Corporate Governance at Infosys

Details

Themes: Coporate Governance
Period : 1996 - 2001
Organization : Infosys Technologies Ltd.
Pub Date : 2001
Countries : India
Industry : Information Technology

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Case Code : CGOV001
Case Length : 12 Pages
Price: Rs. 300;

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Corporate Governance - The Infosys Way Contd...

The compensation of the non-executive directors was approved at a meeting of the full board. The components were a fixed amount, and a variable amount based on their attendance of the board and committee meetings. The total compensation payable to all the non-executive directors together was limited to a fixed sum per year determined by the board.

This sum was within the limit of 0.5% of the net profits of the company for the year calculated, as per the provisions of the Companies Act and as approved by the shareholders. The compensation payable to the non-executive directors (and the method of calculation) was disclosed in the financial statements. Since 1999, the non-executive directors were eligible for stock options. Of the compensation payable for the year 1999, 60% was paid for being on the board and the balance 40% was paid in proportion to the board/committee meetings attended (Refer Table II for compensation payable to non-executive directors in 1999).

Table II
Compensation Payable to Non-Executive Directors (1999)

Name	Pro rata compensation	Compensation payable on attendance	Total
Susim M. Datta*	0.36	0.3	0.66
Deepak M. Satwalekar	0.36	0.36	0.72
Ramesh Vangal	0.36	0.1	0.46
Dr.Marti G. Subrahmanyam	0.36	0.2	0.56
Total	1.44	0.96	2.4

*Susim M Datta retired from the board in 2000.
In 1999, the board had four non-executive directors and six executive directors.
Source: Annual Report, 1998-99

None of the directors gained financially from any other contract of significance which the company or any of its subsidiary undertakings was party to.

The audit committee was responsible for effective supervision of the financial reporting process, ensuring financial and accounting controls and compliance with the financial policies of the company. The committee periodically interacted with the statutory auditors and the internal auditors to ascertain the quality of the company's transactions; to review the manner in which they were performing their responsibilities; and to discuss auditing, internal control and financial reporting issues. The committee provided overall direction on the risk management policies and also indicated the areas that internal and management audits should focus on. The committee had full access to financial data. The committee reviewed the annual and half yearly financial statements before they were submitted to the board. The committee also monitored proposed changes in the accounting policy, reviewed the internal audit functions and discussed the accounting implications of major transactions.

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