Infosys Technologies Corporate Governance

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Page 2 Infosys Technologies Corporate Governance . Infosys is a large software company. leadership and governance of the Company. Be transparent and maintain a high degree of disclosure levels.ABOUT INFOSYS TECHNOLOGIES AND ITS CORPORATE GOVERNANCE: Infosys Limited (NASDAQ: INFY) was started in 1981 by seven people with US$ 250. Infosys has used its corporate governance practices and in particular increased transparency. and application development to multinational companies using its proprietary “Global Delivery Model. They have evolved guidelines and best practices over the years to ensure timely and accurate disclosure of information regarding their financials. and Japanese companies like Toshiba. about how the Company is run internally. based in Bangalore. VISA. Comply with the laws in all the countries in which they operate. The company provides business consulting.825 billion (LTM Q3-FY12). Today. Make a clear distinction between personal conveniences and corporate resources. in a truthful manner. India. including India and the US. disclose. Infosys clients include U. As a responsible corporation. specializing in customized software and development solutions.” which divides large projects into components that are then completed in different parts of the world. they use corporate governance framework to maintain accountability in all their affairs. systems integration. as a distinguishing competitive feature for several years before its Nasdaq Listing. Communicate externally. and retailers Nordstrom and JCPenney. performance. When in doubt. theye are a global leader in the "next generation" of IT and consulting with revenues of US$ 6. Their corporate governance philosophy is based on the following principles:      Satisfy the spirit of the law and not just the letter of the law. and employ democratic and open processes. corporations Northwestern Mutual Life Insurance.S. Corporate governance standards should go beyond the law.

2011 Name of the director Age India listed All Committee Chairperson (1) (3) companies companies membership of around committees(3) the world(2) Founder and nonexecutive director N. one is non-executive and eight are independent directors. R. Dinesh Whole-time directors T. Mohandas Pai Srinath Batni Independent directors Deepak M. Subrahmanyam 64 – 6 – – 56 56 57 52 56 62 64 – – – – – 4 0 1 8 3 5 4 8 8 – 1 – – – 4 2 – – – – – 2 – Page 3 Infosys Technologies Corporate Governance . and to separate its functions of governance and management. and directorships held as at March 31. D. Have a simple and transparent corporate structure driven solely by business needs The Management is the trustee of the shareholders‟ capital and not the owner. The Board periodically evaluates the need for change in its composition and size. Narayana Murthy Founders and wholetime directors S. The Board believes that the current size is appropriate. based on their present circumstances. Marti G. V. Currently. Gopalakrishnan S. Three of the executive directors are their founders. Composition of the Board. Satwalekar Prof. the Board consists of 14 members. (a) BOARD COMPOSITION AND DIVERSITY: The current policy of them is to have an appropriate mix of executive and independent directors to maintain the independence of the Board. Shibulal K. five of whom are executive or whole-time directors.

Bank of America & ANZ banking group Prof of law & former President at Cornell Unv Senior Scholar at Woodrow Wilson international centre for scholars in Washington DC Page 4 Prof Marti G Subrahmanyam Deepak M Satwalekar Omkar Goswami Sridar A Iyengar David L Boyles Prof Jeffrey Lehman Infosys Technologies Corporate Governance . Former HDFC Standard Life Insurance MD & CEO Founder & Chairman of corporate CERG President of Foundation for Democratic Reforms in India Senior leader of American Express. V. (1) (2) (3) Excluding directorship in Infosys Technologies Limited and its subsidiaries. Iyengar David L. Kamath R. Omkar Goswami Sridar A. Jeffrey S. Lehman K.Dr. As required by Clause 49 of the Listing Agreement. well-informed and independent Board is necessary to ensure the highest standards of corporate governance. (b) Name INDEPENDENT DIRECTORS ON BOARD: Details Charles E Merrill Prof of finance. The Board of Directors („the Board‟) is at the core of their corporate governance practice and oversees how the Management serves and protects the long-term interests of all our stakeholders. the disclosure includes memberships / chairpersonship of audit committee and investor grievance committee in Indian public companies (listed and unlisted). They believe that an active. unlisted and private limited companies) including Infosys Technologies Limited and its subsidiaries. economics & international business at Stern School of Business New York Unv. Directorships in companies around the world (listed. Seshasayee 54 63 62 54 63 62 6 3 – – 3 3 12 13 2 2 5 16 8 6 – – 1 4 4 3 – – – – Notes: There are no inter-se relationships between our Board members. Boyles Prof.

reflecting the company‟s desire to increase the number of outside directors. the compensation committee and the audit committee were all non-executive directors. Infosys had given its non-executive directors the mandate to pass judgement on the efficacy of its business Infosys Technologies Corporate Governance Page 5 . President of CII Majority of their Board. which comprise independent directors. the compensation committee and the audit committee. That means 60% of their board is dominated by independent directors. Further. they have audit. 9 out of 15. The board is relatively large compared to other global companies.the nominations committee.S. and the recommendations of the Conference Board Commission on Public Trusts and Private Enterprises in the U. 2000. His resignation from the post of CEO shows that he wants the other members of the board to take the chance to manage & lead the company. compensation. Many outside members assist the company through unpaid networking or door-opening. To ensure independence of the board.Ravi Venkatesan R Seshasayee K V Kamati Chairman of Microsoft India CA & Co.Chairman of CAR Non executive Chairman of Board. investor grievance. We also adhere to the United Nations Global Compact policy. The board has three committees . and structural features like audit. they comply with the Euro shareholders Corporate Governance Guidelines. With the growing size and diversity. Infosys' corporate governance practices has shown that increasing shareholder wealth and safeguarding the interests of other stakeholders was not incompatible. compensation and nomination committees that do much of the board‟s behind-the-scenes work. Narayana Murthy himself is prominent in the management of the company. the board has adapted to the need for greater formality and more explicit procedures at meetings. nominations and risk management committees. are independent members. though directors have carefully balanced this with innovations such as day-long pre-board meetings and weekend offsites where more unstructured discussions can take place. Role of Mr. the members of the nominations committee. The executive directors are appointed by the shareholders for a maximum period of five years. As part of their commitment to follow global best practices.  IMPACT OF BOARD OF DIRECTORS AND PERCENTAGE OF INDEPENDENT DIRECTORS ON INFOSYS’S PERFORMANCE: Infosys maintains a board with a majority of independent non-executive directors led by a lead director. separate chairman and CEO positions.

but also led or served on at least one of the three (Nomination. Infosys' founders had set very high standards. Compensation and Audit) committees. The founders only took salaries and dividends and derived no other financial benefits from the company. Every non-executive director not only played an active role in decision making. (c) SHARE PRICES & FINANCIALS: EPS 2011 2010 2009 90 100 110 120 EPS FINANCIALS CAPITAL TOTAL ASSET TOTAL LIABILITIES 2009(mn) 17523 17809 3342 2010(mn) 21749 22036 4030 2011(mn) 24214 24501 4529  IMPACT OF CORPORATE GOVERNANCE WITH RESPECT TO SHARE PRICE & FINANCIALS: Infosys follows the following pattern which meets the expectations of their shareholders & stakeholders thus giving rise to a sound financial performance. Infosys Technologies Corporate Governance Page 6 . in a country where malpractices by founders were rampant. Hence it can be concluded from this that Infosys has taken corporate governance practices seriously & has made all efforts to bridge the gap between the stakeholders & the mangers which in turn has added to the performance of the company in general.plans.

Though liabilities are constantly increasing but not at that rate at which company‟s assets are so company does not stand a chance to liquidate. Infosys has set benchmark in financial reporting. From the above charts it is visible that company‟s capital structure is sound to meet any emergencies or slowdown which shows the capital adequacy. which constitute the integral part of corporate governance. Transparency.Transparency is integral part of Infosys corporate governance. Financial performance. Infosys believe that sound corporate governance is critical to enhance and retain investor trust so they always disclose in public about any new news about the company and management. Company‟s asset quality is increasing continuously. disclosure and trust. Thus by using exemplary corporate governance guidelines Infosys has built a financially sound company. Infosys Technologies Corporate Governance Page 7 . present and prospective is a benchmark for investment. Use of transparency & disclosure are their competitive advantage. higher transparency has reduced the information asymmetry between a firm‟s management and financial stakeholder‟s. Infosys is known to lead good practices in the country. EPS that is what the shareholders will earn on per share is a benchmark since rarely any Indian company has EPS of more than 100 for three consecutive years thus from earnings perspective company is doing good. can provide pressure for improved financial performance. to set best corporate governance norms in the world & above all build a financially strong company in all aspects.

this is done by sustainability & social contract SUSTAINABILITY: Infosys has always adopted a sustainable approach to business. As a responsible corporate as well as beyond business . Key drivers of social reporting of Infosys Technologies are as follows: (1) Establishing a meaningful communication with stakeholders. This is done through their community service & social commitment in education. SOCIAL CONTRACT: They are committed to an equitable society. Additionally. and The Energy and Resources Institute (TERI).567 computers to various institutions across India. World Economic Forum (WEF). mandatory social disclosure requirements and management‟s motivation to improve the firm‟s image Infosys Technologies is disclosing social information in some form or another.employees and business partners.(d) CORPORATE SOCIAL REPORTING: As a result of pressure from public interest groups. which enhances the trust and relationship. they collaborate with clients and governments to develop sustainable solutions and governance frameworks. & helps in demonstrating the performance & plans for future improvement. It upholds the principles of the United Nations Global Compact (UNGC). COMMUNITY SERVICE: Through Infosys Computers@Classrooms initiative launched it donated 2. Infosys are applied to the relevant authorities for permission to donate computers to educational Infosys Technologies Corporate Governance Page 8 . At Infosys Technology. local communities and the environment.and shares their progress in the pursuit of sustainable growth. and by fostering transparency and accountability. Infosys sustainability policy guides interactions with stakeholders and influences day-to-day actions. United Nations Development Fund for Women (UNIFEM). Their employees take up social causes in education. rural rehabilitation and inclusive growth. A strong sense of social responsibility is therefore an integral part of our value system. the distribution of wealth is as important as its legal and ethical creation. (2) Improving their reputation by demonstrating concern about social issues. The report focuses on their activities . They are aware that growth is inextricably linked to the well-being of their ecosystem .

and shareholders' rights and equitable treatment'.institutions on an ongoing basis in the future. It was ranked number 1 across categories of „disclosure and transparency. CONCLUSION: Infosys has been a pioneer in benchmarking its corporate governance practices with the best in the world. CRISIL has assigned them the “CRISIL GVC Level 1” rating while ICRA has assigned “CGR 1” rating to their corporate governance practices. RESOURCE INTENSITY: They are responsible consumers of natural resources. They are reducing ecological impact even as they grow their global operations. In the same year Infosys topped a poll on best practices in corporate governance conducted by Asiamoney. responsibilities of management and the board of directors. corporate governance. SOCIAL COMMITMENT IN EDUCATION: Infosys' Education & Research group has the pride of anchoring the Infosys Extension Program (IEP). Their long-term vision is to become carbon neutral and water sustainable. Infosys Technologies Corporate Governance Page 9 . Microsoft Corporation continues to participate in this initiative by donating relevant software. which consists of the Infosys Fellowship Program. They combine sustainability with engineering to develop green products and services. and environmental responsibility and investor relations. management acumen. In 2011 it was awarded The Asset Corporate Governance Platinum Award for overall financial performance. (3) Improving environmental factors through resource intensity & green innovation. Catch Them Young and Train the Trainer. social responsibility. Rural Reach program. GREEN INNOVATION: They develop sustainable solutions to reduce the carbon footprint of their clients.

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