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THEIR FAILINGS, OUR LEARNINGS

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ALL “GOOD” THINGS MUST COME TO AN END

Context:

This leading chemical company saw a high-profile departure from the Board. Leaving when persons ask “why”, and not when they ask “why not”, is a test of courage of conviction. Overstaying one’s welcome is often fraught with adverse consequences. Why wait till eyebrows are raised?

  • The promoter Non-Executive Vice Chairperson of a large listed Company was to retire by rotation at the AGM to be held on August 31, 2020, and being eligible, had offered herself for re-appointment as a Non-Executive Director.
  • 2 Proxy Advisory firms (PAFs) advised the institutional investors to vote against her reappointment, citing her age (79 years), and the excessive compensation paid to her through subsidiaries of the Company, as mentioned in the notes to the consolidated financial statements of the Company (INR 9 crores).
  • PAFs claimed that this was done so that the Company did not have to disclose the compensation paid to her, and did not have to seek any approvals.
  • She resigned in the Board meeting held on August 31, 2020, just before the AGM.
  • The Company cited ‘’personal commitments’’ as reason for her resignation in their letter to Stock Exchanges.
  • The resolution on her re-appointment was dropped from the AGM agenda after her resignation.