The UTI Bank board on Wednesday reversed last week's decision to split the post of chairman and managing director. The board also decided to extend the tenure of the existing CMD, PJ Nayak, by five years.
Wednesday's decision has drawn the curtains on the week-long boardroom tussle between the bank's promoters and its management led by Nayak.
On December 14, the bank board had decided to split the post of CMD. Nayak, whose term expires on December 31, was offered the post of managing director, which he declined.
Sources close to the board said earlier the government had wanted to split the post but subsequently reversed its decision.
"Taking into account Nayak's performance as CMD, the board on Wednesday decided to give him a five-year extension. The board has also decided to continue with the present arrangement (of having one post for chairman and CEO) and has reversed the decision to split the post," said Surendra Singh, the chairman of the board's remuneration and nomination committee, immediately after the meeting.
Nayak's reappointment was subject to the approval of the general body of shareholders as also its principal shareholder, UTI-I, and of the Reserve Bank of India, the bank said in a notice to the Bombay Stock Exchange.
Even though the board has given Nayak an extension, Nayak said he would like to retire after two-and-a-half years in July 2007, when he turned 60.
"I have personally taken a decision to give up the post on July 31, 2007. All our bank employees retire on the last day of the month in which they turn 60. I am on contract and not an employee of the bank. So, this rule does not hold good for me. But personally I want to retire when I turn 60," he told Business Standard.
According to Nayak, two-and-a-half years would be a good time for the board to assess the bank's growth. "If the board stills holds the view that I should continue, I could review my decision," he added.
Being an interested party, Nayak stayed away from today's board meeting. Of the eight members of the board, six were present.
Yash Mahajan, an independent director, did not attend the meeting. According to sources, at the last board meeting, the proposal to split the post got the support of four members while three opposed it.
"It was felt the earlier decision did not find uniform favour in the board and other interested parties in the bank," Singh pointed out.
He also mentioned that the Life Insurance Corporation, one of the promoters of the bank, had nominated its director to the board but had declined to name the person.
"The board will consider the induction of the LIC nominee in the next board meeting on January 17," he said.
Bank executives said LIC had in the past named RBL Vaish as its nominee.The UTI Bank board has eight members. While JR Varma, NC Singhal, Yash Mahajan and Surendra Singh are independent directors, AT Pannir Selvam, and Ajeet Parsad are UTI-I nominees. Nayak is also a UTI-I nominee, while M Raghavendra represents General Insurance Company.