Corporate Governance Infosys 47465j

CORPORATE GOVERNANCE At Infosys

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Harsh Dedhia Yash Doshi Mahir Gada Vimble Varghees Deep Shah Gautam Shreemali Pranay Nahar

113 114 115 135 142 149 154

INTRODUCTION

Keywords! 

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Ethics Sustainable basis Fairness Commitment to values Trust Integrity etc.

What is CG? 

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Set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term.

Why is it important? 

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Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the

Infosys- Vision & Mission 

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Vision: "To be a globally respected corporation that provides best-ofbreed business solutions, leveraging technology, delivered by best-inclass people." Mission : "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."

Infosys philosophy on CG 

“Corporate governance is about owners and the managers operating as the trustees on behalf of every shareholder–large or small.”Narayana N. R. Murthy

Infosys philosophy on CG 

Satisfy the spirit of the law and not just the letter of the law

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Corporate governance standards should go beyond the law

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Be transparent and maintain a high degree of disclosure levels

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When in doubt, disclose

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Make a clear distinction between personal conveniences and corporate resources

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Communicate externally, in a truthful manner, about how the Company is run internally

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Comply with the laws in all the countries in which the Company operates

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Have a simple and transparent corporate structure driven solely by business needs

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Management is the trustee of the shareholders' capital and not the owner

CORPORATE SOCIAL RESPONSIBILITY At Infosys

Guiding principle of CSR At Infosys, the distribution of wealth is as important as its legal and ethical creation.

Infosys Science Foundation 

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Not-for-profit trust to promote research in pure and applied sciences in India. Physical Sciences – Physics and Chemistry Mathematical Sciences – Mathematics and Statistics Engineering Sciences – All branches of Engineering Life Sciences – Biology and Medicine Social Sciences and Economics – Economics, History, Sociology, Political Sciences and other Social Sciences.

Infosys Foundation 

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Since its inception in 1996, the Infosys Foundation has worked to the underprivileged in society and enrich their lives. Promoted by Infosys Technologies Limited, the Foundation began its work in Karnataka, India, gradually extending its activities to the states of Tamil Nadu, Andhra Pradesh, Maharashtra, Orissa and Punjab. It has successfully implemented projects in four key focus areas:   

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Healthcare Rural development and social rehabilitation Learning and education Art and culture

Various social initiatives 

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2250 houses built as rehabilitation in Karnataka after floods (approx Rs 30 Cr). Employees are encouraged to take up this initiatives. Provide scholarships and educational material. Many medical camps and cleanliness drives undertaken. It helps organize cultural programs to promote artists in rural areas of Karnataka and Andhra Pradesh.

Many lives touched 

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It organizes programs like puppet shows and other cultural events to encourage artistes and performers in rural areas. It has sponsored art exhibitions and performing arts programs in Dharwad and Bangalore in Karnataka. The Foundation constructed the Infosys Superspecialty Hospital on the Sassoon Hospital premises in Pune. This hospital caters to poor patients. It has spread its donations for medicines to aged and poor patients suffering from cancer, leprosy, defects of the heart/kidney, mental illnesses and other major disorders.

Diversity in work place 

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Creating common ground initiative – aimed at creating cultural awareness. Infosys Women Inclusivity network – Conducting workshops on time management, career growth, empowerment, health counselling, lifestyle management etc. Global Buddy programme – helps to make a smooth transition.

Environment friendly practices 

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Use of solar power where possible and also for R&D. Installations of wind turbines. Using LED lights where possible. Built a biogas plant to recycle all organic wastes.

CORPORATE GOVERNANCE RATINGS, BOARD COMMITTEES AND CODE OF CONDUCT

Corporate Governance Ratings 

CRISIL CRISIL has been consistently asg Infy the 'CRISIL GVC Level 1' rating over several years now. This Governance and Value Creation (GVC) rating indicates their capability to create wealth for all their stakeholders while adopting sound corporate governance practices.

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ICRA ICRA assigned 'CGR 1' rating to their corporate governance practices. Infy is the first company in India to be assigned the highest CGR by ICRA. The rating reflects their transparent shareholding pattern, sound Board practices, interactive decision-making process, high level of transparency, disclosures encoming all important aspects of our operations and track record in investor servicing.

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Standard & Poor Standard & Poor‟s (S&P) governance services assigned a corporate governance score (CGS) of CGS-8.6 to Infosys Technologies making it the first Indian Company to get a score. The overall CGS is a result of four component scores with a scale of 1 (low) to 10 (high). Infosys has scored 9 for ownership structure and influence; 8.3 for financial stakeholder rights and relations; 9.2 for financial transparency and information disclosure; and 8.0 for board structure and

C.G. Policies - Board Committees 1. 2.

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Audit committee, Compensation committee, Nominations committee, Investor grievance committee and Risk management committee. All Independent Directors Frequency and Duration determined by Chairperson of Board and Committee, Company Secretary Normally 4 Times a year

Primary Objectives 

Audit Committee 

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Compensation Committee 

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To monitor and supervise financial reporting process, to ensure accurate and timely disclosures with transparency, integrity and quality reporting Approving and evaluating the compensation plans, policies and programs for CEO, executive directors and senior management.

Nominations Committee 

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To oversee the nomination process and identify, screen and review individuals qualified to serve as executive directors, nonexecutive directors and independent directors consistent with criteria approved by the Board and to recommend nominees for election or re-election at the annual meeting of shareholders. It also coordinates and oversees Board‟s performance and of individual directors in the governance of the Company

Primary Objectives 

Investor Grievance Committee 

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The committee has the mandate to review and redress shareholder grievances

Risk Management Committee To assist the Board in fulfilling its corporate governance ideals in overseeing the responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and external environment risks  Monitoring and approving the risk policies and associated practices of the Company  Reviewing and approving risk disclosure statements in any public documents or disclosures 

Code of Conduct @ Infosys 

Principles described in the code are general in nature hence employees are to use common sense and good judgment in applying the code

Responsibility to the Company 

General Standards of Conduct      

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Honest and Ethical Conduct Equal opportunity workplace free of harassment (HEAR) Safety at Workplace Dress Code Drug, Alcohol and Weapons Abuse Solicitation and Distribution of Literature

Conflicts of Interest    

Outside Employment Outside Directorships Business Interests Related Parties

Responsibility to the Company 

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Applicable Laws 

Obligations under Securities Laws and Prohibition against Insider Trading (Blackout Period)

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Prohibition against Short Selling of Company Secs

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Industrial Espionage (Mkt Understanding and Laws of Land)

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Export Controls

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Free and Fair Competition

Financial Reporting and ing Requirements 

Compliance with Rules, Controls and Procedures

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Accuracy of Records and Reports

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Intentional Misconduct (Misrepresent or Manipulate)

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Dealing with Auditors (Cooperate in good Faith)

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Obligations to Investigate and Report Potential Violations

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Keeping the Audit Committee Informed

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Disclosure to the Regulators and the Public

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Expense Claims (Authorized by Manager)

Responsibility to the Company 

Anti- Corruption Policy       

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Governmental Relations  

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Prohibition of Bribery Expenses incurred on Governmental Officials Gifts (Not more than $100) Charitable Contributions Political Contributions Transacting with Intermediaries Record Retention (Min 8 years) Lobbying (Written approval from CFO) Government Contracts (Apr. co‟s Legal Dept.)

Maintaining and Managing Records 

Records on Legal Hold

Responsibility to the Company 

Protecting the Company‟s Confidential Information    

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Proprietary Information and Invention Agreement Disclosure of Company Confidential Information Requests by Regulatory Authorities Company Spokespeople (CEO, COO, CFO, Investor Relations Dept)

Use of Company‟s Assets and Corporate Opportunities       

Company Brand and Logo Physical Access Control Company Funds (Used for Co) Computers and Other Equipment Software (Licensed) Electronic Usage Corporate Opportunities

Responsibility to the Customers and Suppliers 

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Customer Relationships (Create Value, Build Trust) Payments or Gifts from Others Publications and Copyrights Handling Confidential Information of Others Selecting Suppliers (Competitive Bids)

Reporting Violations

Whistleblower Cases Other Cases (HR/Legal Department) Prohibition against Retaliation

MANAGEMENT REVIEW AND RESPONSIBILITIES

Evaluation and Compensation 

Formal evaluation of officers

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The compensation committee of the Board approves the compensation and benefits for all Executive Board as well as of the Executive Council. Another committee, headed by the CEO, reviews, evaluates and decides the annual compensation of the officers from the level of Vice President, excluding of the Executive Council.

Board Interaction 

Board interaction with clients, employees, institutional investors, the government and the press

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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.

POLICIES FOR SHAREHOLDERS AND EMPLOYEES

1. Disclosures regarding appointment / 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.

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Example (August 21, 2011): As per Article 122 of the AoA, K. Dinesh, Srinath Batni, Sridar Iyengar, Deepak Satwalekar and Dr. Omkar Goswami would retire in the ensuing AGM. The Board had recommended the re-appointment of all the retiring directors, except K. Dinesh who expressed not to seek re-appointment (personal reasons).

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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.

2. Communication to the shareholders 

Quarterly reports are sent 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 Infosys website and 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).

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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 the website. The proceedings of the Annual General Meeting are webcast live for shareholders across the world. The video archives are also available on the website

3. Investor grievances and share transfer 

A Board-level investor grievance committee has been set to examine and redress shareholders‟ and investors‟ complaints. Details of shares transferred and the nature of complaints are provided in the Shareholder information section of the Annual Report. 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, registrar and share transfer agent.

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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 for the transaction. The latter will immediately update the . There is no need for separate communication to the Company to the share transfer.

4. Training of Board 

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All new non-executive directors inducted into the Board are given an orientation (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 of the senior management share point of views and leadership thoughts on relevant issues. Continual Education: 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.

5. Mechanism for evaluating nonexecutive Board 

The Board evaluates the performance of nonexecutive / independent directors through a peerevaluation process every year. A scale of 1 to 3 is used by every Board member during the evaluation of each of the external Board . Independent directors have three key roles, namely, governance, control and guidance.

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Performance indicators for evaluation of independent :

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Ability to contribute to and monitor our corporate governance practices.

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Ability to contribute by introducing international best practices to address top-management issues.

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Active participation in long-term strategic planning.

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Commitment to the fulfillment of a director‟s obligations and fiduciary responsibilities. This includes participation at the Board and

6. Whistleblower policy 

A mechanism for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of our code of conduct or ethics policy has been established.

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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. Infosys further affirms that no employee has been denied access to the audit committee.

WHISTLE BLOWING POLICY At Infosys

Reporting 

If one has become aware of Questionable ing/ Audit Matters, or reporting of fraudulent financial information or of grave misconduct he can:

Reporting Report those facts to immediate supervisor or corporate counsel.

He is then requested to document those facts in writing.

If he believes that both those individuals are involved he can report those facts to the Audit Committee of Board of Directors. One can also report concerns anonymously by sending e-mail at [email protected] or by sending anonymous letter to corporate counsel.

Investigation 

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All the complaints are promptly & thoroughly investigated. All information will remain confidential except as necessary to conduct investigation & take remedial actions. It‟s the duty of everyone to cooperate in the investigation, if he fails to do disciplinary action can be taken against him. If found guilty, appropriate remedial actions commensurate with severity of offence will be taken.

Discrimination, Retaliation or Harassment 

Infosys strictly prohibits any discrimination, retaliation or harassment against:  Any

person who reports the incident  Any person who participates on the investigation

Additional Enforcement 

A employee can report information to the appropriate agency when he has reasonable cause to believe that the violation of federal or state statute or regulation has occurred.

Case: Infosys‟ H-1B visa misuse 

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Jack Palmer alleged Infosys was using the U.S. B-1 business visa to bring the outsourcer's Indian employees to perform software development, quality assurance and testing for U.S. clients. B-1 business visa are designed to allow foreigners to come to the U.S. for short periods of time for such things as meetings, contract negotiations or short-term training.

Cont… 

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Palmer had initially filed a whistleblower complaint and thereafter a case in a civil court in the US. Mr. Palmer had retained on his laptop emails, screenshots and other evidence of Infosys‟ activities. In the amended lawsuit filled by Palmer, he alleges that Infosys has increased its harassing, retaliatory, intimidating and outrage tactics.

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He points out the following: A.

B. C.

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Infosys, through its criminal defense lawyer, threatened to discipline or fire Mr. Palmer if he did not turn the laptop, which the Federal investigators needed as evidence, over to Infosys; Infosys‟ employees tried to remotely access the laptop; Infosys put Mr. Palmer “on the bench” in April 2011, meaning he has not been assigned to any project which is causing Mr. Palmer to lose bonuses and other compensation; Infosys completely shut Mr. Palmer out of Infosys‟ system limiting his access to company information;

COMPLIANCE WITH CORPORATE GOVERNANCE CODES At Infosys

Corporate Governance Voluntary Guidelines 2009 

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Objective - of encouraging the use of better practices through voluntary adoption. Provide corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business. Broadly focuses 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 whistle blower .

Revised Clause 49 of the Listing Agreement 

SEBI, with aim to improve corporate governance standards in India and to enhance the transparency and integrity of the market, constituted the Committee on Corporate Governance under the chairmanship of N. R. Narayana Murthy. The committee issued two sets of recommendations :  

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Mandatory recommendations 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, to which Infosys fully comply

Committee Reports 

Naresh Chandra Committee Constituted , by an order dated August 21,2002.  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 for Infosys. 

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Kumar Mangalam Birla Committee To promote and raise the standards of corporate governance.  The SEBI Board adopted the recommendations of the committee on January 25,2000.  Infosys comply with these recommendations. 

Euroshareholders Corporate Governance Guidelines 2000 

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„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. Subject to the statutory regulations in force in India, Infosys comply with these recommendations.

OECD Principles of Corporate Governance 

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The governments of the 30 countries in the OECD have recently approved a revised version of the OECD's Principles of Corporate Governance. Recommendations for good practice in corporate behaviour with a view to rebuilding and maintaining public trust in companies and stock markets Infosys comply with these recommendations.

The Conference Board Commission on Public Trust and Private Enterprises in the U.S 

Compliance with findings and recommendation of The Conference Board Commission on Public Trust and Private Enterprises in the U.S.  Convened

to address the circumstances which led to corporate irregularities and the subsequent decline of confidence in American capital markets.  The Commission addressed three key areas – executive compensation, corporate governance, and audit and ing issues

United Nations Global Compact policy 

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Formally launched at the UN Headquarters in July 2000. Calls on companies to embrace ten principles in the areas of human rights, labor standards and environment. Utilizes the power of transparency and dialog to identify and disseminate good practices based on universal principles. On August 27, 2001,infosys adopted the United Nations Global Compact policy and became a partner with the United Nations in this initiative.