“I am being sacked” was the text message former Tata Sons chairman Cyrus P Mistry sent to his wife Rohiqa minutes after he was asked to either resign or face termination over Tata Trusts losing confidence in him for a variety of reasons.
Minutes before the October 24, 2016 board meeting of Tata Sons -- the holding company of the USD 106 billion salt-to- software conglomerate -- Ratan Tata and another board member Nitin Nohria came calling on the former chairman, claims Nirmalya Kumar, who was part of the core Group Executive Council (GEC) formed by Mistry.
“Nitin Nohria begins by proclaiming that ‘Cyrus as you know the relationship between you and Ratan Tata has not been working’.
“Therefore, Nohria continues, Tata Trusts have decided to move a board resolution removing Cyrus as Chairman of Tata Sons. He is offered the option of resigning or facing the resolution for his removal at the upcoming board meeting,” Kumar wrote in a blog.
Ratan Tata, according to Kumar, chimes in at this stage to say he is sorry that things have reached this stage.
“Cyrus Mistry calmly responds with ‘gentlemen you are free to take it up at the board meeting and I will do what I have to do’,” he wrote.
Cyrus sends a text “I am being sacked” to his wife Rohiqa, before putting on his jacket and heading for the board meeting, says Kumar in his latest blog titled ‘How Cyrus Mistry was fired’.
Kumar, who is currently a professor of marketing at Lee Kong Chian School of Business, Singapore Management University and Distinguished Fellow at INSEAD Emerging Markets Institute, states that during the meeting, Mistry argued that the articles of association required a 15-day notice before a resolution.
Another Tata Trusts nominee Amit Chandra informed the board that the legal opinion obtained by the Trusts stated such a notice was not necessary. “He offered to share the opinion, but none has been to date,” said the blog.
While six of the eight-member board that included Vijay Singh, Amit Chandra and Nitin Nohria -- all trust nominees; Ajay Piramal, Ronen Sen and Venu Srinivasan -- all independent directors, voted in favour of the resolution that sought removal of Mistry, Farida Khambhata, an independent director, and Ishaat Hussain, finance director, Tata Sons abstained from voting.
“It was all over in minutes, no explanations and no opportunity for Cyrus Mistry to prepare a rebuttal,” Kumar wrote.
At 3 pm Mistry returned to his room and begun “packing his personal effects.” He was informed by F N Subehdar, chief operating officer, Tata Sons that it was “unnecessary for Mistry to return the next day” when the latter queried him about the same.
Kumar said Mistry’s ouster stood out because the Tata Group had a history of only six chairmen over 148 years.
“Cyrus Mistry was selected after a careful process that took over a year, and by assuming the role at the age of 46, he was expected to serve between 20-30 years,” he wrote.
Kumar said the initial contract under which Cyrus was serving as the Chairman had been passed via a shareholder resolution of Tata Sons.
“It was due to expire on 31 March 2017. Instead of the sudden, no warning dismissal, the board could have just let the clock run out in five months. By eschewing the public humiliation of Cyrus Mistry, the bloody aftermath that followed could have been avoided.
“Unfortunately, instead there was the subsequent public airing of the underbelly of the Tata group as well as the deleterious impact on the reputations of Ratan Tata, Cyrus Mistry and the Tata brand,” he wrote.
The only winners, he said, were the public relations companies and lawyers, who are still having a field day.
On October 24 last year, Tata Sons announced that its board has replaced Mistry as Chairman of Tata Sons, naming his predecessor Ratan Tata as interim chairman.
Mistry was appointed Tata Sons chairman in November 2011 on the basis of his representation from Shapoorji Pallonji, the single largest shareholder in Tata Sons.
On February 21 this year, former head of TCS N Chandrasekaran took over as the chairman of Tata Sons.