It seems that for the first time the share-holders of the Tata Motors have put their foot on the management. The Management had decided high compensation for its Directors coming to crores. As per Companies Act, if a company is in loss, the compensation to its Director is limited to 48 lakhs.
Now the Tata Motors for Financial Year 2014 has posted loss. If the compensation is to be more than 48 lakhs, the approval of the share holders is necessary. This time when the loss has taken place, 75% of the shareholders have rejected the proposal for higher compensation for its Directors. Now, if the Management acts according to the opinion of the shareholders, some of the directors will have to return Rs. 3 crores to 14 crores.
But it is certain that the management / Directors will find out some plea/reason to keep up their high compensation. It will only be the workers who will have to face the result of the loss, not the Directors who are fully responsible for the loss.