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Monday, May 16, 2005

Company Result

Manmohan Singh is a modern Prime Minister. His vision to transform Mumbai into Shanghai made it to the front pages of every newspaper in the country. He has even instructed his partymen and ministers not to take out newspaper ads to highlight their achievements in the last one year.

Now, corporate governance seems to be preoccupying his mind. In true CEO-style Dr Singh will present the government's report card, much like a quarterly statement of results, to the country's board of directors chaired by Sonia Gandhi. But the shareholders still are not very clear if she is the executive or the non-executive chairperson. The party she leads would have you believe that Sonia's role clearly is that of a non-executive chairman, just as the Burmans, Munjals and Bajajs insist that the show is run by professional managers. The Sarbanes-Oxley inspired clause 49 of the listing agreement, which is yet to come into effect, puts the onus of corporate vigilance squarely on independent directors. In corporate India, independent directors are mostly family and friends of the promoters. But if the promoter or his Harvard-educated son happen to bump into Poonam Barua of Conference Board, an independent director is likely to be inducted into the board. It just takes a couple of quarters for the fad to disappear, or for the IDs to become pushovers.

Unfortunately for Dr. Singh, the self appointed IDs on the country's board, the Left has been anything but a pushover. Boardroom vigilance has been taken a step further. The problem for the CEO is that IDs are refusing to ratify the quarterly results leave alone attending the post board meeting party.

To uphold the spirit of corporate governance Dr Singh and his managers would perhaps lower the company's earnings projection substantially for the next review period, and reiterate the committment for big ticket bonus, golden handshake, and grand housing schemes for even the most underperforming employees. Bottomline growth be damned. That would ensure IDs' sign on the dotted line, their stay for a celebratory kulhar of chai, and ofcourse a we-stand-united photo-op with all concerned flashing a V-sign. Thankfully our modern CEO doesn't have to bother too much about the stock market.

1 Comments:

  • At 3:05 PM, Anonymous Anonymous said…

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