Tata vs Mistry : Changing Rooted Traditons

Tata vs Mistry-Cyrus, Ratan Tata, Tata steel limited, Board of directorsTata vs Mistry difference in opinions and actions have churned to bring muck atop. Most of all changing traditions of washing dirty linen in public. All the causes yet hidden in the folds, not letting truthful sentiments and politics be visible clearly. Nexensus objectively explores the changes chairmanship of Cyrus Mistry brought along in Tata Steel Ltd.

Mr.Cyrus Pallonji Mistry joined the board members of Tata Steel Limited in 2012 and took up the chairmanship the next year in 2013 with a sitting fee of INR 480,000. New additions on board following Cyrus Mistry were Dinesh Kumar Mehrotra, Mallika Srinivasan and Om Prakash Bhatt while Suresh Krishna, Dr. J. J. Irani, Kirby Adams left from the board of Non-wholetime Directors.

Winds of Change

We have observed the following changes after the tenure of Mr. Ratan Naval Tata:

  1. There has been a decrease in the retirement age from 75 years to 70 years.
  2. The number of independent directors increased after Mr. Cyrus Mistry headed the board.
  3. There was a 78% increase in remuneration of independent directors from 2012-15.
  4. In contrast there was a significant decline in remuneration of Chairman and Vice chairman from 2012-15.
Board Members-of-Tata-Steel-Nexensus-report
Tata vs Mistry: Board members between 2012 -2015

Tata vs Mistry : The Tipping Point

Interestingly Mr.Balasubramanian Muthuraman, Vice chairman of Tata Steel Limited retired at the age of 70 with change in rules after 2014 under Mr. Cyrus Pallonji Mistry’s chairmanship. Rather Mr.Suresh Krishna, Dr. J. J. Irani, and Mr. Ratan Tata all retired at the age of 75 years in 2012. Furthermore, Mr. Karl Ulrich Egon Maria Koehler also resigned in 2016 due to another issue pertaining to cheap imports of steel from China in European Union.

Board changes since 2012 in Tata Steel Ltd.

Board Member NamesBoard Changes under Cyrus Mistry as ChairmanTotal Remuneration (INR) - 2015
Dinesh Kumar MehrotraAppointed in 20126,155,000

Mallika SrinivasanAppointed in 20125,850,000
Om Prakash BhattAppointed in 201310,400,000
Dr. Karl-Ulrich Egon Maria KoehlerResigned due to import of cheap steel from China in European Union340,000
Muthuraman BalasubramanianRetired as Tata Steel set retirement age as 70 years5,680,000

The spat between Tata Group with Mr. Cyrus Mistry’s camp including Mr.Nirmalya Kumar and Mr. Nusli Neville Wadia has raised many questions. SEBI is also questioning the role of independent directors between this tug of war.

Change in Remuneration of Tata Steel board between 2012 to 2015

Board MembersRemuneration as on 2012Remuneration as on 2015% Change in Remuneration between 2012-2015
Mr. R. N. Tata25220000
--
Mr. Cyrus Pallonji Mistry
-380000-98.49%
Mr.Balasubramanian Muthuraman
18850000
5680000-69.87%
Mr. Ishaat Hussain
8870000
1105500024.63%
Dr. Karl-Ulrich Koehler
280000
34000021.43%

Mr. Nusli N. Wadia
7120000
1072000050.56%
Mr. Subodh Bhargava
7260000
1072500047.73%
Mr. Jacobus Henricus Schraven
2660000
5990000
125.19%
Mr. Andrew Mackenzie Robb
3340000
629000088.32%
Mr. Dinesh Kumar Mehrotra-6155000
-
Mrs. Mallika Srinivasan-5850000
-
Mr. Om Prakash Bhatt-10400000-
Change in Remuneration of Tata Steel board during Chairmanship of Ratan Tata and Cyrus Mistry

Mr. Nusli Neville Wadia has attended 66.67 % of board meetings and  85.71% on Tata Steel committee meetings with the remuneration of  INR 10,720,000. There has been a slide of 98% in the Chairman’s remuneration between 2012-2015. While Mr.Ratan Tata took a commission of INR 25,000,000 and sitting fees of INR 320,000 on Tata Steel board, rather Mr. Cyrus Mistry chose to take only INR 380,000 as sitting fee as the Chairman of Tata Steel.

On Cyrus Mistry’s Tata Steel Board, the remuneration for Mr.Jacobus Henricus Schraven increased by 125%, Mr.Andrew Mackenzie Robb increased by 88%,Mr. Nusli Neville Wadia’s remuneration favourably increased by 51% and Mr.Subodh Bhargava’s remuneration increased by 48%.While remuneration for Mr.Balasubramanian Muthuraman  declined by almost 70% over a period of four years.

Cyrus Mistry: short stint

Cyrus Mistry born on 4th July 1968 to Indian Billionaire Mr.Pallonji Mistry and Irish mother Mrs.Patsy Perin Dubash has taken up citizenship of Ireland. He broke the tradition of lineage succession for the second time to become the Chairman of Tata Sons. Mr.Cyrus Pallonji Mistry heading young in spirit the giant Tata group has been ousted.It is most noteworthy that Tata sons, the holding company of Tata Group has been Chaired by Cyrus Mistry for the shortest tenure of four years among –

  1. Jamsetji Nusserwanji Tata (1867–1904)
  2. Sir Dorab Tata (1904–1932)
  3. Nowroji Saklatwala (1932–1938)
  4. Jehangir Ratanji Dadabhoy Tata (1938–1991)
  5. Ratan Tata (1991–2012)
  6. Cyrus Pallonji Mistry (2012–2016)

In addition to Tata Steel Ltd, Mr. Cyrus Mistry has associations with 14 companies including Tata group companies, Cyrus Investments , Imperial College India Foundation, The Indian Hotels , Shapoorji Pallonji And Company (Rajkot) , Sterling Investment Corporation.

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