Must age be a facet in judging one’s worth to a firm?
There is little evidence that younger CEOs are more measured in their responses
At the recent annual general meeting (AGM) of engineering giant Larsen & Toubro Ltd (L&T), A.M. Naik, the company’s non-executive chairman, set off a minor kerfuffle. As per a Business Today report, he asked marshals at the event to evict shareholders who raised questions about his use of company land on its Powai campus for setting up a super-specialty cancer hospital in his granddaughter’s memory.
Naik faced opprobrium for his flare-up, but curiously, it was his age more than his behaviour that seems to have created much of the subsequent stir. At 76, Naik is no spring chicken, but after 52 years with a company which he helped grow to its current level, it seems unfair to begrudge him the role of non-executive chairman.
Indeed, should age be a factor at all in judging a person’s worth to a company?
While the issue of using company land for what is essentially a private initiative is definitely dodgy, Naik’s response was no surprise.
The assumption that a younger Naik would have been less abrasive or would have dealt with it differently isn’t borne out by his past record. Those who know the man and have tracked his long career are well aware that he doesn’t take criticism too well.
Nor is it this the first time that a shareholder has been ticked off at the AGM of an Indian company.
Many a company owner has told shareholders who dared to ask sticky questions that they have the option of selling off their shares if they didn’t like what they saw. In India, AGMs have rarely been models of democratic behaviour and minority shareholders have often found their voice stifled.
Naik’s summary dismissal of the shareholder’s query was no surprise then.
It is the issue of his age that raises the more pertinent question. In the family business-driven world of corporate India, there are many patriarchs who continue to run their companies well beyond the generally accepted age for retirement. That it should be so at a professional company like L&T is what causes some surprise. But here too, Naik is in good company. Yogi Deveshwar at 71 continues to be chairman of ITC Ltd and Ratan Tata was Tata group chairman till he turned 75.
That the age of these men should at all be an issue is symptomatic of an increasingly age-conscious corporate culture with Silicon Valley and its clone in Bengaluru driving the push for more youthful occupants in the corner office. Yet, there is little evidence to suggest that younger CEOs are more measured in their responses or more effective with their decision-making. Indeed, some of the antics of Uber’s Travis Kalanick and Tesla’s Elon Musk, both in their 40s, suggest that eccentricity isn’t an age-related thing at all.
Despite the commonly held belief of a definite leadership sweet spot that falls in the age group of 50-60, some of the top performing corporate leaders defy such stereotypes. The late Brijmohan Lall Munjal continued to steer the Hero group well into his 80s, while Wipro chairman Azim Premji shows few signs of losing his grip even at 73.
It is also a moot point whether Infosys might have been better off if N.R. Narayana Murthy hadn’t stepped down as its chairman when he turned 65.
Even in the US where the average age of new CEOs, according to research from Crist Kolder, a Chicago-based executive search firm, is 50, there are men like Berkshire Hathaway’s Warren Buffett and Marriott International’s Bill Marriott who are successfully running their companies well into their 80s. In fact, last year American Insurance Group (AIG) surprised everyone by naming 70-year-old Brian Duperreault as its next chief executive.
In the US, the Age Discrimination in Employment Act does provide safeguards to older workers against the threat of lay-offs due to age. Unfortunately, the Act does not cover people in executive-level positions.
In India, of course, most professionally-managed companies have a mandatory retirement age for all positions. To the extent that it allows space for younger executives to grow, it is the right thing. But whether it should be applied to leadership is questionable.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider looks at current issues and trends in the corporate sector every week.