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...

As per the recommendations of the Kumar Mangalam Committee, Infosys included a separate section on corporate governance in its annual report, which disclosed the remuneration paid to directors in all forms, including salary, benefits, bonuses, stock options. The annual report also carried a compliance certificate from the auditors.

Infosys also laid emphasis on succession planning and management development. The chairman reviewed succession planning and management development with the board from time to time. The chairman and CEO also managed all interaction with the investors, media, and the government. Where necessary, he took advice and help from the managing director, president, and COO as well as the CFO. The managing director and COO managed all interactions with the clients, taking the advice and the help of the CEO. Both the CEO and the COO handled employee communication.

Infosys-A Benchmark for Corporate Governance

Some analysts felt that Infosys' corporate governance practices offered many lessons to corporate India. Infosys had shown that increasing shareholder wealth and safeguarding the interests of other stakeholders was not incompatible. Infosys had given its non-executive directors the mandate to pass judgement on the efficacy of its business plans. Every non-executive director not only played an active role in decision making, but also led or served on at least one of the three (Nomination, Compensation and Audit) committees. Infosys' founders had set very high standards, in a country where malpractices by founders were rampant. The founders only took salaries and dividends and derived no other financial benefits from the company.

Commenting on the strengths and weaknesses of Infosys' corporate governance, Nandan M Nilekani, Managing Director, Chief Operating Officer and President of Infosys, said, "The strengths are that we have been very successful in creating a value based system with a very strong focus on ethics, and strong division between personal and professional funds etc. That has translated into brand equity, shareholder value etc.

Obviously, we can do things better. We believe that we can never stand still. We will keep looking at global best practices, what the world is saying on this front. We keep trying to improve the way we manage to be on par with it." It remained to be seen whether other Indian companies could emulate Infosys form of corporate governance.