When shareholder voting is on, many directors pull their candidature

livemint.com:

Mint review of director appointments at 21 companies showed. These include Zee Entertainment Enterprises Ltd, Dish TV India Ltd, pharma firms Gland Pharma Ltd, Alkem Laboratories and Solara Active Pharma Sciences Ltd, and banks like Union Bank of India and Karnataka Bank. Zee has seen three instances of directors opting out while Gland Pharma and IFGL Refractories Ltd, which provides refractories to steel plants, has witnessed two such occasions in the last three years.

A prospective director, or a director seeking reappointment, provides consent to the company board's nomination and remuneration committee, (NRC), which recommends the candidate to the board, and eventually seeks shareholders' approval. For this reason, a board member withdrawing at the voting stage is surprising. Mint spoke to four executives, including a former board member, two investors and one corporate governance expert, who pointed out two likely reasons: Disapproval from proxy advisory firms, and a desire to avoid the embarassment of being rejected by investors.

Shroff's candidature, for instance, had met with disapproval from several proxy advisors. “Our firm view remains that directors should not be allowed to withdraw once the company sends a notice to shareholders seeking their appointment," said Amit Tandon, founder and managing director at Institutional Investor Advisory Services (IiAS), a proxy advisory firm. A board member withdrawing makes the voting process infructuous, and a company does not disclose the voting results for the resolution, despite many investors making their choice.