Financial Daily from THE HINDU group of publications
Tuesday, Jun 28, 2005
Corporate - Announcements
Non-exec directors of Tata Sons to retire at 75
It enables Mr Ratan Tata to continue as non-executive chairman till 2012
Mumbai , June 27
THE main holding company of the Tatas has partially reversed a retirement policy that won it much appreciation when originally introduced.
Tata Sons, it was informed today, has adopted revised guidelines for the composition of its board, including a roll back of the retirement age for non-executive directors to 75 years. Though not directly mentioned by the group, this would enable Mr Ratan Tata to continue as non-executive chairman till December 2012 when he turns 75.
The revised guidelines are being circulated to the boards of Tata group companies for their consideration. They can decide to follow suit or not.
Under Tata Sons' earlier norms, directors had to relinquish executive power on turning 65 years old and stop being non-executive directors at 70. Mr Ratan Tata, Chairman, Tata Sons, had accordingly surrendered his executive powers on crossing the prescribed age limit in December 2002.
The earlier policy adopted in 2000 and accepted by the major Tata companies, had met with favourable reception all around because it brought transparency to leadership tenure.
The transparent retirement policy, along with top-level consultative bodies (like the Group Executive Office and Group Corporate Centre) for casting corporate direction, was viewed against this backdrop of boardroom tussles once on at certain companies. It also appeared in tune with the desire of the group to infuse greater youth into its outlook and be in tune with the demographics of the market place.
According to today's statement the revised guidelines from Tata Sons include the following: creation of Nominations Committees for the selection of new directors based on certain criteria; specification of tenure for independent directors; retirement age has been maintained at 65 years for executive/whole time directors; the retirement age for non-executive directors has been reverted to 75 years.
On the revision of retirement age for non-executive directors, it said, the step would enable the company "to benefit from the rich experience of these directors, who add value to the strategy and direction of Tata group companies.'' Overall, it said, the revisions "reflect the views of independent directors on the boards of major Tata companies and take account of recent developments in the regulatory environment relating to good corporate governance.''
It is generally perceived that the relaxation in retirement age for non-executive directors at Tata Sons would help in the search for a successor to Mr Ratan Tata, or in grooming the person for the task. In a 2000 interview to a business magazine, Mr Tata had said when asked of any urgency in the search, "There is an urgency because I would not want the situation that took place in my case where there was continued speculation about who would be the chairman for Tata Sons until one day it was announced. I would like my successor to have two or three years or at least two years, with everyone knowing that he is my successor, and then take over.''
In the past media reports have spoken of Mr Keki Dadiseth, former chairman of Hindustan Lever who went on to be a director at Unilever, and Mr Noel Tata, Managing Director, Trent, as candidates. While recent news reports cited a weaker possibility of Mr Dadiseth taking up such a big responsibility now, Mr Noel Tata has made it to the boards of Voltas and Titan Industries but not as yet to the boards of Tata Industries and Tata Sons, which was the route for Mr Ratan Tata himself on his way to being the group chairman.
Arguably, with the revised norms permitting a lengthier tenure at the top, Mr Tata would have more time to shepherd the succession in place. For now, that angle is in the realm of speculation.
The revised guidelines are being circulated to the boards of Tata companies "for their consideration.''
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