7 DECEMBER 2016 TATA GROUP EGM PROPOSALS 1 | P AGE INGOVERN VIEWS AND RECOMMENDATIONS Tata Group EGM Proposals for Removal of Mr. Cyrus Mistry as Director Six of the seven Tata listed group companies where Mr. Cyrus Mistry serves as a Director, have called for EGMs between 13 th December and 26 th December 2016 for removal of Mr. Mistry as a Director, after having received requisition from the promoter shareholder Tata Sons Limited. Tata Global Beverages, having already replaced Mr. Mistry as Chairman, is yet to announce the date and notice of its EGM. Following are details of EGMs and the proposals as requisitioned by Tata Sons Ltd. 1) Tata Consultancy Services Ltd – 13 th December 2016 Removal of CP Mistry as a Director 2) The Indian Hotels Company Ltd – 20 th December 2016 Removal of CP Mistry as a Director 3) Tata Steel Ltd – 21 st December 2016 Removal of CP Mistry as a Director Removal of Nusli Wadia as a Director 4) Tata Motors Ltd – 22 nd December 2016 Removal of CP Mistry as a Director Removal of Nusli Wadia as a Director 5) Tata Chemicals Ltd – 23 rd December 2016 Removal of CP Mistry as a Director Removal of Nusli Wadia as a Director Appointment of Bhaskar Bhat as a Director Appointment of S. Padmanabhan as a Director 6) Tata Power Ltd – 26 th December 2016 Removal of CP Mistry as a Director
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7 DECEMBER 2016
TATA GROUP EGM PROPOSALS 1 | P A G E
INGOVERN VIEWS AND RECOMMENDATIONS
Tata Group EGM Proposals for Removal of Mr. Cyrus Mistry as Director
Six of the seven Tata listed group companies where Mr. Cyrus Mistry serves as a Director,
have called for EGMs between 13th December and 26th December 2016 for removal of Mr.
Mistry as a Director, after having received requisition from the promoter shareholder Tata
Sons Limited. Tata Global Beverages, having already replaced Mr. Mistry as Chairman, is yet
to announce the date and notice of its EGM.
Following are details of EGMs and the proposals as requisitioned by Tata Sons Ltd.
1) Tata Consultancy Services Ltd – 13th December 2016
Removal of CP Mistry as a Director
2) The Indian Hotels Company Ltd – 20th December 2016
Removal of CP Mistry as a Director
3) Tata Steel Ltd – 21st December 2016
Removal of CP Mistry as a Director
Removal of Nusli Wadia as a Director
4) Tata Motors Ltd – 22nd December 2016
Removal of CP Mistry as a Director
Removal of Nusli Wadia as a Director
5) Tata Chemicals Ltd – 23rd December 2016
Removal of CP Mistry as a Director
Removal of Nusli Wadia as a Director
Appointment of Bhaskar Bhat as a Director
Appointment of S. Padmanabhan as a Director
6) Tata Power Ltd – 26th December 2016
Removal of CP Mistry as a Director
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 2 | P A G E
Case of Individual Companies
TATA CONSULTANCY SERVICES LIMITED (TCS)
Shareholder Meeting Details
Meeting date & time: 13 December 2016, 3:30 PM IST
Meeting venue: Yashwantrao Chavan Pratishthan Auditorium, Y. B. Chavan Centre,
General JB Marg, next to Sachivalaya Gymkhana, Mumbai 400021
List of Resolutions
Res Resolution Title Management InGovern
1. Removal of Mr. CP Mistry as a Director For Against
This is an ordinary resolution requiring more than 50% of the voting shareholders to vote FOR its approval
Actions undertaken by the Board/ Promoter/ Company
AoA of TCS gives right to Tata Sons to appoint/ replace Chairman of TCS
On 9th November 2016, Tata Sons
replaced Mr. Cyrus Mistry as Chairman of TCS
appointed Mr. Ishaat Hussain as the new Chairman of TCS
requisitioned TCS to hold an EGM for removal of Mr. Mistry as Director
On 17th November 2016, the Board of TCS decided to convene an EGM on 13th December
1. Removal of Mr. CP Mistry as a Director - Against
This is an ordinary resolution requiring more than 50% of the voting shareholders to vote FOR its approval * The Board has not recommended either in favour or against the resolution
Actions undertaken by the Board/ Promoter/ Company
On 4th November 2016, a meeting of Independent Directors was held in which they
unanimously expressed their full confidence in Mr. Cyrus Mistry as their Chairman
On 9th November 2016, Tata Sons requisitioned Indian Hotels to hold an EGM for removal
of Mr. Mistry as Director
On 21st November 2016, the Board decided to convene an EGM on 20th December 2016
Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 8 | P A G E
InGovern Recommendations
The Board of Tata Steel replaced Mr. Mistry as its Chairman by passing circular resolutions
on 25 December 2016. In Tata Steel, we share the same concerns as we have for other Tata
Group companies.
The Board Evaluation section of FY2016 Integrated Report of Tata Steel states:
“The evaluation process endorsed the Board Members’ confidence in the ethical standards of the
Company, the cohesiveness that exists amongst the Board Members, the two-way candid
communication between the Board and the Management and the openness of the Management in
sharing strategic information to enable Board Members to discharge their responsibilities.”
Considering such a positive evaluation of the Board under the leadership of its Chairman, the
logic of removal of Mr. Mistry as Director doesn’t carry weight. If indeed the performance of
the company where to matter, the Key Management Personnel and the whole Board of
Directors should be held responsible for the poor performance of the company. Mr. TV
Narendran is the Managing Director and Mr. Koushik Chatterjee is the Executive Director of
Tata Steel.
SP Group’s beneficial interest in Tata Steel is around 5.47%. With no governance issues
regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow
Mr. Mistry to continue in the Board of Tata Steel.
Tata Sons directly owns 29.75% and along with other Tata group companies (which include
listed companies as well), own 31.35% in Tata Steel.
Most importantly, although Tata Sons has proposed removal of Mr. Mistry as Director, Tata
Sons has not articulated to the public shareholders any specific plans and the way forward for
the company. Unless there is a plan different from what the Board under Mr. Mistry envisaged
for the company, public shareholders will not be able to take an informed decision.
On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal
from the Board of Tata Steel. There is no logic for his removal as Director and his continuance
would be in best interests of the company.
Regarding Mr. Wadia’s removal as a Director, InGovern, in an earlier vote recommendation
report on the company meetings, had recommended shareholders vote AGAINST his re-
appointment to the Board. However, the reason for recommending against was his tenure as
Mr. Wadia has been on Board of Tata Steel since 1979 (i.e., more than 37 years). His tenure is
far greater than the maximum tenure of 10 years for Independent Directors as per Companies
Act, 2013.
However, Tata Sons proposes his removal not because of his long tenure but because he has
expressed an opinion that is contrary to theirs. By stating that he is acting in concert with Mr.
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 9 | P A G E
Mistry, Tata Sons has questioned the position of the Independence Directors. Promoters
removing Independent Directors who do not agree with their views also sets a bad precedent
for Indian corporate governance and such efforts should be thwarted by voting against the
promoter proposals.
In case Tata Sons believes that Mr. Wadia’s independence has been affected, it should also
propose removal of other Independent Directors of all its listed group companies with longer
tenures. A list of these directors on Boards of the seven companies is given below.
Independent Directors with tenures longer than 10 years
Tata Consultancy Services Limited
Name Tenure (Years)
Aman Mehta 12+
Venkataraman Thyagarajan 11+
Clayton M Christensen 10+
Ron Sommer 10+
The Indian Hotels Company Limited
Name Tenure (Years)
Deepak S Parekh 16+
Keki B Dadiseth 16+
Tata Steel Limited
Name Tenure (Years)
Nusli Wadia 37+
Subodh Bhargava 10+
Tata Motors Limited
Name Tenure (Years)
Nusli Wadia 18+
Tata Chemicals Limited
Name Tenure (Years)
Nusli Wadia 35+
Nasser Munjee 10+
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 10 | P A G E
Tata Power Limited
Name Tenure (Years)
Homiar Vachha 15+
Nawshir Mirza 10+
We recommend shareholders vote AGAINST Mr. Wadia’s removal from the board because,
the principle against his removal does not set a good precedent for the company or for Indian
corporate governance. However, shareholders should raise concern on the tenure of Mr.
Wadia.
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 11 | P A G E
TATA MOTORS LIMITED
Shareholder Meeting Details
Meeting date & time: 22 December 2016, 3:00 PM IST
Meeting venue: Yashwantrao Chavan Pratishthan Auditorium, Y. B. Chavan Centre, General JB Marg, next to Sachivalaya Gymkhana, Mumbai 400021
List of Resolutions
Res Resolution Title Management InGovern
1. Removal of Mr. CP Mistry as a Director … Against
2. Removal of Mr. Nusli Wadia as a Director … Against
These are ordinary resolutions requiring more than 50% of the voting shareholders to vote FOR approval * The Board has not recommended either in favour or against the resolution
Actions undertaken by the Board/ Promoter/ Company
On 10th November 2016, Tata Sons requisitioned Tata Motors to hold an EGM for removal
of Mr. Mistry and Mr. Wadia as Directors
On 14th November 2016, a meeting of Independent Directors was held in which they
stated all decisions taken by the Board with regards to strategy, operations and business
have been unanimous and executed by Chairman and Management accordingly
On 23rd November 2016, the Board decided to convene an EGM on 22nd December 2016
Highlighted are Independent Directors who have exceeded a tenure of 10 years whom we consider not truly independent
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 12 | P A G E
InGovern Recommendations
Independent Directors represent the interest of all shareholders. The Independent Directors
of Tata Motors, through their meeting on 14 November 2016, emphasised on the collective
responsibility of the Board by stating all decisions taken by the Board with regards to strategy,
operations and business have been unanimous and executed by Chairman and Management
accordingly.
We believe if accountability is indeed put on the Board for non-performance, it should be all
the Directors of the Board as a collective. Mr. Gunter Butschek is the MD and CEO while Mr.
Ravindra Pisharody and Mr. Satish Borwankar are Executive Directors of Tata Motors. Mr.
Butschek was, however, a recent appointment having been appointed as MD and CEO in
February this year.
Also, since there is no negative commentary about Mr. Mistry’s evaluation as Chairman, it is
assumed that he had got a favourable rating from the Board of Tata Motors. Hence, there is
no reason as to his removal from the Board after receiving favourable evaluation from the
Board.
SP Group’s beneficial interest in Tata Motors is around 4.88%. With no governance issues
regarding Mr. Mistry and considering his significant beneficial interests, it is prudent to allow
Mr. Mistry to continue in the Board.
Tata Motors is an associate company of Tata Sons as its stake is less than 50% in Tata Motors.
Tata Sons directly owns 26.51% and along with other Tata group companies (which include
listed companies as well), own 32.43% in Tata Motors.
Most importantly, although Tata Sons has proposed removal of Mr. Mistry as Director, they
have not articulated to the public shareholders their specific plans, the way forward for the
company. Unless they explain how their plan is different from what Mr. Mistry envisaged for
the company, public shareholders will not be able to take an informed decision.
On basis of these points, we recommend shareholders vote AGAINST Mr. Mistry’s removal
from the Board of Tata Motors. There is no compelling logic for his removal as Director and
his continuance would be in best interests of the company.
Regarding Mr. Wadia’s removal as a Director of Tata Motors, InGovern, in its earlier vote
recommendation reports for the company, had recommended shareholders vote AGAINST
his re-appointment to the Board. However, our reason for recommending against was his
tenure on the Board as an Indepdent Director. Mr. Wadia has been on Board of Tata Motors
since 1998, i.e., more than 18 years which is greater than the maximum tenure of 10 years for
Independent Directors as per Companies Act, 2013.
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 13 | P A G E
However, Tata Sons proposes his removal not because of his long tenure but because he has
expressed an opinion in Tata Motors that is contrary to theirs. By stating that he is acting in
concert with Mr. Mistry, Tata Sons has challenged the position of the Independence Directors.
Promoters removing Independent Directors who do not agree with their views also sets a bad
precedent for Indian corporate governance.
In case Tata Sons believes that Mr. Wadia’s independence has been affected, it should also
propose removal of all the Independent Directors of these companies with longer tenures.
We recommend shareholders vote AGAINST Mr. Wadia’s removal from the board because,
the principle against his removal does not set a good precedent for Indian corporate
governance. However, shareholders should raise concern on the tenure of Mr. Wadia.
INGOVERN VIEWS AND RECOMMENDATIONS
TATA GROUP EGM PROPOSALS 14 | P A G E
TATA CHEMICALS LIMITED
Meeting Details
Meeting date & time: 23 December 2016, 3:00 PM IST
Meeting venue: Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Marine Lines, Mumbai 400020
List of Resolutions
Res Resolution Title Management InGovern
1. Removal of Mr. CP Mistry as a Director - Against
2. Removal of Mr. Nusli Wadia as a Director - Against
3. Appointment of Mr. Bhaskar Bhat as a Director - For
4. Appointment of Mr. S. Padmanabhan as a Director - For
These are ordinary resolutions requiring more than 50% of the voting shareholders to vote FOR approval * The Board has not recommended either in favour or against the resolution
Actions undertaken by the Board/ Promoter/ Company
On 10th November 2016, a meeting of Independent Directors was held in which they
unanimously affirmed their confidence in Mr. Mistry as their Chairman
On the same date, Mr. Bhaskar Bhat, a Non-Executive Director resigned from the Board
due to his disagreement with the statement put out by the Independent Directors
On 10th November 2016, Tata Sons requisitioned Tata Chemicals to hold an EGM for
removal of Mr. Mistry and Mr. Wadia as Directors
On 16th November 2016, the company received two more notices from Tata Sons
proposing Mr. Bhaskar Bhat and Mr. S Padmanabhan as Directors
On 22nd November 2016, the Board decided to convene an EGM on 23rd December 2016
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