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Review the annual report of a fortune 100 company of your choice.Who serves on the board of directors for the company?Are there any designated “outside”directors?On how many other boards do those outside directors serve?What does the compsny gain from having these outside directors on the board?
Expert Answer
I have chosen Nestle as the company and I will be focusing on their Indian subsidiary. Following are the board of directors of Nestle India.
Suresh Narayanan – Chairman & Managing Director
Shobinder Duggal – Director – Finance & Control and CFO
Aristides Protonotarios – Director – Technical
Rajya Vardhan Kanoria – Independent Non-Executive Director
Ashok Kumar Mahindra – Independent Non-Executive Director
Rakesh Mohan – Independent Non-Executive Director
Ravinder Narain – Independent Non-Executive Director
Swati A. Piramal – Independent Non-Executive Director
Out of total 8 directors, five directors are “outsiders” or are not related full time to the company. For example, Rajya Vardhan Kanoria sits on the board of many companies like JK Paper, Kanoria Chemicals, Vardhan Limited, KPL International and Ludlow Jute and Specialities Limited. Similarly, Ashok Kumar Mahindra sits on the board on tower insurance and reinsurance brokers(india) private limited.
Rakesh Mohan: Kirloskar Borthers and Mahindra United World College of India
Ravinder Narain: Shree Rajasthan Syntex, Shriram Pistons and DCM Shriram Industries Limited
Swati Piramal: Piramal Finance, Piramal Art Foundation, Indiaventure advisors, Piramal Management services, Kavaal finvest, Allergan India, Piramal Glass
Hence, all “outside” directos sits on the board of many other companies. The companies gains a lot from the services of outside directors. An outside director is a legal requirement. However, other than legal aspects, an outside director brings fesh perspective to the company. Since, he is not related, he has lesser “conflict of interest” in his job. Generally, people who have served in leadership positions earlier or are an experts in their fields are appointed as external directors. They bring their knowledge and experience to the table. Since,their requirement is mandatory in boards, they also play an important statuto ry responsibility of flagging off issues related to corporate governance or any other misgivings which comes to their notice.
