Vol 24, No 4; Article by N Balasubramanian and Rejie George; December 2012
In conversation with K V Kamath, Chairman, Infosys and ICICI Bank
Even as the power and influence of corporations are indisputably acknowledged in modern society, there is a concomitant need to govern them such that the competing and often conflicting interests of the state, society, and the shareholders are reconciled and aligned. Over the years, several corporate governance mechanisms have evolved to cater to these governance challenges. N Balasubramanian and Rejie George set out some of the key internal mechanisms of corporate governance and their institutional context, and examine how corporate boards as a preeminent mechanism of such governance are structured to perform their assigned role.
Section A charts out the broad corporate governance landscape, emphasising the internal governance mechanisms such as the board of directors, large shareholders and debt holders, and executive compensation schemes. Section B focuses on boards and emphasises the scenario in India. It takes up issues relating to (a) optimal board size; (b) the proportion of non-executive and executive directors in the interests of objectivity and impartiality; (c) board profile and diversity to ensure the right balance of domain skills and breadth of experience and exposure of value to the company; (d) the "duality debate" on the separation of board chair and chief executive positions; (e) interlocking directorships, and (f) parent-subsidiary relationships, especially where the interests of subsidiaries and their affiliates may not coincide with the parent's. Section C documents the authors' conversation with Mr K V Kamath, non-executive chairman of the boards of Infosys and ICICI Bank, two of India's top ranking corporations, discussing many of the issues raised.
