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Infosys co-founder NR Narayana Murthy on Saturday stressed the role of independent directors and CEOs in ensuring “good corporate governance”.
According to Murthy, good governance is about representing shareholders faithfully and increasing shareholder value legally and ethically.
“Good governance is about enhancing the reputation of the corporation. It involves understanding the risks involved in every function and mitigating them through debates and discussions,” Murthy said, delivering his convocation address at the Indian Institute of Management, Calcutta (IIM-C), here on Saturday.
It also entails holding the management responsible to be fair, honest, transparent and accountable to every stakeholder of the company. The CEO of the organisation should understand the nuances of industry and intricacies of the business model.
‘Avoid cronyism’
“The CEO should not put pressure on Board to obtain disproportionate direct or indirect advantage for himself or herself or his or her family, friends and cronies to the exclusion of fair compensation for other employees,” he said.
He emphasised that a CEO should be ever ready to question deeply and seek the truth. “It is about disagreeing without being disagreeable on the boardroom,” he said.
Talking about the role of an independent director, he said, the accountability of an independent director is only to his shareholders and the regulators.
“Shareholders have every right to ask questions and you have to be transparent. But you cannot be party to selective disclosure to just any group of shareholders, including the founders,” he said.
Govt’s role
Emphasising the role the government should play in enhancing business environment thereby creating jobs, he said, that the government should be an “impartial regulator.”
The government should resist the temptation to get into or stay in a business, he said. “ Jish desh mein sarkar byapari hota hai us desh mein log bhikari ho jate hain (In a country where the government gets into business, there the citizens turn into beggars).”
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