When 2018 turned year of big c-suite exits

Chanda Kochhar:  ICICI Bank for long had been a showcase institution where nothing can go wrong. But, the 56-year-old Kochhar, who rose through ranks to occupy the corner office of the prestigious institution, was mired in allegations of conflicts of interest, lack of disclosures and quid-pro-quo while extending loans to the now-bankrupt Videocon Industries. 

Shikha Sharma: Another high-profile banker Shikha Sharma was denied extension by the RBI as MD of Axis Bank, the third largest private sector lender. The bank’s board had proposed another three-year term for her till May 2021, but she was allowed to serve only till December 31, 2018.  Axis Bank’s NPAs jumped over five-fold in two years till March 2017, while the net profit halved in the same period. 

Rana Kapoor: His tenure as Yes Bank CEO was curtailed by RBI and he has been allowed to occupy the position only till January 31, 2019. The lender saw Ashok Chawla quitting as its chairman last month. In case of Axis Bank and Yes Bank, RBI flagged problems with their assets. Many lenders like Yes Bank were asked by the RBI to disclose “divergences” in their bad loan reporting.

Urjit Patel: The mother of all exits took place at the RBI itself with Governor Urjit Patel announcing his sudden resignation on December 10 citing “personal reasons”. The resignation, however, followed a run-in with the government over several issues including autonomy of the central bank. The very next day, the government appointed former bureaucrat Shaktikanta Das as the new RBI chief. 

Arvind Subramanian: The Chief Economic Advisor resigned in June this year. On FB, Arun Jaitley spoke about Subramanian’s decision to go back to the US on account of family commitments. In November, Subramanian said demonetisation was a massive, draconian, monetary shock that accelerated economic slide to 6.8 pc in seven quarters after it, against the 8 pc recorded prior to the note ban.

Surjit Bhalla: The economist, who questioned the involvement of the Niti Aayog in the release of re-stated economic growth numbers of the UPA regime, tweeted “I resigned as a part-time member of the Prime Minister’s Economic Advisory Council (PMEAC) on December 10.” This was after Urjit Patel resigned as the RBI governor amid a standoff with the government over a range of issues.

Binny Bansal: The high profile exits this year include that of Flipkart Group CEO Binny Bansal who resigned after an allegation of ‘serious personal misconduct’, parent Co Walmart said. Binny, who along with Sachin Bansal had co-founded Flipkart, which became India’s biggest online retailer denied the allegation. The probe revealed other lapses in judgement, and a lack of transparency, related to how Binny responded to the situation.

Aditya Ghosh: Stepped down as President and Whole Time Director of Indigo, following a decade long stint to join Oyo as CEO. The appointment comes in wake of the company’s focus to drive accelerated growth in its home markets, India and China. Ghosh said his 10-year stint with Indigo was “the most satisfying task.” “It is now time for me to step off the treadmill and sometime in the near future embark on my next adventure,” he had said in an official email. 

Hari Sankaran: The Vice Chairman and Managing Director at Infrastructure Leasing & Financial Services (IL&FS) was ousted in October, when the Centre disbanded the 15-member board of the debt-ridden entity. The National Company Law Tribunal (NCLT) had asked nine former directors including Sankaran to disclose their assets and restrained them from selling or mortgaging their properties till the next date of hearing.

Vinod K Dasari: Closer home, Hinduja Group’s flagship firm Ashok Leyland’s CEO & MD Vinod K Dasari, who had been reappointed for a term of five years ending March 31, 2021, quit citing personal reasons. Dasari had been associated with the commercial vehicles major for the past 13 years. Ashok Leyland Chairman Dheeraj Hinduja was elevated as Executive Chairman in view of the resignation of Dasari.

Elon Musk: On the international front, Mars bound Tesla CEO, Elon Musk, in September reached a deal over fraud charges saw him step down as chairman of the board and pay a $20 mn fine but stay on as CEO. The embattled executive faced charges, which stemmed from a tweet by Musk about taking the company private. The ban on Musk’s serving as chairman went from two years to three, with his fine being doubled to the aforementioned sum.

Carlos Ghosn: Auto czar Carlos Ghosn, who helmed Nissan and Renault was ousted after being indicted on charges of underreporting his income from Nissan to Japanese authorities. It is alleged that he transferred personal losses worth some 1.85 billion yen ($16.6 million) sustained in the 2008 financial crisis to Nissan. He also stands accused of wiring some $14.7 million from Nissan funds to another company for his own benefit.

The year witnessed a slew of big-ticket exits across sectors. Experts believe a major shift in perspective vis-à-vis corporate governance, performance appraisal and even shareholder activism has contributed to this exodus of sorts. 

According to Ganesh Chella, MD, Coaching Foundation India, who has been credited with training more than 40 CEOs pan India, “Exits are a fallout of conflicts, differences of opinion, ethical and moral concerns, besides changes in choice of pursuit. Globally, over the last three years, we have witnessed several such high-profile departures from places of power. One might attribute it to business fatigue, increasing activism among shareholders or even mounting scrutiny on social media or pressures stemming from the Board.” 

Performance shortcomings, corporate malfeasance and the growing acceptance of whistle blowers in the corporate governance aspect has led to many a mega exit. Sankaran P Raghunathan, Dean, The National Management School says, “Clearly, greater vigilance and protection for whistle blowers are changing the work dynamics of India Inc. Activism is only bound to increase in the future as leaders will be increasingly assessed on performance and not just charisma.”

Raghunathan also laments the lackadaisical approach employed by several independent directors who fail to call out the excesses of executives. “Why rock the boat or miff the CEO, especially in family run enterprises.  Even major shareholders are taking the silent route out and allowing institutions like IL&FS go downhill,” he notes. Of course, shareholders are nowhere near having the last laugh as the stock markets are rife with Goliaths who continue to post sub-par yield (under 15 per cent returns) annually for decades together.