Chair of the highest governance body

The Chairman of ITC is the Chief Executive of the Company. He is the Chairman of the Board and the CMC. His primary role is to provide leadership to the Board and the CMC for realising Company goals in accordance with the charter approved by the Board.

We have a diversified business portfolio which demands of senior leadership an in-depth knowledge and understanding of the functioning of the Company, so as to enhance the value-generating capacity of the organisation and contribute significantly to stakeholders’ aspirations and societal expectations. The Chairman of the Company, therefore, is chosen from the Executive management.

Board of Directors (Board)

The ITC Board is a balanced Board, comprising 4 Executive and 9 Non-Executive Directors (including 7 Independent Directors) as on 31st March, 2007.

Selection of Directors

ITC’s Governance Policy stipulates that the Non-Executive Directors (including Independent Directors) be drawn from amongst eminent professionals with experience in business/finance/law/public enterprises. Directors are appointed/ re-appointed with the approval of the shareholders for a period of three to five years or a shorter duration in accordance with retirement guidelines as determined by the Board from time to time. All Directors are liable to retire by rotation unless otherwise approved by the shareholders. One-third of the Directors who are liable to retire by rotation, retire every year and are eligible for re-election.

The selection of Directors is done by the Nominations Committee, which comprises all the Non-Executive Directors and the Chairman.

Performance of the highest governance body

The role of the Board is to provide direction and exercise control to ensure that the Company is managed in a manner that fulfils stakeholders’ aspirations and societal expectations. The Board evaluates Directors collectively to reinforce the principle of collective responsibility.

Compensation for members of the highest governance body

Remuneration of the Chairman, Executive Directors and seniormost level of management below the Executive Directors is determined by the Board, on the recommendation of the Compensation Committee comprising only Non-Executive Directors; Remuneration of the Directors is subject to the approval of the shareholders. Such remuneration is linked to the performance of the Company inasmuch as the performance bonus is based on various qualitative and quantitative performance criteria. The quantum of such performance bonus for each financial year is determined by the Board on the recommendation of the Compensation Committee.

Remuneration to Non-Executive Directors is by way of commission for each financial year; such commission is determined by the Board within the limits approved by the shareholders. The remuneration is based, inter alia, on Company performance and regulatory provisions and is payable on a uniform basis to reinforce the principle of collective responsibility. Non-Executive Directors are also entitled to sitting fees for attending meetings of the Board and Committees thereof, the limits for which have been approved by the shareholders.

The Corporate Management Committee determines the remuneration of other managers of the Company. Stock Options are granted to Directors and managers to align their interest with those of the shareholders by creating a common sense of purpose towards enhancing shareholder value. Options are granted based, inter alia, on the employee’s and Company’s performance, the level/grade of the employee and such other criteria as determined by the Compensation Committee/Board.

The appointment of Executive Directors, who have all been drawn from amongst the management cadre, is covered by the terms and conditions of their Service Contract. In terms of the Articles of Association of the Company, a notice of one month is required to be given by a Director seeking to vacate office and the resignation takes effect upon the expiration of such notice or its earlier acceptance by the Board. In terms of the Service Contract applicable to the management cadre, employment may be terminated at any time by either party giving in writing the requisite notice.

Avoidance of conflicts of interest

In terms of the ITC Code of Conduct, as adopted by the Board, Directors, senior management and employees must avoid situations in which their personal interest could conflict with the interest of the Company. This is an area in which it is impossible to provide comprehensive guidance but the guiding principle is that conflict, if any, or potential conflict must be disclosed to higher management for guidance and action as appropriate.

Contracts in which Directors are interested, if any, are required to be placed before the Board for approval. Further, senior management is also required to confirm on an annual basis that no material transaction has been entered into by them which could have potential conflict with the interest of the Company; such confirmations are placed before the Board.