Chandra should leave with his head held high

The recent move by Tata Sons to reappoint N Chandrasekaran as the Chairman of Tata Sons for another five-year term, a decision that came about after a final casting vote by Harish Manwani (who chaired the meeting for discussion of the reappointment after Chandrasekaran recused himself), does not augur well for Chandrasekaran, or Tata Sons and its members, or for the Tatas as a whole.

Noel Tata, who chairs Tata Trusts, which holds 66 per cent of Tata Sons' shares, making it the single largest shareholder, has challenged the reappointment, claiming that the majority support of the Tata Trusts directors was not secured during the vote for Chandrasekaran.

The company’s articles mandate that a majority of the three Tata Trusts members on Tata Sons’ board must support any decision on appointing the chairman. At present, there are only two members representing Tata Trusts on the board of Tata Sons: Noel Tata and Venu Srinivasan.

When the voting took place, one member of Tata Trusts voted against Chandrasekaran’s reappointment (making it 50 per cent of Tata Trusts’ vote), splitting the members. After the casting vote by the person in the chair pro tem was made in Chandrasekaran’s favour, he was reappointed.

Noel Tata, who has been vocal in his opposition to Chandrasekaran’s continuing as chairman (and the move to list Tata Sons), has called the reappointment a legal nullity, claiming the support of the majority of the Tata Trusts members was not secured.

The legalities of the Board’s actions will be worked out, hopefully sooner rather than later. But what is patently evident is that Chandrasekaran does not have the support of the entire Tata Trusts, the majority stakeholder of the company. Agreeing to reconsider his earlier decision and accepting the reappointment, on a split vote, by a Board gone rogue, reflects very badly on him.

So far Chandrasekharan has not made any public comment. But it is saddening that he has allowed himself to be dragged into a position to take on the Tata Trusts.

His first instinct, when he announced that he would not seek reappointment because “one member” was against it, immediately gave him the moral high ground, showing him as a gentleman of honour. He should have stayed the course and walked away with his head held high, earning the respect of corporate captains and the common man.

Instead, he has chosen to enter into a battle with the majority owner, the Tata Trusts. It isn’t rocket science to know that it is a battle he cannot win if the majority shareholder is against him. To continue this battle can only harm him, the Tatas, and the nation at large.

Since Chandrasekaran hasn’t made any public statement, it still isn’t too late. He cannot have forgotten the unseemly spectacle of Cyrus Mistry being dragged out kicking and screaming, having lost the trust of the Trusts. He can still redeem his image and honour by announcing that he will exit peacefully and let Tata Sons focus on other challenges it faces.