Boardroom Battles in the Indian Corporate

“…his continued presence as a Director is a serious disruptive influence on these Company Boards, which can make the company dysfunctional, particularly given his open hostility towards the primary promoter, Tata Sons.”

Ratan N. Tata, Chairman, Tata Group

(In his appeal to the shareholders to remove Cyrus Mistry from the boards of Tata Group companies, dated December 06, 2016)


Boardroom battles are a manifestation of deteriorating quality of corporate governance in board-managed companies that disguise the interest of their shareholders in mere numbers on their financial statements and create multiple centres of power in corporate boards to undertake risky ventures for ‘altruistic’ reasons. The outbreak of such incidents in succession in recent years has reiterated the need for a robust institutional framework that not only seeks to revamp the role of independent directors but also put in place necessary safeguards to protect the fortunes of minority shareholders. It is time the corporates overhauled their due diligence, both internal and external, to avoid incurring losses in apparently unhealthy investments, including manpower, and indulging in a bitter blame game later to justify their actions to the investors.

Boardroom Battles and Corporate Governance

Peter Drucker coined a phrase, “Culture eats strategy for breakfast” to caution businesses about the risk that emanates from disconnecting the two and results in crowding out of thoughtful discussions in boardrooms. Often, a complex system of regulation, lack of mutually acceptable metrics for measuring governance, rampant conflict of interests and distrust between shareholder activists and managers result in unintended consequences and adversely affect value creation. The management is overwhelmed by unrelenting pressure to achieve financial results even at the cost of undermining long term corporate strategy and deviating from organisational mission[1].

The system of corporate governance is vulnerable to litigation and a mere hiccup in the stock price or earnings raises a red flag, inviting litigation against the board from plaintiffs’ (shareholders) attorneys. This compels corporates to relinquish staggered board structures and elect directors for shorter terms. Thus, with a narrow perspective of the corporate strategy, these board members end up de-stabilising the entire structure instead of promoting continuity and stability in the boardroom.

Corporate boards are obliged to ensure proper mix of skills and perspectives in the boardroom. It is often argued that age and term limits are a blunt instrument for achieving optimal board composition[2]. Key strategic decisions require time for evaluation of their success. Improper succession planning not only leads to waste of right business acumen and functional knowledge but also loss of future value creation opportunities.


The Solution                                  

“Guidelines today have taken the force of law and Indian corporates have to come to terms with the existence and importance of Board evaluation”

Suhas Tuljapurkar, Director, Legasis Services

(Legasis Services is a provider of technology solutions and support services in legal and compliance domain)

The outbreak of boardroom battles has necessitated board evaluation as a statutory requisite. In October 2017, a Securities and Exchange board of India (SEBI) – appointed panel proposed more powers for independent directors, limiting chairmanship to non-executive directors, and called for a greater focus on transparency and disclosures to improve corporate governance[3]. The following exhibit depicts some of the recommendations that span areas such as the composition of the board, the make-up of board committees, treatment of subsidiaries, information sharing with promoters and related-party transactions, audit evaluations, and conduct of annual general meetings.

           Exhibit: Measures suggested by the Uday Kotak – led SEBI panel on corporate governance reforms[4]


In addition to the proposed solutions, some of the following litmus tests can be considered:

  • Meaningful Director Evaluations: The Securities and Exchange Board of India has specified guidelines for board evaluation on various attributes. The use of software and interpersonal tools like psychometrics and role-based evaluation interface, for instance, has now gained prominence in the light of Tata-Mistry corporate battle as the latter had come off with flying colours in his evaluation just few months before his ouster. This would improve boardroom dynamics by discouraging underperforming directors from seeking renewal of their terms and push others into action, lest they be perceived as underperforming.
  • Shareholder Proxy Access: To prevent talent from gravitating to other boards and ensure the right mix of skills in the boardroom, shareholders with significant ownership can nominate director candidates on the corporate ballot. Transparency is the ley to ensuring the highest standard of corporate governance. For instance, if United Spirits Limited (USL) had a proxy access rule, it would not have lacked directors with risk expertise on its board at the time of USL-Kingfisher Airlines fiasco.
  • Compensation Structure: Value-based management practices that align interests of the board with that of the shareholders help in mitigating reputational risk and loss of value. For directors to think and behave like owners, it is necessary for them to have more skin in the game and so they should be allowed to purchase equity with their own funds. Infosys with the right compensation structure could have prevented its boardroom battle from making news and bridged the divide between CEO Vishal Sikka and founder N R Narayana Murthy.


Boardroom battles is a serious corporate governance issue and calls for formulation of pragmatic solutions that can clarify governance roles and procedures by taking into account differing board leadership cultures. It is time the Indian corporates revamped their board structures and delivered the kind of sustained value creation that long-term shareholders expect and that the society deserves.



[1] Barton, D. and Wiseman, M., Where boards fall short. Harvard Business Review, 93 (2015)

[2] Guhan Subramanian, Corporate Governance 2.0, Harvard Business Review 96 (2015)

[3] Sebi panel led by Uday Kotak proposes corporate governance reforms, dated October 17, 2017

[4] Livemint dated October 06, 2017 (




Shreyans Jain,,

IIM Lucknow


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s