With Cyrus Mistry, the ousted chairman of Tata Sons, staying away from the shareholders' meeting of Tata Consultancy Services (TCS) on Tuesday, there were fewer fireworks than anticipated.
With Cyrus Mistry, the ousted chairman of Tata Sons, staying away from the shareholders’ meeting of Tata Consultancy Services (TCS) on Tuesday, there were fewer fireworks than anticipated. Nevertheless, it didn’t all go Ratan Tata’s way and the TCS board did face a few uncomfortable moments when a handful of small shareholders questioned the reasons for Mistry’s sudden dismissal as TCS chairman on November 10.
Aman Mehta, the independent director who chaired the extraordinary general meeting (EGM) as TCS chairman Ishaat Hussain felt it would be the fair thing to do, wasn’t always able to come up with satisfactory answers. However, the two-and-a-half-hour-long meeting held at the YB Chavan Centre in south Mumbai saw the TCS board deftly duck most questions. The standard reply to queries seeking the specific reasons for Mistry’s removal was that he had lost the trust of the Tata Sons board. Ratan Tata did not utter a single word throughout the meeting.
Some shareholders also questioned the role of the independent directors, asking whether their high remuneration was justified or whether these directors were merely toeing the promoter line. Mehta clarified the stance of independent directors, claiming their decision was meant to ensure there was no breakdown in the trust between the TCS board and its principal shareholder Tata Sons.
“The real issue here is of trust and confidence of the promoter group in their nominated chairman. It goes far beyond any consideration or performance or competence or even personalities. Once that trust is lost, it is appropriate for the nominated chairman to resign in the best interest of the company,” Mehta said.
Dinesh Kotecha, a long-time shareholder in Tata companies, felt Mistry had raised some valid and pertinent points. “He is specific, he is humble. He has drawn attention to at least 50 issues and I think of those at least 40 points require deliberations,” he said.
Not unexpectedly, however, most small shareholders supported Tata Sons and Ratan Tata in the decision to remove Mistry, criticising the latter for what they said was washing dirty linen in public. Indeed, despite some support from small shareholders, the odds were always stacked against Mistry — of the 39 shareholders who spoke, 35 were in favour of the resolution to remove him as director of TCS.
Given Tata Sons has a 73.3% stake in TCS, Mistry knew the die was cast. Nevertheless, he exhorted shareholders to vote with their conscience, saying his was not a fight for office but for Tata values. The former TCS chairman wrote: “Since the requisitionist’s stake in the equity share capital of the company is over 73%, the outcome in this particular meeting is a foregone conclusion. Yet, it is necessary for me to address this letter to you.”