IIAS says Murthy's return violates Infosys ideals

NR Narayanamurthy may be back at the helm of Infosys, but this move has not gone down well with investor advisory firm IIAS. The firm has raised the red flag on the move and says that this dilutes the standards of corporate governance at the IT giant.

CNBC-TV18's Sajeet Manghat and Payaswani Upadhyay report that IIAS has also raised questions about other proposals that will be taken up at the IT  company’s AGM on June 15.
When NR Narayanamurthy was brought back to lead Infosys, the markets cheered. But his reappointment does not sit well with investor advisory firm IIAS. The firm believes that with this reappointment, Infosys has compromised the very same principles it so strongly advocated during its rise to the top.
The argument is that Murthy's appointment has led to amendments to at least three key Infosys principles — the retirement age for executives and non-executives, founder children do not take up executive roles and bringing back the post of executive chairman, which had been done away with at Murthy's retirement.
The sudden manner in which Murthy was reinstated, through a board meeting called on the basis of a shareholder notice, has also raised eyebrows.
Says, Anil Singhvi, founder director, IIAS, "Why didn’t Infosys inform the stock exchanges when it received a notice from a shareholder and the likelihood of the notice being discussed at a board meeting on June 1?  If Infosys has prior knowledge, it cannot say that the board meeting was convened all of a sudden. I don't think many companies appoint an executive chairman or any other member of the senior management based on the notice sent by a shareholder."
The other issue that IIAS has raised has to do with the re-appointment of two independent directors — Omkar Goswami and DM Satwalekar. IIAS argues that Omkar Gosawami has been on the Infosys board for 13 years, while Satwalekar has been on the board for 16 years — tenures more then the 9-year maximum limit allowed. The advisory firm also pointed out  that only 44 percent of the Infosys board comprised independent directors... when company policy mandated that at least 56 percent of the board should consist of  independent directors.
Anil Singhvi, founder-director, IIAS, adds, "The company's AGM resolutions talk about appointing two independent directors who have been on the board for more than 15-16 years whereas the company's corporate governance policy in the annual report of 2012-13 mandates three terms of three years each. That means after 9 years, every independent director shall retire."