Compensation

practices of
Ashok Leyland

By arjun and priyanka

Basic structure of comp&ben in
AL
Total Compensation (TC) for Execs
Total compensation of the Managing Director and Senior Executives consists of the
following components:
1. Base salary (set comparable to peer group and reviewed every year)
2. Variable income
- Annual Performance Pay (APP)
- Performance-related Long-Term Incentive Plan (LTIP)
The distribution between APP and LTIP for (on target) performance aims to
achieve a proper balance between short term result and long term value creation.
Further, the LTIP helps enhance retention of key executives.
Cont

Total Compensation for regular employees and workers

Remuneration of middle and lower level employees of the Company consists
mostly of fixed pay and a reasonable performance pay which is reviewed on an
annual basis. Increase in the remuneration of employees is effected based on
an annual review taking into account performance of the employee and the
performance of the Company also.
Remuneration of workmen employed in the factories of the Company consists
of fixed pay and performance incentives, which is negotiated and agreed upon
on periodical basis. Increase in the remuneration of workmen is effected based
on a review of performance of the Company and increase in the general price
levels/cost of living index, etc.
Compensation cost in FY 2015-
16
Basic Salary, Perquisites, Allowances and retiral benefits - ` 5,28,00,000/-
(Rupees Five Crores Twenty Eight Lakhs only) per annum. The annual
increments will be decided and approved by the Nomination and Remuneration
Committee and the Board of Directors based on his and the Companys
performance.
Insurance , Health and wellness

Health care and insurance

Disability insurance
Vision insurance
Life insurance
Health insurance
Financial and retirement

Pension plan
Retirement plan
Stock options
Performance bonus
Family and parenting

Work from home

Child care
Unpaid extended leave
Maternity and paternity leave
Reduced or flexible hours
Vacation and time off

Vacation
Paid time off
Sick leave
Bereavement leave
Perks and benefits

Employee discount
Employee assistance program
Company car
Free lunch or snacks
Gym membership
Professional support

Diversity program
Apprenticeship program
Job training and tuition
Evaluation in terms of external
equity for design engineer
Salary in Ashok Leyland is 6,36,000 rupees.
Salary in Tata motors is 5,40,632 rupees. (with yearly cash bonus of Rs 30,000)
Salary in Mahindra and Mahindra is 5,33,100 rupees (with yearly cash bonus of
Rs 41600rs.)
if we look at these 3 companies for the salary of design engineer we can safely say
that Ashok Leyland is paying well to its design engineer.
Evaluation in terms of
individual worth
A Design Engineer earns an average salary of Rs 366,821 per year in india.
Experience has a moderate effect on pay for this job. Most people with this job
move on to other positions after 10 years in this field.
So we can safely say that in Ashok Leyland they are paying better than the
average.
ESOP Plan
ASHOK LEYLAND EMPLOYEE STOCK OPTION PLAN 2016
Your Company believes that equity based compensation schemes are an effective tool to reward the employees
(including Directors) in the growth of the Company, to create an employee ownership, to attract new talents, to
retain the key resources in the organisation and for the benefit of the present and future employees of the
Company. In view of the above, the Board of Directors of your Company has approved the formulation and
implementation of Ashok Leyland Employee Stock Option Plan 2016 (AL ESOP 2016) at their meeting held on May
25, 2016. Resolution seeking approval of the members for AL ESOP 2016, have been incorporated in the Notice of
the AGM.
The total number of options to be granted under AL ESOP 2016 shall not exceed 42,68,815 (Forty Two Lakhs Sixty
Eight Thousands Eight Hundred and Fifteen) options constituting 0.15% of the paid-up equity share capital of the
Company as on March 31, 2016. Each option when exercised would be converted into one Equity Share of ` 1/-
(Rupee One only) each fully paid-up.
The appraisal process for determining the eligibility shall be decided from time to time by the Committee. The
broad criteria for appraisal and selection may include parameters like tenure of association with the Company,
performance during the previous years, contribution towards strategic growth, contribution to team building and
succession, cross-functional relationship, corporate governance, etc.
The Scheme shall be implemented and administered either directly by the Company or through an Employees
Welfare Trust or both as the Board/Committee deems fit. In case the Company wishes otherwise, it may be
intimated to the members in due course as per the applicable laws.
Employee cost to turnover ratio

Employee benefit expenses is 1398.75 (crore rupees)

Company achieved a 39% increase in sales turnover at ` 18,822 crores
compared to ` 13,562 crores, last year.
EBE: SALES Ratio is 0.0743:1 or 7.43% of the sales turnover goes towards
employee benefits expense
Employee expenses are up by 19% predominantly reflecting the full year
impact of increments, salary revision for executives as well as higher
provisioning requirements for bonus and performance related compensation
consequent to better performance this year.
VRS Compensation has gone up from 663.5 to 987.10 Lakhs rupees
Split up of EBE

Salaries and wages include compensated absences ` 995.10lakhs(2015:`

1,730.30 lakhs).
Provident fund and family pension ` 4,914.51lakhs (2015:4,700.40 lakhs)
super annuation`1,579.01lakhs (2015:`1,545.98lakhs)
gratuity`2,480.99lakhs (2015:1,462.34lakhs)
other funds 559.68lakhs(2015:561.27lakhs).
Welfare expenses include contribution to employee state insurance plan
44.43lakhs (2015:33.54lakhs), retirement benefits charged of 81.13lakhs (2015:
8.56lakhs) and other defined employee benefits 6.53lakhs (2015: 8.26 lakhs).