While InGovern and ISS have asked the shareholders to vote against Mistry’s removal, IiAS believes he should go as Boards are divided
Proxy advisors, who help institutional investors in deciding how to vote on crucial corporate resolutions, are a divided lot when it comes to their view on the resolution of Cyrus Mistry’s revomal from various Tata Group companies during the upcoming extraordinary general meeting (EGMs) of shareholders.
While domestic proxy advisory firm InGovern and global outfit Institutional Shareholder Services Inc (ISS) have asked the shareholders to vote against the move to remove Cyrus Mistry as director, another major global firm, Institutional Investor Advisory Services or IiAS, has advised TCS shareholders to remove Mistry as chairman in the upcoming EGM.
These firms have together raised several questions that have come to the fore following Mistry’s removal from the chairmanship of Tata Sons.
These questions range from Tata Group’s justification of removal of company chairman to sustainability of current Board of Directors of several companies where Tata Sons and the independent directors are of divergent views on the issues.
InGovern has questioned the basis of removal of Mistry.
“Tata Sons has not provided any compelling reasons for the removal of Cyrus Mistry as a director from the Boards of operating companies... It has not articulated any new plans or visions for the operating companies than what the Boards under Mistry had adopted,” InGovern Research Services said in a report.
Mistry’s presence would, in fact, help independence of the Board from the influences of Tata Sons, the majority owner, InGovern indicated, noting that Mistry continues to have the confidence of the independent directors.
The proxy advisor firm even asked shareholders to question inherent assumptions made regarding the value of the group structure and ‘Tata’ brand and demand greater disclosures on information flow between Tata Sons and operating companies.
It has wondered why TCS Board recommended removal of Mistry after giving him a favourable rating in his evaluation as chairman a few months ago.
ISS said neither they have given a compelling evidence that the proposal to remove Mistry will be beneficial nor have they said his continued presence on the Board is “expected to have a material negative effect on Board governance or future performance”.
Proxy advisor IiAS, however, is of the view that since the Boards of listed Tata group companies are divided in their support to Cyrus Mistry, there is a risk of Boards becoming dysfunctional, which has operational implications for the companies.
FATE DECIDED?
Meanwhile, Tata Steel struck a deal with unions to secure future production and jobs at its Port Talbot plant, reports Bloomberg. The company also invest £1 billion in the next decade, the GMB union said
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