| Usha and Laxmi Mittal: Crisis manager and real boss
Calcutta, June 13: If Laxmi Mittal and his slate of directors at ArcelorMittal were suddenly forced out of action, wife Usha will run the show at the $88-billion steelmaker.
Shareholders at the world’s largest steelmaker have decided to make Usha the contingency boss if the whole board of directors were “prevented from acting or permanently absent”.
This is in line with a mandatory corporate governance code in Holland where ArcelorMittal is now headquartered.
But Usha’s entry means that the Mittals will have three members of the family in positions of key responsibility now: Laxmi was voted in today as chief executive of the company at its first shareholders’ meeting while son Aditya is already on the management committee.
The Mittals have faced criticism for showing preference for family in key appointments — an issue that had flared up when Mittal Steel mounted a hostile bid for the Luxembourg-based Arcelor last year.
Usha’s appointment has been rendered necessary because of Article 23 of the Articles of Association of ArcelorMittal that reads: “In case a managing director is prevented from acting or permanently absent, the remaining managing directors or the only managing director shall temporarily be responsible for the entire management.
“In case all managing directors are, or the only managing director is, prevented from acting or permanently absent, the person designated or to be designated for that purpose by the general meeting of shareholders shall temporarily be responsible for the management. Failing one or more managing directors, the person referred to in the preceding sentence shall take the necessary measures as soon as possible in order to have a definitive arrangement made.”
Usha was the contingency boss at Rotterdam-based Mittal Steel before the merger. So, in one sense, she is continuing with tradition.
Contacted by The Telegraph, an ArcelorMittal spokesperson took pains to explain that the resolution was passed only to comply with the Dutch law. “She will act as emergency proxy for the board but such a situation is extremely hypothetical,” he said.
He also added that once the merger of Arcelor and Mittal Steel was completed and the headquarters move to Luxembourg, there would be no requirement to bring such a resolution in the next annual general meeting.
“There would be no regulatory framework to back such a resolution. We will follow the Luxembourg laws,” he pointed out.
This indicates that the merged entity will have to drop this article of association or Usha may always have a chance to be where she is now.
India does not require companies to have a contingency head like this. In any case, companies take care to make sure such an extreme case does not arise.
For instance, no company allows directors to travel together after the tragic instance of Birla 3M whose entire board got wiped off in a plane crash in 1990.
Incidentally, one of the sops the Mittals offered to win over Arcelor shareholders was to move the headquarters from Rotterdam to Luxembourg, which may now mean the end of Usha’s special status.
To fend off possible charges of excessive family control over Mittal Steel and court a professionally managed company like Arcelor, Laxmi had agreed to reduce personal stake in the company and also special voting rights.