Promoter-led companies retaining non-executive directors, chairpersons for guidance, boardroom decision making

MUMBAI: Promoter-led companies are holding on to retiring top executives such as CEOs, MDs and CFOs by reappointing them as non-executive directors, chairmen or board advisors as they navigate increasingly complex and challenging market environments.

The continued involvement of these seasoned leaders is seen as a means to safeguard institutional knowledge, maintain strategic continuity, and add depth to boardroom decision making, while allowing executive directors to lead without interference.

Guenter Butschek, former CEO of Tata Motors, has been made a non-executive, non-independent director at the company. Bharat Puri, who recently retired as MD of Pidilite, has been retained as a non-executive, nonindependent director. Former Jaguar Land Rover CEO Thierry Yves Henri Bollore is now non-executive chairman of group company Tata AtoComp. HK Agarwal, former MD of Grasim Industries, is an advisor to the company board.

Balancing Act
The Kumar Mangalam Birla-led Aditya Birla Group recently appointed Praveen Maheshwari, who retired last month from the role of Hindalco CFO, as advisor or non-independent director.

Multinational companies tend to have a transactional equation with their management while Indian promoters continue to tap the expertise and knowledge of their talent well beyond the formal retirement age, said the chairman of a consumer conglomerate.

“Our group promoters consult the former director on all big decisions before taking a final call,” said a top executive at a Mumbai-based metals conglomerate. “He is like a trouble shooter and his guidance is greatly valued.”

These retired top executives, with years of experience, bring a wealth of knowledge that can be instrumental in overcoming strategic challenges and navigating roadblocks. However, their involvement needs to be managed carefully to avoid hindering the induction of new leadership and fresh ideas. One former MD being retained in an advisory role suggests that the key lies in maintaining a balance, where the new management team is not overshadowed by the presence of retired executives.

“It’s crucial that the retired executives remain open to new ideas and demonstrate a willingness to learn, ensuring that their contributions complement, rather than disrupt, the ongoing development of the organisation,” he said.