FMCG CEOs (Fast-Moving Consumer Goods) are increasingly grabbing opportunities to join the boards of non-competing consumer-facing companies in search of new ideas to grow their businesses.
One recent example of this emerging trend among FMCG CEOs is Suresh Narayanan, chairman and managing director at Nestle India, joining the board of Asian Paints as an independent director in March this year.
Ullas Kamath, joint managing director of Jyothy Labs, has been serving as an independent director on the board of VGuard Industries since July 2014.
Varun Berry, MD at Britannia, is on the board of Page Industries since May last year while Vivek Gambhir, MD at Godrej Consumer Products, is on the board of Metropolis Healthcare since September.
The earliest instance of this trend is perhaps that of Anand Kripalu, CEO of United Spirits, serving on the board of Marico from April 2007 to October 2017.
From independent directors like Harsh Mariwala and Kiran Mazumdar Shaw, consumer-facing companies are now looking at boarding CEOs of non-competing peers as they have increased their hunt to get independent directors on board.
No conflict of interest
“As professionals we can be honest on family owned companies, and not dependent on the board membership to make a living. Asian Paints is a well-governed company, so we learn from each other as large organisations. Being on part of good companies is also therefore not a professional risk,” Narayanan told ET.
“All of us are professionals and not entrepreneurs and, therefore, not interested party in the operations,”Narayanan of Nestle said.
It is a win-win arrangement. “Companies get CEOs to provide an independent view and add value, based on their experience. Equally, the CEO can take back useful ideas to implement in his own company.” Kripalu of United Spirits told ET.
Elaborating on the incentive for an FMCG Chief Executive to be an independent director on another board, Sarwate said, “There is the exposure to another industry, typically an industry not far too removed from FMCG.”
“This widens the cerebral horizon, encourages a different kind of strategic thinking. Being on another board in a non-executive capacity enables a better understanding of governance processes,” Sarwate added.
Sarwate also said, “The CEO gets a grounding in being a board member, this helps in his or her own individual career. It helps the CEO build new, active and live networks. All that the CEO learns gets ploughed back into his or her parent organisation.”
The trend is global
FMCG CEOs of some of the leading consumer-facing companies in the world sit on the boards of other listed consumer-centric companies.
Tim Cook of Apple Inc is on the board of Nike since June 2016.
Alex Gorsky, CEO of Johnson & Johnson, has been on the board of IBM Inc since September 2014.
Dirk Van de Put, CEO of Mondelez International, serves on the board of Keurig Dr Pepper since April last year.
While David S Taylor, CEO of Procter & Gamble Co, joined the board of Delta Airlines this month.
By: Abhinav Ranjan, Editorial Desk, DKODING Media