Friction #6: The oxymoron that is an independent director

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Editor's note: On 31 August, The Economic Times reported that Stakeholders Empowerment Services (SES), a proxy advisory firm, had flagged how in 2019-20 Mumbai-based agrochemical company UPL Ltd paid more than Rs 100 crore as remuneration to Sandra Shroff, Jai Shroff and Vikram Shroff, three of its five non-executive directors. The payment through its subsidiaries appeared to be an attempt to bypass standard disclosure norms and approval requirements. The company, for its part, clarified that the payments were made from its international subsidiaries since these accounted for 85-90% of the company’s business.  Following the proxy advisor’s intervention and recommendation that the institutional investors should vote against the reappointment of Sandra Shroff, the company’s vice-chairman chose to resign from the board before the annual general meeting on 31 August. Normal order of business had been restored.  Why did it need an external agency to bring up the issue ahead of the AGM? Did the five independent directors, all illustrious men and women, even raise the matter with the board, in particular the fact that UPL had categorically stated in its FY 2020 annual …