Resignations Drove Premature Board Cessations of Independent Directors Serving India’s NSE Companies

Yearly report on board composition in India; second edition showcases insights from data across first three quarters of 2024.

January 8, 2025, New Delhi - Russell Reynolds Associates, a global leadership advisory and search firm, has found that in the first three quarters of 2024, of all mid-term board cessations for independent directors serving companies on India’s National Stock Exchange (NSE), 94% was due to resignations.

This finding was shared as part of the newly released Board Matters: India Board Analytics Report, the second edition of an annual study on board composition of the NSE’s top 200 listed companies in India, hereafter referred to as the TOP 200. The analysis extends to compare board demographics with those in other leading markets globally, offering a wider perspective and deeper insights into how India’s boards are evolving.

The second edition of the report highlighted that the most common reason for independent board director resignation was preoccupation with other commitments, with 54% citing this reason, up from 47% in 2023. Other common reasons included personal reasons (27%) and health or age (6%). Only 2% mentioned conflicts such as disagreements with management, up from 1% in 2023.

Another key observation from the report was that HR expertise among Nomination and Renumeration Committee (NRC) chairs remains low, despite incremental improvements. 5% of NRC chairs now bring in Chief People Officer or Head of HR experience to the role, up from 4% in 2023.

Sanjay Kapoor, lead of Russell Reynolds Associates’ Board & CEO Advisory in India, said, “The role of the NRC chair is crucial and complex, spanning across essential governance areas such as C-suite succession planning, executive compensation, organizational culture and DE&I initiatives. It is beneficial for boards to have NRC chairs with extensive HR experience, and we expect to see HR expertise increasing in representation among NRC chairs in the years to come.”

Across the TOP 200, representation of independent directors lags behind global peers. Within the TOP 200, 53% of directors are independent directors, a figure which is much lower in comparison to other markets, such as 74% of FTSE 100 directors, and 86% of S&P 100 directors.

Sanchit Jain, consultant and member of Russell Reynolds Associates’ Technology Practice and Board & CEO Advisory in India, said, “The Securities and Exchange Board of India stipulates that boards must include at least 50% independent directors if the chair is an executive, and one-third if the chair is non-executive. While there has been a significant cultural and regulatory shift toward ensuring publicly listed companies maintaining a majority of independent directors on their boards, many companies in India are family-owned, which inherently influences board composition.”

Other key findings from the report include:

Incremental progress towards gender parity on India’s boards.

• India is making gradual progress in enhancing gender diversity within its boardrooms. As of this year, women account for 21% of all directors in the TOP 200, up from 19% in 2023. Despite these gains, India remains behind global standards, where women make up 44% of FTSE 100 directors and 35% of S&P 100 directors.

Women independent directors are nearly 3x more common than women non-independent directors in the TOP 200.

• Women’s representation on TOP 200 boards highlights a significant disparity between independent and non-independent roles. Women hold 29% of the TOP 200’s independent director roles, a 2% increase from 27% last year. In contrast, women hold only 11% of the non-independent director positions, a nominal increase from last year’s 10%.

Women independent directors in India are younger than their male counterparts.

• The average age of independent directors on the boards of India's TOP 200 companies is 64.1 years, roughly in line with other markets.
• On average, women independent directors on the boards of in these Indian companies are 4.5 years younger than their male counterparts. We observe similar age gaps between men and women board directors in other geographies as well, with the largest gap occurring in the Straits Times Index (STI) 30 (where men are, on average, 7.7 years older than women directors) and the smallest in the S&P 100 (with a 2.1-year difference).

More than half of CSR chairs are independent, with a modest decline from last year.

• In India, companies above certain financial thresholds are mandated to spend at least 2% of their average net profits from the last three years on CSR initiatives. This emphasizes the necessity for effective governance in overseeing CSR spending.
• Despite a modest 3% decline in the proportion of TOP 200 independent CSR chairs since 2023, the majority remain independent. This ensures that CSR committees are led by those who can provide objective oversight.

^{The NRC is a subcommittee of a company’s board of directors, responsible for board member selection and renumeration. The Chair of this committee leads and oversees its activities.}

The full report is available here.

Media Contact:

Russell Reynolds Associates

Joann Chin, Marketing Director APAC

joann.chin@russellreynolds.com