Some of the top NSE companies by market capitalisation that saw the demise of directors include Motherson Sumi, Muthoot Finance, Jindal Steel,
, Endurance Technologies, Mahanagar Gas, HFCL, Angel Broking, Kalpataru Power Transmission and Venky’s India.
While the cause of each death is not known, it is possible that some would have succumbed to Covid-19. “Average age of board members in India is 59 years and it is a well-established fact that Covid impacts people in older age groups much more adversely,” said Pranav Haldea, managing director of Prime Database.
Companies have in the past focused on executive succession planning, but the impact of Covid-19 on boardrooms highlights the need to do this for directors, something that has not got adequate attention until now, experts said.
“The pandemic has challenged several boards on account of members of the board not being available to discharge their governance responsibilities due to ill-health and in several cases even death,” said Santosh Kumar, partner, Deloitte India.
“Succession planning for the board is now an important aspect that all boards need to consider to ensure there is agility in responding to ‘drop-dead’ scenarios,” Kumar said.
Companies Need to be Prepared
The pandemic has made it clear that companies need to be prepared for unexpected fatalities across all levels.
“The board should champion and be in the know of the succession plan for all key managerial personnel and CXO-level executives as part of responsibility to the company and shareholders,” said Shriram Subramanian, founder and MD, InGovern Research, a proxy advisory firm.
Amit Tandon, MD of proxy advisory IIAS, said companies are now evaluating the skillsets of board members. They know what areas of expertise they possess and what gaps need to be filled and can use these opportunities to refresh the board. “The harsh reality that we all need to face is that business needs to go on,” Tandon said.
For many boards, it will be necessary to develop new channels for identifying talent, adopt a fresh approach to onboarding directors, and have a more deliberate process for succession planning, all of which are imperatives for building a collaborative board, said Kumar of Deloitte.
