Executives dearth may spur review of appointment policy for PSU chiefs

The government may review its current policy of appointing only those who have minimum two years residual service as chiefs of public sector undertakings.

The trigger for this review is the dearth of senior executives who have more than two years of residual service at the Rs 3,40,000-crore Life Insurance Corporation of India (LIC).

LIC chairman S B Mathur retires in October this year. R K Vashishtha, managing director, retires a month earlier. The six senior-most LIC executives will have less than two years of service left when Mathur hangs up his boots.

This means that in the normal course they will not be considered for the chairman's and the managing director's posts.

LIC's six senior executive directors are L K Dash, ED, marketing, who retires in May 2005, A K Shukla, ED, publicity (who retires in May 2006), Amitabh, ED, secretariat, (in May 2006), R Venugopal, ED, inspection (in June 2006), D Krishnan, ED, human resources department (in August 2006) and M V Suryanarayana, CEO, LIC Mutual Fund (who retires in May 2006). The next batch of senior executives who qualify for the two top jobs are in their early fifties.

If one of them is appointed LIC chairman, he will end up having a minimum tenure of over eight years, and in the process will also supersede six senior colleagues.

In addition to the six senior EDs, Dr S C Jain (chief, customer relationship management) and S K Kapathi (chief, estates) who were due for promotion this year were not promoted and so do not qualify right now for the top jobs.

Supersession is not new at LIC. Mathur as well his predecessor G N Bajpai (now chairman of the Securities and Exchange Board of India) superseded their seniors to become chairman.

Bajpai who became LIC chairman in September 2000 superseded P C Gupta (executive director, actuarial) and Pritam Singh (executive director, marketing), both of whom then put in their papers and joined private insurance companies.

The government may not want a chairman to have an eight-year tenure at the top. No LIC chairman or managing director has served in his position for more than three years.

Secondly, should the Centre stick to the two-year criterion, the next batch of senior executives will stagnate since they are just one to two years junior to the existing 1979-batch, many of whom were promoted as executive directors in April 2004.

"The finance ministry is closely looking at the issue. It may waive the two-year criterion for the next chairman," said a source.

The reason why this issue has cropped up this year at LIC is because it had stopped fresh recruitments for 10 years after the 1969 batch joined. This makes the 11 EDs who meet the two-year criterion "too junior" for the post.

There have been five instances in the history of LIC where the appointment of chairmen and managing directors did not stick to the two-year service criterion.

These individuals include R N Tripathi (managing director), N V Govardhan (chairman), R Totathari (managing director), M D Diwan (chairman) and N K Shinkar (chairman).