Incentives for JLR's senior executives are now linked to Tata Motors's market performance
The annual bonuses of Jaguar Land Rover Ltd's senior executives now partly depend on the performance of parent Tata Motors Ltd's shares, with so-called 'phantom stocks' substituting in for regular stock options or bonuses.
The decision comes at a time when JLR, Tata Motors's UK-based subsidiary, faces growth challenges amid a slowdown in the Chinese automobile market and the US's reciprocal tariffs, which could make premium cars such as Jaguar and Land Rover more expensive.
JLR said in its annual report for 2024-25 that it introduced a cash-settled long-term incentive plan last year for certain employees.
The incentive plan, which replaces JLR's annual strategic bonus programme, is a phantom share scheme to reward the company's senior executives based on business results and valuation. These are not real stocks and do not give equity ownership in the company but mirror the value of Tata Motors's shares.
JLR accounted for 71% of Tata Motors's revenue in FY25. Tata Motors's share price has declined by more than 2% so far this year as against a nearly 3% rise in the Nifty Auto index. On Tuesday, Tata Motors gained about 2% to end at ₹732.70 on NSE.
Employees eligible for the scheme will be rewarded a cash payment based on two things: the performance of Tata Motors' shares over a period of three years and achievement of long-term business metrics.
'The scheme will provide a cash payment to certain employees based on the Group's performance against long-term business metrics related to performance and strategic priorities and the share price of Tata Motors Limited over a period of three years," Tata Motors said in its FY25 annual report.
In a statement to Mint, a company spokesperson said the decision to change the bonus pay structure was in line with industry standards.
The long-term incentive plan accrues over a three-year period and 'is in line with other industry long-term incentive plans and the interests of shareholders", the spokesperson said, without elaborating on the details of the scheme and how the payouts will be made to senior management.
JLR's annual report suggests the performance metrics are based on four indicators: retail sales, customer satisfaction, cash flow, and earnings before interest and tax margin.
Also read | Jaguar Land Rover tariff hit compounds Tata Motors' domestic woes
JLR's employee retention strategy
Industry experts said incentive plans such as JLR's phantom stock scheme allow companies to incentivise retaining employees for a longer period and also manage cash flows in the short term.
'From a stability perspective, considering that phantom option schemes are typically vested across a longer period, companies are able to retain employees for a longer period and manage their short-term cash flows, as opposed to bonuses, which may be required to be paid out more regularly to employees," Ifrazunnisa Khan, counsel at Initium Legal Services, said.
Neha Sinha, founder and partner, Corporate Law and Policy Advisors, noted that JLR's phantom stocks scheme allowed it to link incentives to its listed parent without having to dilute any shareholding.
'This route allows secondary businesses to bank on their more successful parent and group companies for incentivising their employees and advisors," Sinha said.
JLR stated in its FY25 annual report that as its long-term incentive plan is cash-settled and based on phantom shares, it would not dilute the holdings of existing shareholders.
Although JLR recorded £5 million as 'employee costs" for FY25 in relation to its long-term incentive plan, no phantom shares were exercisable at 31 March 2025, the company added.
Also read | Tata Motors, JLR flag EV supply chain as a separate business risk
Global headwinds for JLR
Tata Motors, India's third-largest carmaker by revenue, is looking to stabilise JLR's business as the UK-based subsidiary faces multiple headwinds that forced its management to hold back announcing growth projections for 2025-26.
In FY25, Jaguar Land Rover's revenue fell 0.1% to £28.9 billion while profit before tax declined 30% to £1.8 billion. Retail sales declined 0.6% to 428,854 units.
JLR's largest markets include North America, China and Europe. In the US and China, the company is currently facing headwinds due to multiple factors including the threat of reciprocal tariffs by US President Donald Trump's administration and the company's slowing sales in China.
Also read | Who says Jaguar's new ad campaign is 'too woke to work'?
JLR halted exports to the US in April to assess the situation before resuming in May. Also, JLR decided last year to discontinue all Jaguar models including XE, XF, XF Sportwagon, and F-Type, barring one. It plans to make Jaguar an all-electric brand by 2026.
'In JLR, discontinuance of 'Jaguar' models, loss of market share in the China region, and imposition of tariffs in the US region, shall lead to a volume contraction ahead," analysts at Nuvama Institutional Equities said
Analysts at Motilal Oswal Financial Services said, 'JLR continues to face multiple headwinds due to the tariff-led uncertainty in its key markets. As a result, management has refrained from giving any guidance for FY26 and beyond."
Also read | How Tata Motors plans to win back the market with its hatchbacks
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
39 minutes ago
- Time of India
Trade deal lacks fine print, raising doubts over US-China truce: Shaun Rein
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel "You can have companies, the big automakers like Ford and GM are rumoured to say, we need to relocate our manufacturing to China, so we can get access to rare earths despite the heavy tariffs that they would then incur by going into the United States. But here is the thing, China's media has been a lot more circumspect with the details of this so-called trade agreement," says Shaun Rein, China Market Research is a great and big question. Trump is saying the deal has been signed and he has been talking about that the Chinese are going to send rare earths and magnets in advance to whatever the United States needs because what you have seen in the last month is the lack of rare earths that were exported to the United States has really crippled the American economy You can have companies, the big automakers like Ford and GM are rumoured to say, we need to relocate our manufacturing to China, so we can get access to rare earths despite the heavy tariffs that they would then incur by going into the United States. But here is the thing, China's media has been a lot more circumspect with the details of this so-called trade has said the rumour is that they will give maybe export licenses to rare earths on a six-month trial basis to American companies. So, basically Trump is exaggerating the win in his mind and China is being a lot more honest probably saying well we do not have all the details ironed out, we want to come to an agreement but quite frankly China has the upper hand in the trade war with the United States right that the United States makes except for semiconductors, the Chinese can buy elsewhere. So, instead of buying American beef, they are buying Australian beef; instead of buying American oil, they are buying Canadian oil; instead of buying American soybeans, they are buying Brazilian soybeans. So, what you have seen is that there is a total shift in trade patterns and a total shift in power and China is at the top of the triangle, the top of the pyramid right now in terms of buying goods and trading goods from other countries. We are seeing a shift in world order right I mean that that is not true. I mean, Chinese equity markets are up 15-16% since the start of the year while the S&P 500 is only up about 2%. So, it is quite clear that the Chinese Hong Kong equity markets are outperforming the United States right the equity markets also do not necessarily reflect the economy. So, what you are seeing right now is Abigail Johnson, who is the head of Fidelity , the rumour is today that her private investment house is going to be selling 40 Chinese tech companies that they have long held because they are worried about the regulatory and I have been talking with a lot of mutual funds, I have been talking with a lot of LPs like pension funds and endowments and they are getting huge pressure from not just Trump , but previously under the Biden regime to derisk by not investing in Chinese equities, so that does not mean the economy is bad, that just means more oppression and bullying from the United States because they are trying to really contain China's economic might have happened eight years ago and that might have worked eight years ago. But the big problem is the United States has gone after Europe. The United States has gone after Canada. You even hear Howard Lutnick, the Secretary of Commerce , criticised India last week and said, why is India buying Russian weapons, they should be buying American the reality is the United States under Trump and Biden has been bullying people all around the world. And I think at some point the global south or I prefer to call it the global majority is saying you know what, let us not deal with all the drama, let us not deal with weaponization of the US dollar, weaponization of technology and let us move closer towards China where we have a lot more stable relations with Australia for instance, Australian dollar has strengthened in the last couple weeks because basically Australia is a proxy for China. Australia's economy does well when China's economy does well, whether it be buying iron ore, whether it be buying tourists going to Australia to buy products, so that is why the Aussie has strengthened and the US dollar is weakened. Now when it comes to liquidity and volume going back towards China, we are still at a very initial of the global funds only have about 25% of their holdings exposed to China. I recommend retail investors to have 15% to 20% because of the volatility and the regulatory we are seeing in my conversations with institutional investors like hedge funds that they want to come back into China, but they have not come back yet. Now, that gives a great opportunity for speculators and people who have a high-risk appetite to trade in front of the institutional personally, I am getting more exposure to Hong Kong equities the last six months because I am trying to front run what the hedge funds are doing because they still have not quite gotten into the markets yet and they will in the next three to six months because they have to make the business case, China is outperforming the S&P the United States needs a deal. Frankly, China controls about 30-35% of global manufacturing. So, America might have the money, they might have the capital, but they need to buy the products from China. At the end of the day, China makes not just rare earths, about 90% of refined rare earths, but they also make most of the ibuprofen, most of the of the antibiotics in the world comes from China. So, at the end of the day, that is real leverage. So, for instance in 2017, 18% of Chinese exports went to the US, that number is down to 14%. China on the other hand has shifted and exports to Asean, has gone up to 16%.So, basically, it is a game of chicken right now. China's economy is hurting, do not get me wrong. There are about 15 million people who are involved in the export sector. You have seen that the CPI index has dropped about 0.1%. So, we are dealing with the D-word, the economy in China is not booming, but China is not going to blink. They have the resolve to push hard back against Trump and Scott Bessent and Howard Lutnick because at the end of the day, the Americans need to buy from China. They cannot buy antibiotics from any other country in the world except for a little bit from India.
Time of India
an hour ago
- Time of India
The End of Banking in Canada? Wealthsimple launches credit card with 2 percent cashback, 2.75 percent chequing, and instant loans in bid to disrupt the Big 6
Wealthsimple unveiled what CEO Michael Katchen calls 'our take on banking', pivoting from its fintech roots into full-fledged everyday finance. The Toronto-based firm introduced its first credit card, an upgraded high-interest chequing account, and announced an instant line of credit coming by year's end, all part of its ambitious goal to become Canadians' primary financial relationship. More than 110,000 people tuned in virtually, and hundreds packed Toronto's Evergreen Brick Works to witness the reveal of what Wealthsimple dubs 'The End of Banking?'. On stage, New Jersey-born Sam Newman‑Bremang, the product director, shared, ' It's our take on banking ' , as he described their goal of integrating savings, spending, and investing under one roof. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like New 3BHK Flats In Hanoi:(Take A Look At Prices) Apartments | Search Ads Search Now Undo 2 percent cash back, no annual fee Wealthsimple's new Visa Infinite credit card offers unlimited 2 percent cash back on all purchases, with no annual fee, foreign exchange fees, or tap limits. Newman‑Bremang described it as 'the company's most‑requested product to date'. Clients with over CAD 100,000 in assets receive an upgraded metal version. A chequing account that grows Live Events Previously known as Wealthsimple Cash, the revamped chequing account offers up to 2.75 percent interest, the highest in Canada for a chequing account, plus no monthly or ATM fees, no FX charges, and early direct‑deposit access up to a day early As Paul Teshima, chief commercial officer, explained to MoneySense: '[Hidden] fees are a tax on choice.' . About one in four Wealthsimple users now have the account By the end of this year, Wealthsimple will offer an instant line of credit (rates starting at 4.45 percent) tied to eligible account balances. More nostalgically, they're also rolling out on‑demand cheque and cash delivery, customers in Toronto will soon find real money or bank drafts arriving at their door. A fintech taking on the "Big Six" Canada's banking scene is notoriously concentrated: the top six hold 93 percent of assets. Wealthsimple, which is valued at roughly CAD 5 billion, serves 3 million clients and manages $70 billion in assets, and aims to disrupt that status quo. CEO Katchen didn't mince words: 'The way I see it, the banks are a tax on all of us. We as Canadians need to demand more.' Wealthsimple's consolidated ecosystem promises simplicity, with high interest, low fees, and rewards for investing inside the platform. It does, however, mean no physical branches and total reliance on digital delivery.
Time of India
an hour ago
- Time of India
Lumpsum vs SIP: Is caution killing the case for lumpsum?
With mutual fund SIP inflows reaching record highs in May amid a market rally, a key question arises: Why are investors moving away from lumpsum investments? An expert explains that geopolitical tensions, trade concerns, and fears of a global slowdown—along with muted earnings and valuation worries—have made investors more cautious about lumpsum investing. 'A combination of geopolitical uncertainty, trade wars, and fears of a global slowdown have made investors less confident about investing in lumpsums and more inclined towards SIPs in the current environment. Additionally, the slowdown in corporate earnings and concerns over the valuations of mid- and small-cap stocks are pushing investors to prefer SIPs as their investment strategy,' said Vishal Dhawan, CEO of Plan Ahead Wealth Advisors, a Mumbai-based wealth management firm, in a conversation with ETMutualFunds. Also Read | Mutual fund SIP inflows at record high, rise marginally to Rs 26,688 crore Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » In May, mutual fund SIP inflows rose marginally by 0.21% to Rs 26,688 crore, compared to Rs 26,632 crore in April. On a yearly basis, SIP inflows have surged nearly 28% from Rs 20,904 crore in May 2024. In the current financial year so far, total SIP contributions by investors stand at approximately Rs 53,320 crore. For the calendar year to date, total SIP contributions have reached nearly Rs 1.31 lakh crore, up from Rs 98,571 crore during the same period last year. Live Events The benchmark indices—Nifty50 and BSE Sensex—are down about 4% from their 52-week highs. With markets hovering near record levels, is the fear of buying at the peak discouraging lumpsum investments? Addressing the trend, Dhawan noted that investors often anchor to index highs, and their past experience of corrections from those levels tends to impact their willingness to invest in lumpsums. According to the latest monthly data from the Association of Mutual Funds in India ( AMFI ), equity mutual funds witnessed a 22% drop in monthly inflows, receiving Rs 19,013 crore in May compared to Rs 24,269 crore in April. Debt mutual funds saw an outflow of Rs 15,908 crore in May, a sharp reversal from the inflow of Rs 2.19 lakh crore in April. Meanwhile, hybrid mutual funds attracted higher inflows than equity mutual funds in May, with inflows rising 46% to Rs 20,765 crore from Rs 14,247 crore in April. Also Read | Midcap mutual funds deliver 19% return in 3 months. Check top performers Passive funds saw a steep 73% decline in monthly inflows, receiving Rs 5,525 crore in May compared to Rs 20,229 crore in April. Different mutual fund categories showed mixed trends, with some attracting investor interest while others witnessed a decline. Dhawan advises that investors can still consider lumpsum investments in the current environment through hybrid equity funds, multi-asset funds, balanced advantage funds, and equity savings funds. Overall mutual fund inflows dropped by 89% in May. However, total assets under management (AUM) grew 3%, rising to Rs 71.93 lakh crore in May from Rs 69.73 lakh crore in April.
