Textbooks say shareholders are the real bosses of a company — they can question management, vote them out, and keep everything in check.
But in the real world? It’s not always that simple.
From Infosys to Tata Sons, and even global giants like Meta — the theory of shareholder power often collapses in front of real-life boardroom drama and power games.
In this blog, we’re exposing that gap — between what’s taught in theory, and what actually happens behind closed doors.
Stay tuned – because this is the side of corporate governance they don’t teach in class.
More Real-Life Examples Where Theory vs. Practice Collides
Infosys – Vishal Sikka vs. Narayana Murthy (2017)
Background:
- Vishal Sikka was the CEO of Infosys at the time.
- Narayana Murthy, co-founder and a major shareholder, was unhappy with some of Sikka’s decisions — including his high compensation, acquisition strategies, and concerns around corporate governance.
What should have happened according to theory?
- As a concerned shareholder, Murthy should’ve raised his voice through formal channels like the annual general meeting (AGM) and used his voting power to push for change.
- The Board of Directors should have independently intervened, investigated the allegations, and taken unbiased action in the best interest of all shareholders.
But what happened in practice?
- Instead of the AGM or board acting decisively, Murthy had to create public pressure via the media.
- Voting at the AGM had little to no real impact.
- The board initially backed Vishal Sikka, since he was their chosen CEO.
- Eventually, Sikka resigned, but only after sustained media attention and public scrutiny built up pressure.
Moral of the story:
- In theory, tools like AGMs and boards of directors exist to hold management accountable.
- In reality, these mechanisms often fail unless a powerful shareholder or the media steps in.
- Ordinary shareholders usually lack real influence and are left unheard.
Tata Sons – Cyrus Mistry vs. Ratan Tata (2016)
Background:
- Cyrus Mistry was appointed Chairman of Tata Sons.
- A few years later, he was abruptly removed by the board.
- He alleged that the board lacked independence and operated under Ratan Tata’s influence.
What does theory suggest?
- The board should act independently and make decisions solely in the interest of shareholders.
What happened in practice?
- The board sided with Ratan Tata and removed Mistry.
- Even during the AGM, Tata Trusts held a majority stake, so there was no real chance of Mistry returning.
Lesson: When a powerful promoter or group holds majority control, neither CEOs nor ordinary shareholders truly have power.
Facebook (Meta) – Mark Zuckerberg’s Control
Background:
- Mark Zuckerberg holds “dual-class shares” — meaning he has outsized voting rights, even with a smaller percentage of total shares.
What does theory suggest?
- Shareholders should have equal voting power to influence management decisions.
- The board should remain independent.
What happened in practice?
- Zuckerberg retains final say over nearly every major company decision.
- Even if public shareholders disagree, their votes carry little weight due to Mark’s super-voting rights.
Lesson: When a company’s structure gives one individual disproportionate voting power, shareholders lose any real control.
Yes Bank – The Rana Kapoor Era (Pre-2020)
Background:
- Founder Rana Kapoor had strong influence over the bank’s board.
- He pursued aggressive and risky lending practices, which eventually contributed to the bank’s downfall.
What does theory suggest?
- The board should have questioned and restrained his decisions.
- Shareholders should have raised concerns during annual meetings.
What happened in practice?
- The board failed to challenge him in time.
- It wasn’t until media pressure and RBI intervention that any real action was taken.
- Eventually, Kapoor was removed — not by shareholders, but by regulators.
Lesson: Without external or regulatory pressure, boards and shareholders are often powerless in practice.
