Tatas cut tenure of non-exec directors-The five-member committeerecommended the new retirement age of 70 -Apr 9, 2011

Tatas cut tenure of non-exec directors

TNN | Apr 9, 2011, 05.48am IST


MUMBAI: In the nineties, Ratan Tata introduced a retirement policy in the Tata Group as a means to bring in relatively young blood —- and see off some of the old chieftains. Non-executive directors were to retire at 70.

In 2005, two years before Tata was to retire, the group upped the retirement age of non-executive directors to 75.

Cut to 2011, a little less than two years to go for Tata to hang up his boots, the group has once again tweaked the age and gone back to the original limit of 70.

Tata Sons, the holding company for the $72 billion conglomerate, decides on the age bar for directors across the group. The latest guideline will see the tenure of several Tata veterans cut short by five years. However, for the purpose of managing transition, Tata Sons has reportedly said that directors who have crossed 70 will continue till the age of 75.

So, Tata Sons directors R K Krishna Kumar (72) and J J Irani (74) can serve till 75, but Farrokh Kavarana (67), R Gopalakrishnan (65), Ishaat Hussain (63) and Arunkumar Gandhi (68) will see their term shortened. These stalwarts are also on the board of several Tata group companies.

Several executives who steered group companies till the age of 65 and were subsequently moved to non-executive board positions see their second 10-year career innings halved. This includes S Ramadorai (former MD-CEO and now vice-chairman of Tata Consultancy Services), B Muthuraman (ex-MD and now VC of Tata Steel), Ravi Kant (former CEO and now VC of Tata Motors) and Prasad Menon (erstwhile MD and now non-executive director of Tata Chemicals).

The five-member committee appointed to find a successor for group chairman Ratan Tata (73) recommended the new retirement age of 70 for non-executive directors, which was accepted by the Tata Sons board.

There has been no change in the retirement age of executive and wholetime directors which remains at 65 years. The retirement for executive directors was introduced in 2000. Though all group companies follow this, an exception has been Tata Global Beverages (earlier known as Tata Tea), where the retirement age is 60. Homi Khusrokhan stepped down as Tata Globals MD on turning 60 in 2004.

A former Tata executive, who was with the group for over 15 years, sees this new age limit for non-exec directors as a way to shuffle the deck. It allows the group to bring a younger set of people into the system, he said. The new rule will also see Tata's successor's tenure curtailed to 70 years. The group recently indicated that it would name a successor by the end of second quarter.

A report on Friday said the committee also considered the appropriate board structure including the question of retirement age for directors. It recommended the retirement bar be brought down from the current 75 years to 70 years, Tata Sons was quoted as saying.