 "Nusli Wadia")
Proxy advisory firm Institutional Investor Advisory Services (IiAS), which had asked shareholders of Tata Steel and Tata Motors to vote against the resolution to remove independent director Nusli Wadia, changed its stand on Friday.
“IiAS has changed its voting recommendation on the resolution to remove Nusli Wadia from Tata Steel and Tata Motors — we now recommend supporting the resolution,” the firm said in a note late on Friday.
The change in the recommendation followed the recent Rs 3,000 crore defamation case filed by Nusli Wadia against the Tatas, IiAS said, adding, “ Given this, we believe the relationship between Nusli Wadia and the Tatas has become antagonistic and will therefore likely be a distraction for the boards.”
It argued it was in the long-term interest of the Tata companies to remove Nusli Wadia as a director. Tata Investment Corporation is one of the investors of IiAS.
It argued it was in the long-term interest of the Tata companies to remove Nusli Wadia as a director. Tata Investment Corporation is one of the investors of IiAS.
On Thursday, IiAS had recommended that shareholders vote 'against' the removal of Nusli Wadia as a director.
“Our earlier recommendation in support of Nusli Wadia emanated from a larger governance question — can Tata Sons, as the controlling shareholder, ask for the removal of an ‘independent’ director on account of his support to Cyrus Mistry? Tata Sons accused Nusli Wadia of being disruptive and galvanising other independent directors to act against the interests of the Tata group. While Nusli Wadia has been vocal in his views, there was no tangible evidence of his ‘contrarian’ views being detrimental to the interest of the Tata companies or the group in general. The boards of the Tata companies are also silent on his conduct, but only reiterated his independence,” IiAS said.
“Our earlier recommendation in support of Nusli Wadia emanated from a larger governance question — can Tata Sons, as the controlling shareholder, ask for the removal of an ‘independent’ director on account of his support to Cyrus Mistry? Tata Sons accused Nusli Wadia of being disruptive and galvanising other independent directors to act against the interests of the Tata group. While Nusli Wadia has been vocal in his views, there was no tangible evidence of his ‘contrarian’ views being detrimental to the interest of the Tata companies or the group in general. The boards of the Tata companies are also silent on his conduct, but only reiterated his independence,” IiAS said.
By choosing to remain silent on Nusli Wadia and by continuing to list him as an independent director, IiAS believed the board had tacitly signalled that it has not come to such a conclusion regarding his conduct. “Given this, we believed that Nusli Wadia provided the required diversity of opinion to the boards, and there was no tangible evidence of this being detrimental to the overall board functioning.”
Until now, Nusli Wadia’s actions were in line with the campaign of a director trying to right what he believes is a wrong. But to file a lawsuit, and ask for damages (Rs 30 billion), will likely have permanent implications for both sides.
Moreover, IiAS believed that the lawsuit is significant evidence to suggest that Nusli Wadia’s presence in the boardroom is likely to be a distraction — given the hostile nature of his relationship with the controlling shareholder.
