D. Management review and responsibility
Formal evaluation of officers
The compensation committee of the Board approves the compensation and benefits for all Executive Board Members as well as members of the Executive Council. Another committee, headed by the CEO, reviews, evaluates and decides the annual compensation of our officers from the level of Vice President, excluding members of the Executive Council.
Board interaction with clients, employees, institutional investors, the government and the press
The Chairman, the CEO and the COO, in consultation with the CFO, handle all interactions with investors, the media and various governments. The CEO and the COO manage most of the interactions with clients and employees.
We have an integrated approach to managing risks inherent in various aspects of our business. More details are provided in the Risk management report section of the Annual Report.
Management’s discussion and analysis
A detailed report on the Management’s discussion and analysis is provided in the Management’s discussion and analysis section of the Annual Report.
Disclosures regarding the appointment or re-appointment of directors
According to the Articles of Association, one-third of the directors retire by rotation and, if eligible, seek re-appointment at the Annual General Meeting of shareholders. As per Article 122 of the Articles of Association, K. Dinesh, Srinath Batni, Sridar A. Iyengar, Deepak M. Satwalekar and Dr. Omkar Goswami will retire in the ensuing Annual General Meeting. The Board has recommended the re-appointment of all the retiring directors, except K. Dinesh who expressed his intention not to seek re-appointment due to personal reasons. The Board also decided to appoint S. Gopalakrishnan as the Whole-time Director (to be designated as the Executive Co-Chairman of the Board) and S. D. Shibulal as the Chief Executive Office and Managing Director. These appointments are effective from August 21, 2011. The detailed profiles of all these directors are provided in the Notice convening the Annual General Meeting.
Communication to the shareholders
We send quarterly reports to each shareholder via email. The report contains select financial data extracted from the audited financial statements under Indian GAAP and unaudited financial statements under IFRS. The quarterly report along with additional information is also posted on our website. Moreover, the quarterly / annual results and official news releases are generally published in The Economic Times, The Times of India, Business Standard, Business Line, Financial Express and Udayavani (a regional daily published from Bangalore). Quarterly and annual financial statements, along with segmental information, are also posted on our website. Earnings calls with analysts and investors are broadcast live on the website and their transcripts are published on the website soon thereafter. Any specific presentations made to analysts and others are also posted on our website. The proceedings of the Annual General Meeting are webcast live for shareholders across the world. The video archives are also available on our website, www.infosys.com
Investor grievances and share transfer
We have a Board-level investor grievance committee to examine and redress shareholders’ and investors’ complaints. The status on complaints and share transfers is reported to the entire Board. The details of shares transferred and the nature of complaints are provided in the Shareholder information section of the Annual Report. For shares transferred in physical form, the Company provides adequate notice to the seller before registering the transfer of shares. The share transfer committee of the Company will meet as often as required to approve share transfers. For matters regarding shares transferred in physical form, share certificates, dividends and change of address, shareholders should communicate with Karvy Computershare Private Limited, our registrar and share transfer agent. Their address is given in the Shareholder information section of the Annual Report.
Share transactions in electronic form can be effected in a much simpler and faster manner. After confirmation of sale / purchase transaction from the broker, shareholders should approach the depository participant with a request to debit or credit the account for the transaction. The depository participant will immediately arrange to complete the transaction by updating the account. There is no need for separate communication to the Company to register the share transfer.
Details of non-compliance
There has been no instance of non-compliance with any legal requirements nor have there been any strictures imposed by any stock exchange, SEBI or SEC, on any matters relating to the capital market over the last three years.
For the year ended March 31, 2011, there are no ordinary or special resolutions that need to be passed by our shareholders through a postal ballot.
Auditors’ certificate on corporate governance
As required by Clause 49 of the Listing Agreement, the auditors’ certificate is given in the Annexure to the directors’ report section in the Annual Report.
CEO and CFO certification
As required by Clause 49 of the Listing Agreement, the CEO / CFO certification is provided in the CEO and CFO certification section of the Annual Report.
Code of Conduct
In compliance with Clause 49 of the Listing Agreement, the Company has adopted a Code of Conduct. This code is applicable to the Members of the Board, the Executive Council and all employees of the Company and Subsidiaries. The Code of Conduct is available on our website, www.infosys.com.
All the members of the Board and the Executive Council and senior financial officers have affirmed compliance to the Code of Conduct, as at March 31, 2011. A declaration to this effect, signed by the CEO, the Managing Director and the CFO, is provided in the CEO and CFO certification section of the Annual Report.
General body meetings
The details of the last three Annual General Meetings are as follows :
Financial year ended
Date and Time
Special resolution passed
March 31, 2008
June 14, 2008 at 3 p.m. IST
NIMHANS Convention Center, Hosur Road, Bangalore, India
March 31, 2009
June 20, 2009 at 3 p.m. IST
Christ University Auditorium, Hosur Road, Bangalore, India
March 31, 2010
June 12, 2010 at 3 p.m. IST
Christ University Auditorium, Hosur Road, Bangalore, India
Compliance with non-mandatory requirements of Clause 49 of the Listing Agreement
Clause 49 of the Listing Agreement mandates us to obtain a certificate from either the auditors or practicing Company Secretaries regarding compliance of conditions of corporate governance as stipulated in the Clause, and annex the certificate with the Directors’ report, which is sent annually to all our shareholders. We have obtained a certificate to this effect and the same is given as an Annexure to the directors’ report.
The Clause further states that the non-mandatory requirements may be implemented as per our discretion. However, the disclosures of compliance with mandatory requirements and adoption (and compliance) / non-adoption of the non-mandatory requirements shall be made in this section of the Annual Report.
We comply with the following non-mandatory requirements :
Independent directors may have a tenure not exceeding, in the aggregate, a period of nine years on our Board.
None of the independent directors on our Board have served for a tenure exceeding nine years from the date when the new Clause 49 became effective.
We have instituted a compensation committee. A detailed note on compensation / remuneration committee is provided under the Compensation committee in this section.
The Clause states that a half-yearly declaration of financial performance, including summary of the significant events in the last six months, may be sent to each shareholder.
We communicate with investors regularly through e-mail, telephone and face-to-face meetings either in investor conferences, Company visits or on road shows.
We also leverage the internet in communicating with our investor base. We announce quarterly financial results within two weeks of the close of a quarter. After the announcement of the quarterly financial results, a business television channel in India telecasts a live discussion with our Management. This enables a large number of retail shareholders in India to understand our operations better. The announcement of quarterly results is followed by media briefings in several television channels, press conferences and earnings conference calls. The earnings calls are webcast live on the internet so that information is available to all at the same time. Further, transcripts of the earnings calls are posted on our website, www.infosys.com, within a week. Highlights of the results are also made available to mobile phone users in India through SMS and WAP.
Training of Board members
All new non-executive directors inducted into the Board are given an orientation. Presentations are made by various executive directors and senior management giving an overview of our operations to familiarize the new non-executive directors with the operations. The new
non-executive directors are given orientation on our services, group structure and subsidiaries, our constitution, Board procedures and matters reserved for the Board, our major risks and risk management strategy.
The Board’s policy is to have separate meetings regularly with independent directors to update them on all business-related issues and new initiatives. In such meetings, the executive directors and other members of the senior management share point of views and leadership thoughts on relevant issues.
We also facilitate the continual education requirements of our directors. Each director is entitled for a training fee of US$ 5,000 per annum. Independent directors are allowed to attend educational programs in the areas of board / corporate governance.
Mechanism for evaluating non-executive Board members
The Board evaluates the performance of non-executive / independent directors through a peer-evaluation process every year. Each Board member makes a presentation to the Board highlighting their contributions and thought leadership initiatives pursued during the year. A scale of 1 to 3 is used by every Board member during the evaluation of each of the external Board members.
Independent directors have three key roles, namely, governance, control and guidance. Some of the performance indicators based on which the independent directors are evaluated include:
We have established a mechanism for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of our code of conduct or ethics policy. It also provides for adequate safeguards against victimization of employees who avail of the mechanism, and also allows direct access to the Chairperson of the audit committee in exceptional cases. We further affirm that no employee has been denied access to the audit committee.
F. Compliance with the corporate governance codes
Corporate Governance Voluntary Guidelines 2009
The Ministry of Corporate Affairs, Government of India, published the Corporate Governance Voluntary Guidelines in 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 benchmark for 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 highest standards 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 which is crucial in ensuring the long-term sustainability and value generation by businesses. The guidelines broadly focus on areas such as Board of Directors, responsibilities of the Board, audit committee functions, roles and responsibilities, appointment of auditors, compliance with secretarial standards and a mechanism for whistleblower support. We substantially comply with the Corporate Governance Voluntary Guidelines.
Revised Clause 49 of the Listing Agreement
SEBI, with a view to improving corporate governance standards in India and to enhance the transparency and integrity of the market, constituted a committee on corporate governance under the chairmanship of N. R. Narayana Murthy. The committee issued two sets of recommendations : the mandatory recommendations and the non-mandatory recommendations.
SEBI has incorporated the recommendations made by the Narayana Murthy Committee on Corporate Governance in Clause 49. A revised Clause 49 was made effective from January 1, 2006. We fully comply with the revised Clause 49 of the Listing Agreement.
Naresh Chandra Committee
Following instances of irregularities involving auditors in the U.S. and in India, the Government of India, by an order dated August 21, 2002, constituted a high-level committee under the chairmanship of Naresh Chandra to examine the auditor-company relationship and to regulate the role of auditors. Chapters 2, 3 and 4 of the Naresh Chandra Committee report are relevant to us. We comply with these recommendations.
Kumar Mangalam Birla Committee
SEBI appointed a committee on corporate governance on May 7, 1999, under the chairmanship of Kumar Mangalam Birla, to promote and raise the standards of corporate governance. The SEBI Board adopted the recommendations of the committee on January 25, 2000. We comply with these recommendations.
Euroshareholders Corporate Governance Guidelines, 2000
‘Euroshareholders’ is the confederation of European shareholders associations, constituted to represent the interests of individual shareholders in the European Union. The guidelines are based on the general principles of corporate governance issued by the Organization for Economic Co-operation and Development (OECD) in 1999, but are more specific and detailed. Subject to the statutory regulations in force in India, we comply with these recommendations.
Compliance with findings and recommendation of the Conference Board Commission on Public Trust and Private Enterprises in the U.S.
The Conference Board Commission on Public Trust and Private Enterprises was convened to address the circumstances which led to corporate irregularities and the subsequent decline of confidence in the American capital markets. The commission addressed three key areas – executive compensation, corporate governance, and audit and accounting issues, and issued its first set of findings and recommendations. We substantially comply with these recommendations.
OECD Principles of Corporate Governance
The governments of the 30 countries in the OECD have recently approved a revised version of the OECD’s Principles of Corporate Governance, adding new recommendations for good practice in corporate behavior with a view to rebuilding and maintaining public trust in companies and stock markets. We comply with these recommendations.
A detailed compliance report, with the recommendations of various committees listed in this section, is available on our website
United Nations Global Compact
Announced by the United Nations Secretary-General, Kofi Annan, at the World Economic Forum in Davos, Switzerland, in January 1999, and formally launched at the UN Headquarters in July 2000, the Global Compact calls on companies to embrace ten principles in the areas of human rights, labor standards and environment. The Global Compact is a value-based platform designed to promote institutional learning. It utilizes the power of transparency and dialog to identify and disseminate good practices based on universal principles. The ten principles are drawn from the Universal Declaration of Human Rights, the International Labor Organization’s Fundamental Principles on Rights at Work, and the Rio Principles on Environment and Development.
The Global Compact recommends that companies embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption.
According to these principles, businesses should :
On August 27, 2001, we adopted the United Nations Global Compact policy and became a partner with the United Nations in this initiative. A strong sense of social responsibility is an integral part of our value system. We adhere to the principles of the United Nations Global Compact.
Source : www.unglobalcompact.org