Mumbai: The board of Axis Bank Ltd, India’s third largest lender, on Monday recommended the appointment of Shikha Sharma, head of ICICI Prudential Life Insurance Co. Ltd, as its managing director and chief executive officer after an 8-hour-long meeting that saw the bank’s chairman and chief executive officer P.J. Nayak opposing Sharma’s candidature every step of the way.
Nayak, whose term was to end on 31 July, submitted his resignation soon after, expressing his dissent on the board’s decision.
Eight board members voted in favour of Sharma while Nayak was pushing for an internal candidate, Hemant Kaul, the bank’s executive director and head of retail business. Sharma’s appointment is for five years, subject to the Reserve Bank of India’s approval.
New responsibilities: A file photo of Shikha Sharma, who has been named the managing director and chief executive officer of Axis Bank. Madhu Kapparath / Mint
The board will meet later this week to appoint an interim chief executive officer following Nayak’s resignation.
It also postponed a scheduled conference call with analysts on its quarterly earnings.
“Nayak was in favour of an internal candidate and resigning from the post is his choice,” one board member told Mint, asking not to be identified given the sensitivity of the issue.
Neither Nayak nor Sharma was available for comment.
The list of board members who supported Sharma’s candidature includes Rama Bijapurkar, who is also on the board of ICICI Prudential Life Insurance.
A senior executive of Axis Bank, who also did not want to be identified, said Bijapurkar should have abstained from voting in favour of Sharma as this amounts to a conflict of interest.
Bijapurkar could not be contacted for comment on Monday evening.
“We are aware of the fact that she is on the board of ICICI Prudential, but I cannot tell you whether she participated at the discussion on Sharma’s appointment. I cannot divulge the minutes of today’s (Monday’s) board meeting,’’ said the board member quoted earlier in this story.
The senior executive of the bank said that Axis Bank could see a spate of resignations at the senior level, particularly those who are set to retire soon.
An Axis Bank statement to the Bombay Stock Exchange (BSE) said: “The board of directors of the bank at its meeting held on 20 April, subject to the approval of Reserve Bank of India and shareholders, recommended the appointment of Shikha Sharma as the managing director and chief executive officer of the bank. The appointment will be for a period of five years.”
It also said, “P.J. Nayak, chairman and chief executive officer, dissented from the decision, and informed the board of directors that he would be leaving the bank forthwith.”
Egon Zehnder International, a firm that specializes in assessing and recruiting business leaders, was instrumental in choosing Sharma. The entire process was supervised by the remuneration and nomination committee of the board, headed by R.H. Patil, chairman of Clearing Corp. of India Ltd.
Apart from Sharma, four executive directors of the bank— M.M. Agarwal, V.K. Ramani, S.K. Chakrabarti and Hemant Kaul—were also in the race for the post.
Sharma began her career with the erstwhile financial institution Industrial Credit and Investment Corp. India Ltd in 1980. Instrumental in setting up the group’s investment banking business, she has been heading the life insurance venture since its inception early this century after India opened up the sector and allowed private players to set shop.
Meanwhile, for the January-March quarter of fiscal 2009, Axis Bank has registered a 61% increase in net profit at Rs581.45 crore, up from Rs361.40 crore in the corresponding quarter a year ago. The bank has posted a 69% rise in net profit to Rs1,815.36 crore for the full year, against Rs1,071.03 crore in the previous year.
The board of directors of the bank has recommended 100% dividend, Rs10 per share, for the year ended 31 March, subject to the approval of shareholders.
Axis Bank’s shares rose 1.29% to close at Rs.510.30 a piece on BSE even as the benchmark index, Sensex lost 0.4% to close at 10,979.5 points and Bankex, the banking industry index, lost 0.96% to close at 5,526.33 points.