Letter: For accountability

Don't expect non-executive directors to add to corporate governance

Business Standard 

While I agree with the suggestions of Kavil Ramchandran and Sougata Ray in their article, “Agents of change” (May 3), on the steps that need to be taken in the future, at least three more are needed. They would add more teeth to These are:
 

  • Don’t expect non-executive directors to add to They are dependent on the company. An independent director must assume responsibility more out of prestige than remuneration. There must be a cap on the independent director’s remuneration, so that they quit the board in case the chairman ignores their view. 
  • Each independent director must have a dotted line relationship with one or more executive(s) of the company related to his/her field of expertise/domain knowledge so that the board can look towards them for their views, irrespective of the views of the management. This will bring diversity in governance and increase the involvement of independent directors in the company’s affairs. 
  • The board’s performance evaluation must be external, by independent directors and should be so mandated by the Companies Act. Even the most respected companies carry out internal evaluation of the board. This is just for compliance, not for
 
                Suresh Thawani   Noida

 
can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201  ·  E-mail: letters@bsmail.in
All must have a postal address and telephone number

Letter: For accountability

Don't expect non-executive directors to add to corporate governance

Don't expect non-executive directors to add to corporate governance While I agree with the suggestions of Kavil Ramchandran and Sougata Ray in their article, “Agents of change” (May 3), on the steps that need to be taken in the future, at least three more are needed. They would add more teeth to These are:
 
  • Don’t expect non-executive directors to add to They are dependent on the company. An independent director must assume responsibility more out of prestige than remuneration. There must be a cap on the independent director’s remuneration, so that they quit the board in case the chairman ignores their view. 
  • Each independent director must have a dotted line relationship with one or more executive(s) of the company related to his/her field of expertise/domain knowledge so that the board can look towards them for their views, irrespective of the views of the management. This will bring diversity in governance and increase the involvement of independent directors in the company’s affairs. 
  • The board’s performance evaluation must be external, by independent directors and should be so mandated by the Companies Act. Even the most respected companies carry out internal evaluation of the board. This is just for compliance, not for
 
                Suresh Thawani   Noida
 
can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201  ·  E-mail: letters@bsmail.in
All must have a postal address and telephone number
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