In 2002, Ratan Tata did something that few Indian corporate leaders willingly do. Having built the Tata Group into India’s most respected business house, he gave up his executive powers on turning 65 and became a non-executive chairman of Tata Sons. The move was in keeping with the Tata Group’s retirement policy, which prescribed 65 as the retirement age for executive directors.That precedent raises an uncomfortable question today.If the architect of modern Tata Group and the Tata family patriarch was willing to subject himself to the retirement rules he helped institutionalise, why did the Tata Sons Nomination and Remuneration Committee recommend a fresh five-year executive term for N. Chandrasekaran beyond the age of 65?The question is not about Chandrasekaran’s competence. Few would dispute that he led the group during a period of extraordinary change after the bitter Cyrus Mistry and Ratan Tata war triggered by Mistry’s unceremonious ouster. The question is about governance consistency.The recommendation for a five-year extension did not emerge in a vacuum. It came from the Nomination and Remuneration Committee, which included Venu Srinivasan, Harish Manwani and Anita George. But the proposal failed to secure unanimous approval in February this year when Tata Trusts chairman Noel Tata blocked it.If Ratan Tata accepted the discipline of the retirement policy, stakeholders are entitled to ask why a different standard was considered appropriate for his successor.Also read: Tata Sons is Losing its Chairman. It Can’t Afford to Lose its Way.A board is entitled to make exceptions. Circumstances change. Businesses evolve. Leadership transitions can be complicated. But exceptions require explanation – especially from the Tata Group which has several stakeholders. The Nomination and Remuneration Committee owes stakeholders a clear articulation of why a five-year extension beyond the traditional retirement age was considered appropriate for Chandra? What changed? What strategic considerations justified the recommendation? Why was a shorter transition period not considered sufficient?These questions have become more relevant because the recommendation ultimately became the catalyst for a broader governance crisis.According to Chandrasekaran’s own statement, the proposal for his reappointment failed to secure unanimous support at a Tata Sons board meeting held on February 24, 2026. Six months later, he informed the board that he would not offer himself for another term when his tenure expires in February 2027. The episode exposed divisions that had previously remained behind closed doors.It also highlighted an uncomfortable contradiction.Union minister Ashwini Vaishnaw, second right, presents CII President’s Award for Lifetime Achievement award to chairman emeritus of TVS Motor Venu Srinivasan, second left, at CII Annual Business Summit 2026 on May 11, 2026. Photo: Handout via PTI.Srinivasan was simultaneously a member of the Nomination and Remuneration Committee that supported Chandrasekaran’s extension and one of the most prominent trustees involved in the subsequent governance dispute against the very trust where he is a trustee. If the recommendation was justified, stakeholders deserve to know why. If it was not, they deserve an explanation for how the board arrived at that conclusion.The same scrutiny should apply to decisions on remuneration of Tata Sons.Tata Sons increased the commission payable to directors from 0.4% of profits to 0.7% in fiscal 2025. The timing inevitably invites questions because the increase came during a period when several Tata Sons subsidiaries continued to consume substantial amounts of capital and profits were under pressure. It’s important to mention here that Srinivasan did not take any remuneration from Tata Sons unlike other billionaires who served on Tata Sons board.There is nothing inherently improper about increasing director compensation. Boards routinely revise remuneration structures. Yet governance is not merely about legality. It is also about perception and alignment.When directors approve higher commissions while major investments remain loss-making and significant capital continues to be deployed across the portfolio, stakeholders are entitled to ask how those decisions align with long-term value creation.That brings us to the most important question facing Tata Sons. Who is accountable for performance at the holding company’s major subsidiaries?For years, Tata Consultancy Services (TCS) has served as the financial backbone of the Tata ecosystem. Its dividend stream has funded investments, strengthened Tata Sons’ balance sheet and supported expansion into entirely new industries. Even after ten years of Chandra rule, this has not changed. Also read: What Fuelled the Rebellion Within the TatasThe challenge is that many of those new unlisted ventures remain in investment mode.Air India continues to require substantial capital. Tata Digital is yet to establish a clear path to profitability. Semiconductor projects require years of investment before returns emerge. Government subsidy is crucial for the project. Battery manufacturing through Agratas demands patience, scale and capital. Several other ventures within the Tata Sons portfolio continue to consume resources while pursuing long-term growth. Tata Realty, Tata Play, and Tata Teleservices are still making losses. The continuing huge losses raise a larger capital-allocation question.How many years should shareholders wait before demanding evidence that these investments can generate sustainable returns?Chandrasekaran himself has acknowledged that Air India could take a decade to turn around. That may well prove to be the correct assessment. Airlines are among the most difficult businesses in the world to fix.But that reality makes accountability even more important.If losses persist for another decade, who bears responsibility? The chairman? The board? The operating management? Or the trustee nominee directors who approved the strategy?The current governance dispute risks distracting attention from these fundamental questions.The public debate has focused heavily on trustee appointments, representation within Tata Trusts and disagreements over the listing of Tata Sons. Important as those issues are, they should not obscure the core challenge confronting the group.Tata Sons today is not facing a shortage of ambition. It is facing a test of execution.The next chairman will inherit a portfolio shaped by some of the largest investment decisions in Tata Group history alongwith a basket of loss making subsidiaries. He will also inherit the responsibility of proving that those investments can eventually generate returns.That reality makes the conduct of trustees and directors even more consequential.When trustees challenge institutions they help govern, they must explain why. When directors recommend exceptions to established policies, they must explain why. When remuneration rises despite mounting losses in key businesses, they must explain why. The events leading to the adjournment of the Tata Sons AGM on August 18 have exposed weaknesses in the current governance framework. Whether those weaknesses lie in board composition, committee structures, succession planning or the relationship between Tata Trusts and Tata Sons is a matter for stakeholders to resolve. What is increasingly clear, however, is that the present framework has produced uncertainty at precisely the moment the group needs clarity.The governance crisis at Tata Sons should not end with the appointment of a new chairman. It should trigger a broader review of the composition and functioning of the Tata Sons board itself.For decades, Tata Sons has been the nerve centre of India’s largest conglomerate. The board is not merely responsible for overseeing the holding company; it sets the strategic direction for dozens of operating companies that collectively employ hundreds of thousands of people and influence significant portions of the Indian economy.The events of the past year have exposed weaknesses in the existing governance structure. Questions over succession planning, retirement norms, board accountability, trustee disputes and executive compensation have all surfaced at the same time. The adjournment of the AGM was not simply an administrative setback. It was a signal that governance issues at the apex level can affect the functioning of the wider Tata ecosystem.Noel Tata, as the torch bearer of the Tata family who set up the group 158 years ago, should use this transition to reconstitute the Tata Sons board and bring in a new generation of directors who can provide strategic direction to the group over the next decade.One way to achieve that would be to induct more operating leaders from within the Tata Group who have demonstrated an ability to create value, improve performance and execute difficult turnarounds. The group has no shortage of world class managerial talent. Several managing directors and chief executives have successfully transformed and turned around businesses, improved profitability and navigated complex market conditions. Bringing such leaders into the Tata Sons boardroom would not only reward performance but also ensure that the holding company benefits from current operating experience.A stronger representation of proven business builders would enrich board discussions, improve oversight of capital allocation and strengthen accountability for major investment decisions. More importantly, it would help create a governance framework where strategic decisions are informed by executives who have firsthand experience of delivering results rather than merely reviewing them.The next chairman will inherit some of the most ambitious projects in Tata Group history. Air India, Tata Digital, semiconductors, batteries and advanced manufacturing will require patient capital and disciplined execution. The success or failure of these initiatives will depend not only on the chairman but also on the quality of oversight provided by the Tata Sons board.The current transition presents an opportunity.Tata Trusts should not merely select a successor to Chandrasekaran. It should use this moment to strengthen the Tata Sons board, refresh its composition and reinforce the standards of governance that have long distinguished the Tata Group. The Tata Group should also be fair to other shareholders of Tata Sons like the SP group and give them an exit option so that they can meet their own liquidity issues. The group should strive for win win deal for all stakeholders. If Ratan Tata was willing to follow the rules he created, today’s leaders owe stakeholders a clear explanation whenever those rules are altered.Dev Chatterjee is a senior journalist and co-author of The Meltdown and India Inc’s Greatest Turnarounds.