surge in sales on the back of its products finding takers.
“While these (Esops) were given at a much lower value in prior years, the annual report reflects the value of exercise at the current price. Therefore, the increase in stock price is driving the increase in managerial compensation,” the person said.
Key Takeaways
- Mahindra & Mahindra saw an 84% rise in top executives’ pay in FY25, the biggest jump ever, mainly due to gains from stock options.
- CEO Rajesh Jejurikar’s pay rose 99%, and group CEO Anish Shah’s by 95%, driven by Esop exercises as the company’s share price soared 5 times in five years.
- Mahindra’s strong SUV sales grew 20% in FY25, outperforming rivals like Hyundai and Tata Motors, which saw a 3% decline.
- Non-managerial staff saw just a 10% salary hike in FY25, down from 14% in FY24.
- Analysts credit Mahindra’s SUV portfolio and steady demand for its strong investor sentiment and stock performance.
Queries emailed to Mahindra and Mahindra Ltd remained unanswered until press time.
In its annual report, the company disclosed that the remuneration of its managerial personnel is dependent on several factors, apart from the exercise of stock options.
“The remuneration of the Managing Director and Executive Director is decided based on the individual performance as well as performance of the company, inflation, prevailing industry trends and benchmarks,” the company’s annual report said.
Mahindra rides SUV wave
The average salaries of employees other than managerial personnel increased by 10% during the last financial year, compared to a 14% rise in FY24.
“Among all the auto companies, Mahindra has been outperforming for a while, which is giving investors confidence. Its SUV portfolio and the market’s affinity for such products are helping the company attract investors,” Saji John, senior research analyst atGeojit Financial Services, said.
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In FY25, Mahindra and Mahindra recorded a 20% surge in sales to 551,000 units. Its closest rivals,Hyundai Motor India andTata Motors, both saw their sales decline by 3% during the last financial year to 598,666 units and 556,263.
M&M has also continued to grow in sales in the current financial year, recording a 22% jump in sales to 152,067 units from April to June.
“In June, we achieved SUV sales of 47,306 units, a growth of 18%, and total vehicle sales of 78,969 units, a 14% growth compared to the same month last year. The quarter ended on a very positive note for us, marking the highest quarter ever for SUVs,” Nalinikanth Gollagunta, CEO, Automotive Division, Mahindra and Mahindra.
In the first quarter, Mahindra became the second-largest car maker in the country in terms of sales, while rivals Hyundai Motor India and Tata Motors lagged behind.
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On Tuesday, Mahindra’s share price declined by 0.23%, compared to a 0.2% decline in Nifty Auto.
Source:https://www.livemint.com/companies/news/mahindras-bull-run-leads-to-biggest-ever-jump-in-annual-pay-for-top-executives-11751372924057.html