Shareholders First
Enough said, and yet unclear - that's what's unfolding in the corporate group's holding company's boardroom that is catching everyone's attention in India. Here are the only 3 things in descending importance that should form the basis for the behavior of the warring parties:
- Overall interest of all shareholders
- Majority shareholders' wishes
- Brand / Reputation impact
The one-who-doesn't-want-to-go is strongly pitching that his decisions at the helm were in the best overall interest of all shareholders. And he & his family directly / indirectly are a significant minority shareholder - he has skin in the game & hence some credibility. The one-who-decided-to-intervene is citing erosion of Group's Brand / Values, surely has the backing of the majority and believes that he too is acting in the best overall interest of all shareholders, mid- to long-term.
The saga that is unfolding involves many leading names from the industry, academia & expert professional practitioners, and will engulf more as the ripples spread. No one can predict where things will head. However, 2 things are dead certain:
- Many outsiders will jump in, and fish in troubled waters for their own vested reasons, &
- Trust of the small shareholder in Corporate Governance, already weak, will erode tremendously given the historical stature of this specific corporate group and the muck that will be raked about the goings on in various boardrooms.
Don't the warring parties know this? Can't they anticipate what is likely to follow? Would it not have been better if they had resolved their differences privately? Don't they know that what's unfolding is hurting the interest of all shareholders in the immediate term, and may be difficult to recover from even in the medium- to long-term?
Yet, they did what they did. Even the best of us are finally humans. Expect to see more of the human foibles as big names take sides in this battle which will scar many reputations. Whoever wins, the small shareholder's trust in corporate governance, and an implicit faith in the integrity of many stalwarts in various boardrooms, will be severely dented.
well written. I wanted to say a couple of things. small stakeholders, are of two kinds. ones who look for a short term gain and another who looks for long term returns. managements need to consider the interests of the latter. over indulgent approach to RoCE may be a sound financial practice, but does not bode well for long term business merit. for instance the Docomo puzzle. it may currently make sense to renegotiate and control erosion of capital. but in the long term, it may impact the ability of the group to get partners in a global context. there may be some issues with who or what to invest in, but hey these decisions involve risk. any PE today has a min of 14 to 15 duds in its portfolio. corporate governance is over rated. disclosure of risk is a better approach.
Chief Operating Officer GenInnov Funds
8 年Nice article ! Interest of shareholders is not easy to define - the time frame is also important. In recent years there is a tendency to shorten the time horizons and arrive at conclusions. But these developments will definitely hurt the trust and confidence for all concerned
COO Startup B2B Platform || Chemarc.com || Angel Investor || Business Leader || Strategy || Manufacturing || ESG || Digital | Latin America ||| INSEAD || IIM Calcutta || IIT Kanpur
8 年Very good aarticle Mukesh.. To add to your list, the hit Brand Corporate and Brand India takes worldwide !