Corporate Governance Report Infosys

8/2/2019 Corporate Governance Report Infosys

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Corporate governance report

Corporate governance is about maintaining an appropriate balance of accountability between three keyplayers : the corporation's owners, the directors whom the owners elect, and the managers whom the

directors select. Accountability requires not only good transparency, but also an effective means to take

action for poor performance or bad decisions. Mary L. Schapiro, Chairperson, Securities and Exchange Commission, USA, Address to TransatlanticCorporate Governance Dialogue September 17, 2009.

Corporate governance is about commitment to values and ethical business conduct. It is about how anorganization is managed. This includes its corporate and other structures, its culture, policies and the

manner in which it deals with various stakeholders. Accordingly, timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the company is an

important part of corporate governance. This improves public understanding of the structure, activities and

policies of the organization. Consequently, the organization is able to attract investors, and enhance thetrust and confidence of the stakeholders.

Corporate governance guidelines and best practices have evolved over a period of time. The Cadbury Reporton the financial aspects of corporate governance, published in the United Kingdom in 1992, was a landmark.

The Sarbanes-Oxley Act, which was signed by the U.S. President, George W. Bush as a law in July 2002, hasbrought about sweeping changes in financial reporting. This is perceived to be the most significant change tofederal securities law since the 1930s. Besides laying down the standards for directors and auditors, the Act

has also laid down new accountability standards for security analysts and legal counsels.In India, the Confederation of Indian Industry (CII) took the lead in framing a desirable code of corporate

governance in April 1998. This was followed by the recommendations of the Kumar Mangalam BirlaCommittee on Corporate Governance. This committee was appointed by the Securities and Exchange Board

of India (SEBI).

The recommendations were accepted by SEBI in December 1999, and are now incorporated in Clause 49 of the Listing Agreement. Our compliance with these various requirements is presented in this section. We fully

comply with, and indeed go beyond, all these recommendations on corporate governance.SEBI also instituted a committee under the chairmanship of N. R. Narayana Murthy which recommended enhancements in corporate governance. SEBI has incorporated

the recommendations made by the Narayana Murthy Committee on Corporate Governance in clause 49 of the Listing Agreement. The revised clause 49 was made effective from January 1, 2006.

During the year, the Ministry of Corporate Affairs, Government of India, published the Corporate GovernanceVoluntary Guidelines 2009. These guidelines have been published keeping in view the objective of

encouraging the use of better practices through voluntary adoption, which not only serve as a benchmarkfor the corporate sector but also help them in achieving the highest standard of corporate governance.

These guidelines provide corporate India a framework to govern themselves voluntarily as per the higheststandards of ethical and responsible conduct of business. The Ministry hopes that adoption of these

guidelines will also translate into a much higher level of stakeholders' confidence that is crucial to ensuring

long-term sustainability and value generation by business.We believe that sound corporate governance is critical to enhancing and retaining investor trust.

Accordingly, we always seek to ensure that we attain our performance goals with integrity. Our Boardexercises its fiduciary responsibilities in the widest sense of the term.Our disclosures always seek to attain the best practices in international corporate governance. We also

endeavor to enhance long-term shareholder value and respect minority rights in all our business decisions.Our 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 standardsshould go beyond the law


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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 we operate Have a simple and transparent corporate structure driven solely by business needs Management is the trustee of the shareholders' capital and not the owner.

The Board of Directors (the Board) is at the core of our corporate governance practice and oversees howthe Management serves and protects the long-term interests of all our stakeholders. We believe that an

active, well-informed and independent Board is necessary to ensure highest standards of corporategovernance.

The majority of our Board, eight out of 14, are independent members. Further, we have audit,compensation, investor grievance, nominations and risk management committees, which comprise only

independent directors.As part of our commitment to follow global best practices, we comply with the Euroshareholders Corporate

Governance Guidelines, 2000, and the recommendations of the Conference Board Commission on PublicTrusts and Private Enterprises in the U.S. We also adhere to the United Nations Global Compact policy.

Further, a note on our compliance with the corporate governance guidelines of six countries (Australia,Canada, France, Germany, Japan and U.K.)in their national languages is available on our

website, www.infosys.com. Corporate governance ratingsCRISILCRISIL has been consistently assigning us the CRISIL GVC Level 1 rating over several years now. ThisGovernance and Value Creation (GVC) rating indicates our capability to create wealth for all ourstakeholders while adopting sound corporate governance practices.ICRAICRA assigned CGR 1 rating to our corpor ate governance practices. The rating is the highest on ICRA'sCorporate Governance Rating (CGR) scale of CGR 1 to CGR 6. We are the first company in India to be

assigned the highest CGR by ICRA. The rating reflects our transparent shareholding pattern, sound Boardpractices, interactive

decision-making process, high level of transparency, disclosures encompassing all important aspects of ouroperations and our track record in investor servicing. A notable feature of our corporate governance

practices is the emphasis on substance over form, besides our transparent approach to follow suchpractices.Corporate governance guidelinesOver the years, the Board has developed corporate governance guidelines to help fulfill our corporateresponsibility with our stakeholders. These guidelines ensure that the Board will have the necessary

authority and processes in place to review and evaluate our operations when required. Further, theseguidelines allow the Board to make decisions that are independent of the Management. The Board may

change these guidelines from time-to-time to effectively achieve our stated objectives.

A. Board compositionSize and composition of the BoardOur policy toward the composition of the Board 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 andmanagement. 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 our founders. The Board believes that the current size is appropriate,

based on our present circumstances. The Board periodically evaluates the need for change in composition of its size.Composition of the Board, and directorships held as at March 31, 2010


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Name of the director Age India listed

companies

(1)

All

companies

around the

world (2)

Committee

membership

(3)

Chairperson

of

committees

(3)

Founder and non-executive director

N. R. Narayana Murthy 63 7

Founders and whole-time directors

S. Gopalakrishnan 55 1

S. D. Shibulal 55 7 1

K. Dinesh 56 3

Whole-time directors

T. V. Mohandas Pai 51 5

Srinath Batni 55 3

Independent directors

Deepak M. Satwalekar 61 5 10 2 2

Prof. Marti G. Subrahmanyam 63 1 9 1

Dr. Omkar Goswami 53 7 12 7 2

Rama Bijapurkar (4) 53 6 10 2 1

Claude Smadja 64 4 1

Sridar A. Iyengar 62 3 10 2 3

David L. Boyles 61 2

Prof. Jeffrey S. Lehman 53 1

K. V. Kamath 62 2 4

Notes

:There are no inter-se relationships between our Board members.

(1) Excluding directorship in Infosys Technologies Limited and its subsidiaries.

(2)Directorships in companies around the world (listed, unlisted and private limited companies) including

Infosys Technologies Limited and its subsidiaries.

(3)

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).

(4) Ceased to be a director with effect from April 13, 2010.


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Responsibilities of the Chairman, CEO and the COOOur policy is to have a Non-Executive Chairman and Chief Mentor N. R. Narayana Murthy; a Chief

Executive Officer (CEO) and Managing Director S. Gopalakrishnan; and a Chief Operating Officer (COO)and Director S. D. Shibulal. The responsibility and authority of these officials are as follows :

The Chairman and Chief Mentor is responsible for mentoring our core management team intransforming us into a world-class, next-generation organization that provides state-of-the-art,

technology-leveraged business solutions to corporations across the world. He also interacts withglobal thought leaders to enhance our leadership edge. In addition, he continues to interact withvarious institutions to highlight the benefits of IT and help these benefits percolate to all sections of society. As Chairman of the Board, he is also responsible for all Board and corporate governancematters.

The CEO and Managing Director is responsible for corporate strategy, brand equity, planning,external contacts and other management matters. He is also responsible for achieving the annualbusiness targets and acquisitions.

The COO is responsible for all customer service operations. He is also responsible for innovation andresearch in technology advancements, new initiatives and investments.

The CEO, COO, the other executive directors and the senior management personnel are responsible for

achieving targets. They make periodic presentations to the Board on their responsibilities and performance.Board definition of independent directorsAccording to Clause 49 of the Listing Agreement with Indian stock exchanges, an independent directormeans a person who is not an officer or employee of the Company or its subsidiaries or any other individual

having a material pecuniary relationship or transactions with the Company which, in the opinion of ourBoard of Directors, would interfere with the exercise of independent judgment in carrying out the

responsibilities of a director. We adopted a much stricter definition of independence as required by theNASDAQ listing rules and the Sarbanes-Oxley Act, U.S.Lead Independent DirectorProf. Marti G. Subrahmanyam is a Lead Independent Director. He represents and acts as spokesperson forthe independent directors as a group, and is responsible for the following activities :

Presiding over all executive sessions of the Board's independent directors Working closely with the Chairman and the CEO to finalize the information flow, meeting agendas

and meeting schedules Liaising with the Chairman, CEO and the independent directors on the Board Taking the lead role, along with the Chairman in the Board evaluation process

Documents

Corporate Governance Report Infosys