The voting pattern for passing a series of resolutions including approval of ESOPs and reappointment of Prof Jeffrey Lehman for the Infosys board clearly suggests that the company’s shareholders are paying great attention to corporate governance.
Infosys, India’s iconic IT services company, is habituated to receive full approval for all its resolutions whenever they were put to vote to the shareholders, including institutional investors.
When the company sent out a notice on February 24 this year to the shareholders seeking their approval for five resolutions including that of reappointment of Vishal Sikka as the CEO & MD of Infosys, four of them were met with some resistance from shareholders.
However, all the resolutions were passed with a majority of votes in favour of them.
An Infosys spokesperson said as the company had slipped into a silent period ahead of its quarterly results, it will not be able to issue any statement.
Four resolutionsThe four resolutions were: two resolutions seeking approval of the 2015 stock incentive compensation plan and grant of stock incentives to eligible employees — one related to reappointment of Prof Jeffrey S Lehman as an independent director and another related to the appointment of Punita Kumar Sinha as an independent director.
In the first case relating to grant of ESOPs, 20 per cent of the institutional holders (public institutions) and nearly 47 per cent of the public shareholders (public non-institutions) voted against the resolution, though cumulatively 22 per cent of the total shareholders of all types voted against the resolution, which meant that it was passed.
In the second case, again with regard to ESOPs, 22 per cent of the institutional holders and nearly 48 of the public shareholders voted against the resolution though it was passed as cumulatively, only 23.66 per cent of all the shareholders voted against it.
The third case related to the reappointment of Prof Lehman to the board — nearly 18 per cent of the institutional holders and 19 per cent of the public shareholders voted against the resolution, though cumulatively, nearly 15 per cent of the total shareholders voted against it.
In the fourth case, the resolution related to the appointment of Punita Sinha was met with far less resistance than the first three. Only about 5 per cent of the institutional holders and nearly 19 per cent of the public shareholders voted against the resolution.
Cumulatively, only 8.2 per cent of the total votes polled were against it.
In the case of Sikka, nearly 99 per cent of the shareholders voted in favour of his being reappointed as CEO & MD.
Restricted stock planIn an earlier statement, Infosys said the ESOP scheme was an extension of the 2011 Restricted Stock Units Plan..
On the extension of Lehman, Infosys said it was in full compliance of the regulatory bodies and since the average tenure of the other directors is just two years and one month, coupled with the managing director himself only one year and five months into the job, Lehman brings to the board ‘unique and invaluable’ inputs bridging between past and current perspectives.
Advisories’ view pointAccording to some of the proxy advisory firms, the board should not be vested with absolute powers to modify the ESOP scheme and hence, adequate restrictions should be imposed. In the case of Sinha, a mere disclosure that she is a politically exposed person (PEP) would have been enough.
In the issue related to Prof Lehman, as he has been associated with the company for a decade, there could be issues related to him being considered as independent.
JN Gupta of the proxy advisory firm, SES, told BusinessLine that it is a wake-up call for Infosys. “Investors are becoming cautious and Infosys should make efforts to retain the confidence it has always enjoyed with them.”