Also a few points i would like to add, i
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Corporate governance in India is poor because most investors worship management and management believe that they are doing us a favour. Once a company is listed, it is public and that means all shareholders should in theory be treated equally.
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The 250-500 crore issue of shares to Ajit Isaac at par value only speaks of the disdain he has for his partners, i.e.Thomas cook and minorities. A fair deal would have been to give him options to allow him to raise his stake, this is usually how management is compensated in order to retain them or allow them to increase their stake in the business. This way the options vest over time and more importantly a fair price is paid for it.
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Why did Ajit Isaac sell a stake in quess to begin with? he could have raised money from other sources or even from a private equity firm, but he is smart. He knows that in fairfax’s case he has a long term partner who will genuinely support him. A PE firm would have had him locked in with all kinds of punitive clauses.
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In my experience if someone is willing to cross an ethical boundary, it doesn’t matter what you say or give them today to pacify them, eventually they will try something else in the future. It doesn’t boil down to a figure or right or wrong. so in order to give him extra shares today with the hope that in the future he stays doesn’t hold water…he could eventually sell out to the highest bidder…
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Buffett and Munger let their blue eyed boy David Sokol go once he crossed an ethical boundary with them…no questions, no ifs buts or ands…im really not sure that Ajit Isaac is as valuable as David Sokol…