Corporate governance rating system

hcl technologies

Presented By
Ashmita De
Aveg Mital
George Baby
Manisha Mittal
Rahul Dutta Roy
 INTRODUCTION
Corporate Governance is an integral part of the philosophy of HCL Technologies in its
pursuit of excellence, growth and value creation.

The Company is in compliance with the requirements of the revised guidelines on

Corporate Governance stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges.

The certificate dated August 25, 2009 obtained from Statutory Auditors of the Company,
M/s. Price Waterhouse, confirming compliance with the Corporate Governance
requirements as stipulated under clause 49 of the Listing Agreement.

The Company has adopted Whistle Blower Policy and set up Nominations and Risk
Management Committees.

HCL Technologies has also set up three Councils viz. Employees’ Council, Customers
Advisory Council & Corporate Social Responsibility Council and formulated a
mechanism to report under sexual harassment policy.

The Board of Directors is at the core of the Corporate Governance practices and
oversees how the Management serves and protects the long term interests of all the
stakeholders.
The Board of Directors of the Company has an optimum combination of
executive, non-executive and independent directors who have an in-depth
knowledge of business, in addition to the expertise in their areas of
specialization.
Composition of Board of Directors

13%

13%

Non executive Independent Directors

Executive Directors
Independent Directors

75%
Whistleblower Policy

The objectives of this Policy are:

• To create a window for any person who observes an unethical practice either

organizationally or individually to be able to raise it

• To encourage timely, safe and open reporting of alleged wrong doings or

suspected impropriety

• To ensure consistent and timely institutional response

• To ensure appropriate reporting of whistleblower investigations and,

• To encourage ethical and lawful conduct

Sexual Harassment Policy

The objectives of this Policy are:

•To establish a complaint resolution policy and procedure to effectively combat sexual
harassment at work

•To identify and prevent sexual harassment at work and to resolve complaints against
such conduct in a fair and timely manner.
 Comparison of BoD of HCL Tech
with Industry

Industry
Particulars Company
Average

Number of Directors 8 7
Percent Independent 63% 74%
Percent Women 0 5%
Percent Substantial Industry Knowledge 25% 40%
Average number of other public company 1.5 2.3
board seats
 Methodology for Rating

1.Identify Categories & Sub-sections of the categories.

2.Assign weights between 0 & 1 to each sub – section of the category

& also to the Categories.

3.Score for each parameter of the sub-section is determined, either 0 or

1 based on the information from the Annual Report.

4.Weighted Score is determined.

5.Done for 3 companies in the IT industry.

6.Absolute and Relative % of compliance are determined.

BOARD ACCOUNTABILITY
5.9
Sub – sections considered : 18

Scored – 8.5 out of 14.4

Absolute Rating – 5.9

Relative Rating – 6.8

Observations & Opinion :

1. The board primarily comprises of Independent directors (6/8).It

is a positive governance practice as the board is potentially able
to execute adequate independent oversight.
Financial Disclosure & Internal
Controls 6.7
Sub – sections considered : 9

Scored – 6 out of 9

Absolute Rating – 6.7

Relative Rating – 7.5

Observations & Opinion :

1.There is a risk management committee in place.

2.The Audit committee reviews and discusses the company's
policy with respect to risk assessment and risk management.
3.The company makes comprehensive disclosure on its risk
management policies.
 Shareholder Rights
Sub – sections considered : 4
5.6
Scored – 2 out of 3.6

Absolute Rating – 5.6

Relative Rating – 5.6

Observations & Opinion :

1.All common equity shares have one vote with no restrictions
2.Voting rights are not capped with respect to number of shares
owned
3.There is no minimum holding period for acquiring voting rights
 Market for Control
Sub – sections considered : 5
4.3
Scored – 1.8 out of 4.2

Absolute Rating – 4.3

Relative Rating – 5.2

Observations & Opinion :

1.The company has a does not have single shareholder control or
shareholder group acting together .
2.Company has employed unilateral takeover defense.
3.The company is involved in a series of cross share holdings with
HCL infosystems,HCL America,HCL Europe
 Corporate Behaviour
Sub – sections considered : 14
7.3
Scored – 5.1 out of 7

Absolute Rating – 7.3

Relative Rating – 10

Observations & Opinion :

1.The company in its annual report does elaborate the workplace
safety systems in place.

2.Also environmental disclosures are made.

3.Company's code of ethics does not address whether company funds

may be used to fund the political parties
 Remuneration
Sub – sections considered : 7
4.3
Scored – 2.4 out of 5.8

Absolute Rating – 4.3

Relative Rating – 4.6

Observations & Opinion :

1.The remuneration committee is not composed wholly of
independent members .It also does not disclose the ownership
guidelines for CEO and senior management.
2.The company has employee stock option plans under which the
CEO Mr. Vineet Nayar has been granted 7 .5 lacs option with a grant