C. Board committees
Currently, the Board has five committees : audit committee, compensation committee, nominations committee, investor grievance committee and risk management committee. All committees consist entirely of independent directors.
The Board, in consultation with the nominations committee, is responsible for constituting, assigning, co-opting and fixing terms of service for committee members. It delegates these powers to the nominations committee.
The Chairperson of the Board, in consultation with the Company Secretary and the committee chairperson, determines the frequency and duration of the committee meetings. Normally, all the committees meet four times a year. Recommendations of the committees are submitted to the entire Board for approval.
The quorum for meetings is either two members or one-third of the members of the committee, whichever is higher.
1. Audit committee
Our audit committee (‘the committee’) comprises five independent directors :
In India, we are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). In the U.S., we are listed on the NASDAQ Global Select. In India, Clause 49 of the Listing Agreement makes it mandatory for listed companies to adopt an appropriate audit committee charter. The Blue Ribbon Committee set up by the U.S. Securities and Exchange Commission (SEC) recommends that every listed Company adopt an audit committee charter. This recommendation has also been adopted by NASDAQ.
In our meeting on May 27, 2000, our committee adopted a charter which meets the requirements of Clause 49 of the Listing Agreement with Indian stock exchanges and the SEC.
The primary objective of the committee is to monitor and provide effective supervision of the Management’s financial reporting process to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The committee oversees the work carried out in the financial reporting process by the Management, the internal auditors and the independent auditor, and notes the processes and the safeguards employed by each. The committee has the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent auditor in accordance with the law. All possible measures must be taken by the committee to ensure the objectivity and independence of the independent auditor.
Audit committee attendance during fiscal 2011
Four audit committee meetings were held during the year – on April 12, 2010; July 12, 2010; October 14, 2010 and January 12, 2011.
No. of meetings |
||
Held |
Attended |
|
Deepak M. Satwalekar |
4 |
4 |
Prof. Marti G. Subrahmanyam |
4 |
4 |
Sridar A. Iyengar |
4 |
4 |
K. V. Kamath (1) |
3 |
3 |
R. Seshasayee(2) |
– |
– |
(1) Appointed with effect from April 13, 2010
(2) Appointed with effect from January 13, 2011
During the year, the audit committee held two conference calls on April 7, 2010 and October 8, 2010.
Audit committee report for the year ended March 31, 2011
Each member of the committee is an independent director, according to the definition laid down in the audit committee charter, and Clause 49 of the Listing Agreement with the relevant Indian stock exchanges.
The Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s financial statements in accordance with the generally accepted auditing standards, and for issuing a report thereon. The committee’s responsibility is to monitor these processes. The committee is also responsible for overseeing the processes related to the financial reporting and information dissemination. This is to ensure that the financial statements are true, fair, sufficient and credible. In addition, the committee recommends to the Board the appointment of the Company’s internal and independent auditors.
In this context, the committee discussed with the Company’s auditors, the overall scope and plans for the independent audit. The Management represented to the committee that the Company’s financial statements were prepared in accordance with the Generally Accepted Accounting Principles. The committee discussed with the auditors, in the absence of the Management (whenever necessary), the Company’s audited financial statements including the auditors’ judgments about the quality, not just the applicability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The committee also discussed with the auditors other matters required by the Statement on Auditing Standards No. 114 (SAS 114) – The Auditor’s Communication With Those Charged With Governance – and the Sarbanes-Oxley Act of 2002.
Relying on the review and discussions conducted with the Management and the independent auditors, the audit committee believes that the Company’s financial statements are fairly presented in conformity with the Generally Accepted Accounting Principles in all material aspects.
The committee has also reviewed the internal controls put in place to ensure that the accounts of the Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the committee found no material discrepancy or weakness in the internal control systems of the Company.
The committee also reviewed the financial policies of the Company and expressed its satisfaction with the same.
The Company’s auditors provided to the committee the written disclosures required by Independence Standards Board Standard No. 1 – ‘Independence Discussions with Audit Committees’ – based on which the committee discussed the auditors’ independence with both the Management and the auditors. After review, the committee expressed its satisfaction on the independence of both the internal and the statutory auditors.
Moreover, the committee considered whether any non-audit services provided by the auditors’ firm could impair the auditors’ independence, and concluded that there were no such services provided.
The committee secured compliance on the affirmation of the Board of Directors to the NASDAQ stock exchange, under the relevant rules of the exchange on composition of the committee and independence of the committee members, disclosures relating to non-independent members, financial literacy and financial expertise of members, and a review of the audit charter.
Based on the committee’s discussion with the Management and the auditors and the committee’s review of the representations of the Management and the report of the auditors to the committee, the committee has recommended the following to the Board of Directors :
1. |
The audited financial statements prepared as per Indian GAAP of Infosys Technologies Limited for the year ended March 31, 2011, be accepted by the Board as a true and fair statement of the financial status of the Company; |
2. |
The audited abridged financial statements prepared as per Indian GAAP of Infosys Technologies Limited for the year ended March 31, 2011, be accepted by the Board as a true and fair statement of the financial status of the Company; |
3. |
The audited, consolidated financial statements prepared as per Indian GAAP of Infosys Technologies Limited and its subsidiaries for the year ended March 31, 2011 be accepted by the Board as a true and fair statement of the financial status of the group; and |
4. |
The audited financial statements prepared as per International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) for the year ended March 31, 2011, be accepted and included in the Company’s Annual Report on Form 20-F, to be filed with the U.S. Securities and Exchange Commission. |
The committee has recommended to the Board the re-appointment of B S R & Co., Chartered Accountants, as the statutory auditors of the Company for the fiscal year ending March 31, 2012, and that the necessary resolutions for appointing them as auditors be placed before the shareholders. The committee has also recommended to the Board the appointment of KPMG, India, as independent auditors of the Company for the IFRS financial statements, for the financial year ending March 31, 2012.
The committee recommended the appointment of Singhvi Dev and Unni as the internal auditors of the Company for the fiscal ending March 31, 2012, to review various operations of the Company, and determined and approved the fees payable to them.
The committee has also issued a letter in line with recommendation No. 9 of the Blue Ribbon Committee on audit committee effectiveness, which is to be provided in the financial statements prepared in accordance with IFRS section of the Annual Report on Form 20-F.
In conclusion, the committee is sufficiently satisfied that it has complied with its responsibilities as outlined in the audit committee charter.
Sd/-
Mumbai |
Deepak M. Satwalekar |
2. Compensation committee
Our compensation committee (‘the committee’) comprises four independent directors. They are :
The purpose of the committee of the Board of Directors (‘the Board’) shall be to discharge the Board’s responsibilities related to compensation of the Company’s executive directors and senior management. The committee has the overall responsibility of approving and evaluating the compensation plans, policies and programs for executive directors and senior management.
The committee shall annually review and approve for the CEO, the executive directors and senior management (a) the annual base salary; (b) the annual incentive bonus, including the specific goals and amount; (c) equity compensation; (d) employment agreements, severance arrangements, and change in control agreements / provisions, and (e) any other benefits, compensation or arrangements.
The committee, in consultation with the CEO, shall review the performance of all the executive directors each quarter, on the basis of the detailed performance parameters set for each of the executive directors at the beginning of the year. The compensation committee may, from time-to-time, also evaluate the usefulness of such performance parameters, and make necessary amendments.
Compensation committee attendance during fiscal 2011
Five compensation committee meetings were held during the year ended March 31, 2011. These were held on April 12, 2010; June 12, 2010; July 12, 2010; October 15, 2010 and January 13, 2011.
No. of meetings |
||
Held |
Attended |
|
K. V. Kamath (1) |
4 |
4 |
Prof. Jeffrey S. Lehman |
5 |
5 |
David L. Boyles |
5 |
5 |
Dr. Omkar Goswami (1) |
4 |
4 |
(1) Appointed with effect from April 13, 2010
During the year, the compensation committee held three conference calls – on August 26, 2010; November 26, 2010 and February 16, 2011.
Compensation committee report for the year ended March 31, 2011
During the year, the committee reviewed the performance of all whole-time directors on each quarter based on a detailed performance parameters set for each of the whole-time directors and approved the payment of individual performance incentives to each one of them. The committee also from time to time evaluated the usefulness of such performance parameters and has suggested necessary changes to the to the same. The committee further reviewed the performance of the Members of the Executive Council on a half yearly basis and approved the payment of variable compensation.
The committee believes that the compensation and benefits are adequate to motivate and retain the senior officers of the Company.
The Nominations committee, on April 30, 2011 recommended the appointment of K. V. Kamath as the Non-Executive Chairman of the Board of Directors with effect from August 21, 2011. In this connection, the Committee discussed and recommended to the Board that, while serving in this role, K. V. Kamath, as the Non-Executive Chairman of the Board be entitled to a special fee of US$ 150,000 (over and above the regular Board fee) per year for Chairmanship of the Board. In arriving at this conclusion, the Committee took note of the fact that K. V. Kamath would devote as much as 30 days per year to Infosys, over and above the time that other independent directors ordinarily devote to Infosys.
K. V. Kamath being interested in the proceedings recused himself from the discussions on the matter.
Apart from the said disclosures, none of the directors had a material beneficial interest in any contract of significance to which the Company or any of its subsidiaries were a party, during the financial year.
Sd/-
Bangalore |
Dr. Omkar Goswami |