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Infosys Technologies Corporate Governance

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Infosys Limited (NASDAQ: INFY) was started in 1981 by seven people with US$ 250. Today, theye are a global leader in the "next generation" of IT and consulting with revenues of US$ 6.825 billion (LTM Q3-FY12). Infosys is a large software company, based in Bangalore, India, specializing in customized software and development solutions. The company provides business consulting, systems integration, and application development to multinational companies using its proprietary Global Delivery Model, which divides large projects into components that are then completed in different parts of the world, including India and the US. Infosys clients include U.S. corporations Northwestern Mutual Life Insurance, VISA, and retailers Nordstrom and JCPenney, and Japanese companies like Toshiba. Infosys has used its corporate governance practices and in particular increased transparency, as a distinguishing competitive feature for several years before its Nasdaq Listing. As a responsible corporation, they use corporate governance framework to maintain accountability in all their affairs, and employ democratic and open processes. They have evolved guidelines and best practices over the years to ensure timely and accurate disclosure of information regarding their financials, performance, leadership and governance of the Company. Their corporate governance philosophy is based on the following principles: Satisfy the spirit of the law and not just the letter of the law. Corporate governance standards should go beyond the law. Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose. Make a clear distinction between personal conveniences and corporate resources. Communicate externally, in a truthful manner, about how the Company is run internally. Comply with the laws in all the countries in which they operate.
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Infosys Technologies Corporate Governance

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 current policy of them is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and to separate its functions of governance and management. Currently, the Board consists of 14 members, five of whom are executive or whole-time directors, one is non-executive and eight are independent directors. Three of the executive directors are their founders. The Board believes that the current size is appropriate, based on their present circumstances. The Board periodically evaluates the need for change in its composition and size. Composition of the Board, and directorships held as at March 31, 2011

Name of the director


India listed All Committee Chairperson (1) (3) companies companies membership of around committees(3) the world(2)

Founder and nonexecutive director N. R. Narayana Murthy Founders and wholetime directors S. Gopalakrishnan S. D. Shibulal K. Dinesh Whole-time directors T. V. Mohandas Pai Srinath Batni Independent directors Deepak M. Satwalekar Prof. Marti G. Subrahmanyam


56 56 57 52 56 62 64

4 0

1 8 3 5 4 8 8

1 4 2

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Infosys Technologies Corporate Governance

Dr. Omkar Goswami Sridar A. Iyengar David L. Boyles Prof. Jeffrey S. Lehman K. V. Kamath R. 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.

(1) (2)


Excluding directorship in Infosys Technologies Limited and its subsidiaries. Directorships in companies around the world (listed, unlisted and private limited companies) including Infosys Technologies Limited and its subsidiaries. As required by Clause 49 of the Listing Agreement, the disclosure includes memberships / chairpersonship of audit committee and investor grievance committee in Indian public companies (listed and unlisted). 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. They believe that an active, well-informed and independent Board is necessary to ensure the highest standards of corporate governance.



Details Charles E Merrill Prof of finance, economics & international business at Stern School of Business New York Unv. 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, 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
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Prof Marti G Subrahmanyam

Deepak M Satwalekar Omkar Goswami

Sridar A Iyengar David L Boyles Prof Jeffrey Lehman

Infosys Technologies Corporate Governance

Ravi Venkatesan R Seshasayee K V Kamati

Chairman of Microsoft India CA & Co- Chairman of CAR Non executive Chairman of Board, President of CII

Majority of their Board, 9 out of 15, are independent members. That means 60% of their board is dominated by independent directors. Further, they have audit, compensation, investor grievance, nominations and risk management committees, which comprise independent directors. As part of their commitment to follow global best practices, they comply with the Euro shareholders Corporate Governance Guidelines, 2000, and the recommendations of the Conference Board Commission on Public Trusts and Private Enterprises in the U.S. We also adhere to the United Nations Global Compact policy.


Infosys maintains a board with a majority of independent non-executive directors led by a lead director, separate chairman and CEO positions, and structural features like audit, compensation and nomination committees that do much of the boards behind-the-scenes work. The board is relatively large compared to other global companies, reflecting the companys desire to increase the number of outside directors. The board has three committees - the nominations committee, the compensation committee and the audit committee. To ensure independence of the board, the members of the nominations committee, the compensation committee and the audit committee were all non-executive directors. The executive directors are appointed by the shareholders for a maximum period of five years. With the growing size and diversity, the board has adapted to the need for greater formality and more explicit procedures at meetings, 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. Many outside members assist the company through unpaid networking or door-opening. Role of Mr. Narayana Murthy himself is prominent in the management of the company. 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. Infosys' corporate governance practices has shown that increasing shareholder wealth and safeguarding the interests of other stakeholders was not incompatible. Infosys had given its non-executive directors the mandate to pass judgement on the efficacy of its business
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plans. Every non-executive director not only played an active role in decision making, but also led or served on at least one of the three (Nomination, Compensation and Audit) committees. Infosys' founders had set very high standards, in a country where malpractices by founders were rampant. The founders only took salaries and dividends and derived no other financial benefits from the company. 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.



2011 2010 2009 90 100 110 120 EPS


2009(mn) 17523 17809 3342

2010(mn) 21749 22036 4030

2011(mn) 24214 24501 4529


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

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Transparency is integral part of Infosys corporate governance, higher transparency has reduced the information asymmetry between a firms management and financial stakeholders. 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. Transparency, disclosure and trust, which constitute the integral part of corporate governance, can provide pressure for improved financial performance. Financial performance, present and prospective is a benchmark for investment. From the above charts it is visible that companys capital structure is sound to meet any emergencies or slowdown which shows the capital adequacy. Companys asset quality is increasing continuously. 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. Though liabilities are constantly increasing but not at that rate at which companys assets are so company does not stand a chance to liquidate. Infosys has set benchmark in financial reporting. Use of transparency & disclosure are their competitive advantage. Infosys is known to lead good practices in the country, to set best corporate governance norms in the world & above all build a financially strong company in all aspects. Thus by using exemplary corporate governance guidelines Infosys has built a financially sound company.

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

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institutions on an ongoing basis in the future. Microsoft Corporation continues to participate in this initiative by donating relevant software. SOCIAL COMMITMENT IN EDUCATION: Infosys' Education & Research group has the pride of anchoring the Infosys Extension Program (IEP), which consists of the Infosys Fellowship Program, Rural Reach program, Catch Them Young and Train the Trainer. (3) Improving environmental factors through resource intensity & green innovation. RESOURCE INTENSITY: They are responsible consumers of natural resources. Their long-term vision is to become carbon neutral and water sustainable. They are reducing ecological impact even as they grow their global operations. GREEN INNOVATION: They develop sustainable solutions to reduce the carbon footprint of their clients. They combine sustainability with engineering to develop green products and services.

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. In 2011 it was awarded The Asset Corporate Governance Platinum Award for overall financial performance, management acumen, corporate governance, social responsibility, and environmental responsibility and investor relations. In the same year Infosys topped a poll on best practices in corporate governance conducted by Asiamoney. It was ranked number 1 across categories of disclosure and transparency, responsibilities of management and the board of directors, and shareholders' rights and equitable treatment'.

Infosys Technologies Corporate Governance

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