Aman Dhall, New Delhi, February 8, 2009
The Economic Times
Call them the blue chip choices of India’s top-50 listed companies — economist and banker Nasser Mukhtar Munjee and former Cabinet secretary and ambassador to the US Naresh Chandra are the top choices for independent director posts, according to a SundayET analysis of Nifty companies.
They pipped industry stalwarts such as HDFC CMD Deepak Parekh, ICICI Bank non-executive chairman Narayanan Vaghul, Britannia and Bombay Dyeing boss Nusli Wadia and Nobel Laureate environmentalist Rajendra Kumar Pachauri, according to the latest information filed by India Inc at the Bombay Stock Exchange (BSE).
In all, 56-year-old Munjee and 74-year-old Chandra appear on the boards of four companies each. While the former is an independent director on the boards of ABB, Ambuja Cements, HDFC and Tata Motors, the latter is an independent director at ACC, Ambuja, Cairn India and TCS.
Interestingly, eight people share the second spot with three independent director nominations each on the boards of Nifty 50 companies.
These include Arun Kanti Dasgupta (ABB, Grasim Industries, Mahindra & Mahindra), Deepak Parekh (Hindustan Unilever, M&M, Siemens), Amal Ganguli (HCL, Maruti, Tata Communications), Sam Maneckshaw Palia (ACC, Tata Motors, Tata Steel), Omkar Goswami (Ambuja Cements, Cairn, Infosys Technologies), Narayanan Vaghul (ICICI Bank, M&M, Wipro Technologies), Subodh K Bhargava (Tata Communications, Tata Motors, Tata Steel), and Raghunath Anant Mashelkar (Hindustan Unilever, Reliance Industries, Tata Motors).
According to former company affairs secretary Vinod Dhall, Chandra and Munjee, being promoters’ top choice, shows that well-managed companies seek good minds with sound judgement and good values. “They welcome people with diversity of background, experience and opinions. For instance, Chandra has not only past exposure in the industry ministry but also headed a committee on corporate audit and governance,” he said.
A senior industry consultant, drawing inferences from our analysis, contended that it proves that Indian promoters tend to appoint independent directors who are either “docile” or with “whom they have a strong personal relationship”. “These two elements have a significant impact on independent directors who then tend to owe their position to the promoters,” he said. Further, independent directors currently juggle various balls of responsibilities both on the personal and business fronts.
Women just 2.5% of directors
“Let’s be realistic, in such a scenario it is difficult for an individual to devote significant time in understanding the company’s business intricacies, its value model and compliance with accounting policies. Regulators need to review the current limits for directorships and determine if there is a need to reduce the number to ensure that directors have sufficient time to perform their roles,” the consultant said.
Interestingly, there are only five women independent directors in this list of 200-odd nominated on the boards of Nifty 50 companies. These include ICICI MD Chanda Kochhar (ONGC), HSBC Investment Asia Holdings non-executive chairman Laura May Lung Cha (TCS), ICICI Prudential Life Insurance managing director Shikha Sharma (ACC), retired Exim Bank MD Tarjani Vakil (Idea Cellular) and management consultant Rama Bijapurkar (Infosys Technologies). So, in India, women directors constitute a mere 2.5% of the total directors.
A reason given for this paucity of women on boards in India and abroad, has been the controversial history surrounding many of them. In all major corruption exposes in the US, for example, women played the role of whistleblower. A classical case is Sherron Watkins, who exposed the Enron auditing scam. In fact, Worldcom’s $3.8 billion cover-up was also sounded off by a women named Cynthia Cooper.
All in all, the average age of the independent directors is 58 years, based on the latest updations by BSE-listed companies.
Overall, there are a total of 8,420 independent directorship position on BSE listed companies, giving an average of 3.8 independent directors per company.
As far as average earnings are concerned, the typical Indian company pays between Rs 15,000 and Rs. 20,000 per meeting to independent directors
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