New angle to Mistry-Tata spat: Tata Sons board's remuneration panel had lauded ex-chairman's performance in June

MUMBAI: Four months before he was ousted, the remuneration committee of the Tata Sons board had not only lauded Cyrus Mistry's performance but also recommended a substantial salary increase, according to sources close to the former chairman.

The nomination and remuneration committee which met on June 28, after reviewing Mistry's performance, unanimously recorded its recognition of his significant contribution across group companies.

It also expressed appreciation of his "multifaceted initiatives aimed at preserving and promoting cohesive functioning of the group in accordance with its distinctive values", as per the sources cited.


Also Read: Removal of Mistry was necessary for the future success of Tata Group, says Tata


The committee agreed to recommend to the board of Tata Sons an increase in Mistry's basic salary and commission, according to these sources.



Though the board had offered a larger increment, Mistry insisted that his salary increase should not exceed the 6% offered to his top team, the Group Executive Council.

The GEC has now been dismantled and three of its members — Madhu Kannan, Nirmalya Kumar and NS Rajan — have resigned.

The Tata Sons directors on the nomination panel are Ronen Sen, the chairman of the committee and independent director, Vijay Singh, the nominee director representing Tata Trusts, and Farida Khambata, independent director. All attended the meeting as did Mistry, who was a member.

In the fateful Tata Sons board meeting on October 24, at which Mistry was ousted, Sen and Singh had backed his ouster. Khambata abstained.


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In the June 28 meeting, Sen said that judging by his experience garnered from site visits, Mistry had earned the respect not only of CEOs and senior management but also operational personnel, according to sources close to Mistry who described the meeting's proceedings.

Minutes of the committee's meetings were later circulated to its members and to the entire Tata Sons board. The board also approved the increment for Mistry at its meeting the next day, according to the people cited.

Tata Sons reiterated that the decision was taken in the interests of the group. "The board in its collective wisdom decided that it may be appropriate to consider a change for the long term interests of Tata Sons and the Tata Group," group spokesperson Debasis Ray told ET.

"Although over a week has passed, the board of directors of Tata Sons is not forthcoming as to why Mr Mistry was unceremoniously treated this way without regard to any values. One lone trustee of Tata Trusts has suggested his removal was for non-performance," a person close to Mistry told ET.

"If at all this ostensible reason is to be believed, then the directors who were part of the committee who voted in favour of his removal clearly failed to apply their mind independently and discharge their fiduciary duty," the person added.

VR Mehta, a board member on Sir Dorabji Tata Trust, had told ET that reduced dividend payments by Tata Group companies during Cyrus Mistry's tenure as chairman eroded the income of main shareholder Tata Trusts.

Ratan Tata's unlikely comeback to the Tata Group after he was made the interim chairman on October 24 sent shockwaves through corporate India.

The next day Mistry wrote a letter to Tata Sons board members and trustees of Tata Trusts on issues he had faced in the four years at the helm of the business house.