BENGALURU: There are some 60 foreign-headquartered firms with income over $1 billion every which might be in the present day led by Indian-origin executives, based on Indiaspora, a non-profit that seeks to deliver collectively Indian diaspora for collective motion. A number of of them mix the roles of chairman and CEO, and Satya Nadella has simply joined that choose group.
IBM veteran Arvind Krishna, who was appointed CEO of the corporate early final yr, took on the extra function of chairman in December. Prem Watsa of Fairfax Financial Services additionally holds each positions, as does Shantanu Narayen of Adobe, and Nikesh Arora of Palo Alto Networks. Mastercard’s Ajay Banga is government chairman, which supplies him an operational function too.
There are totally different views on whether or not the identical individual ought to maintain each roles. Vijay Govindarajan, Coxe Distinguished professor, Tuck School of Business at Dartmouth & government fellow, Harvard Business School, mentioned normally the chairman of the board in public companies is separate from the CEO in order that the Board can act on behalf of shareholders to make sure company governance. But Microsoft, he says, remains to be a excessive progress firm and the CEO compensation is generally in Microsoft inventory choices whose worth is dependent upon realising Microsoft’s future progress, thereby aligning the CEO’s curiosity with these of shareholders. “Ultimately, the problem boils right down to the standard of the chief. Satya Nadella is a smart chief, so elevating him to the chairman’s function will serve Microsoft shareholders nicely,” he mentioned.
However, Nirmalya Kumar, Lee Kong Chian professor of selling at Singapore Management University and Distinguished Fellow at INSEAD Emerging Markets Institute, believes combining the roles is a unhealthy thought. “The inherent battle of curiosity in combining roles is well-known as a result of then the chairman is voting on his/her personal compensation and the function of the Board in monitoring the administration is diluted, if not compromised,” he mentioned. A powerful chairman, he mentioned, acts as a examine on the CEO and a wholesome stress between them results in extra considerate choices.