LIC not to appoint retired staff on company boards

The Life Insurance Corporation (LIC) has decided not to nominate any retired employee as a director on the board of the almost 90 companies in which it has equity or loan exposure.

The decision, which comes after LIC was involved in a tussle with one of its retired nominee directors over exercise of the employee stock option plan (Esop) in Larsen & Toubro (L&T), will be implemented once retired employees currently serving as nominee directors complete their term.

Confirming the development, sources in LIC said the corporation would send senior officials of the rank of executive director and above to the company boards.

"The average age of senior officers of the rank of executive director and above is 54; so we may not see many retirements in the near future," they added.

In most cases, LIC appoints one of its high-level retired employees as a director on the board of a company in which it is a lender or an equity stake holder.

Industry experts said the corporation might find it difficult to meet its own criterion"" designation of executive director and above""to fill up vacancies on company boards.

However, a top source in LIC said the corporation's representation on company boards would be significantly reduced in the near future.

"Today, companies go to the capital markets to meet their fund requirements. There has been a reduction in the number of companies approaching us for a term loan and so we may not need that many nominee directors in the future," he added.

LIC and GIC were caught in a major controversy two months ago with their representatives in L&T "" Kranti Sinha and B P Deshmukh, respectively "" exercising their Esops and transferring them to their personal demat accounts without informing the institutions.

LIC took legal recourse against Sinha and received a restraint order from the Bombay High Court.

Later, both directors were replaced from the L&T board and also returned their Esops to the institutions.