Narayana Murthy on his son Dr. Roahn Murthy - VP.

by Marathadi-Saamiyaar Fri Sep 06, 2013 12:43 am

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?

by Rishi Fri Sep 06, 2013 6:36 am

Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?

Saamiyaar,

Do you think Harvard would have been easy on Rohan in granting his Ph.D because of the $ 20 million donation?

by Marathadi-Saamiyaar Fri Sep 06, 2013 10:03 am

Rishi wrote:
Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?
Saamiyaar,

Do you think Harvard would have been easy on Rohan in granting his Ph.D because of the $ 20 million donation?

Definitely YES.

When a University gives admission based on family wealth and connections, it sure can give an easy degree as long as the guy is not a total dud. I heard UPenn gave a PhD to one such 50+ businessman who donated $10 mil. The faculty were opposed but the admin prevailed. The justification was that this guy would not be dong research and just wanted a title for the sake of his ego. So there was no harm or big deal about giving him a PhD.

Rohan could have easily fallen in that category. It takes more than the usual 4, 5, 7 years to get a PhD at Harvard, and this guy gets it in 3 years? rite.

by Rishi Fri Sep 06, 2013 10:33 am

Marathadi-Saamiyaar wrote:
Rishi wrote:
Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?
Saamiyaar,

Do you think Harvard would have been easy on Rohan in granting his Ph.D because of the $ 20 million donation?
Definitely YES.

When a University gives admission based on family wealth and connections, it sure can give an easy degree as long as the guy is not a total dud. I heard UPenn gave a PhD to one such 50+ businessman who donated $10 mil. The faculty were opposed but the admin prevailed. The justification was that this guy would not be dong research and just wanted a title for the sake of his ego. So there was no harm or big deal about giving him a PhD.

Rohan could have easily fallen in that category. It takes more than the usual 4, 5, 7 years to get a PhD at Harvard, and this guy gets it in 3 years? rite.

Then imagine what it does to self esteem, pride etc.

Don't you think he would feel "inferior" in the presence of guys who got their Ph.D because of their talent, hard work and brains?

And that inferiority comples would influence every decision he makes in his work and life.

by Seva Lamberdar Fri Sep 06, 2013 10:54 am

Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?

Here is my input to this post ... TAFE used to be called Massey-Ferguson (India) long ago (until mid-1960s).

by Kris Fri Sep 06, 2013 11:11 am

Rishi wrote:
Marathadi-Saamiyaar wrote:
Rishi wrote:
Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?
Saamiyaar,

Do you think Harvard would have been easy on Rohan in granting his Ph.D because of the $ 20 million donation?
Definitely YES.

When a University gives admission based on family wealth and connections, it sure can give an easy degree as long as the guy is not a total dud. I heard UPenn gave a PhD to one such 50+ businessman who donated $10 mil. The faculty were opposed but the admin prevailed. The justification was that this guy would not be dong research and just wanted a title for the sake of his ego. So there was no harm or big deal about giving him a PhD.

Rohan could have easily fallen in that category. It takes more than the usual 4, 5, 7 years to get a PhD at Harvard, and this guy gets it in 3 years? rite.
Then imagine what it does to self esteem, pride etc.

Don't you think he would feel "inferior" in the presence of guys who got their Ph.D because of their talent, hard work and brains?

And that inferiority comples would influence every decision he makes in his work and life.

>>>>Years ago, there was an article in the WSJ on affirmative action, which pointed out (rightly) the pitfalls of the AA program. I don't remember the specific details, but what I do remember is a letter from a reader which asked the WSJ editors if they had looked into another type of affirmative action, the one that involved family names and endowments that they themselves were probably beneficiaries of. The reader went on to say he had worked in Wall Street for several years and he could easily list a bunch of senior management guys who wouldn't have had access to their office buildings, much less jobs, were it not for their family connections.

by Marathadi-Saamiyaar Fri Sep 06, 2013 11:14 am

Rishi wrote:
Then imagine what it does to self esteem, pride etc.

Don't you think he would feel "inferior" in the presence of guys who got their Ph.D because of their talent, hard work and brains?

And that inferiority comples would influence every decision he makes in his work and life.

Rich/powerful/political people have a thick skin and buried any self-esteem, pride, very early. Don't you see the politicians and rich businesses claiming themselves to be Dr. This and Dr. That after they get themselves honorary doctorates or indulge in bribery and elections even after being accused and paraded of stealing crores of Rs?

Money and power stump everything.

by Marathadi-Saamiyaar Fri Sep 06, 2013 11:41 am

Kris wrote:
Rishi wrote:
Marathadi-Saamiyaar wrote:
Rishi wrote:
Marathadi-Saamiyaar wrote:

.. "I wanted someone with an open mind, somebody who brought the finest ideas in computer science, somebody who has distinguished himself as a stellar academician to come and help me in improving our software delivery effectiveness. That is why I invited Dr Rohan Murty to come and join my office in terms of delivery effectiveness,"

Really?....why did he go to Cornell and not MIT or Stanford? Why would he not do his PhD at Cornell (#5) instead of shifting to Harvard (#20) ? The guy is worth $600 mil and gave $20 mil to Harvard. Besides he is married to the rich heir of Amalgamations Group (TAFE, Voltas, etc.). Naturally, shove all those crap about Principles and ethics and just become a "regular" desi dynastic businessman. At least he could have been honest and openly say he appointed his son as he was a major share holder.

Why all this open mind excuse and crap?
Saamiyaar,

Do you think Harvard would have been easy on Rohan in granting his Ph.D because of the $ 20 million donation?
Definitely YES.

When a University gives admission based on family wealth and connections, it sure can give an easy degree as long as the guy is not a total dud. I heard UPenn gave a PhD to one such 50+ businessman who donated $10 mil. The faculty were opposed but the admin prevailed. The justification was that this guy would not be dong research and just wanted a title for the sake of his ego. So there was no harm or big deal about giving him a PhD.

Rohan could have easily fallen in that category. It takes more than the usual 4, 5, 7 years to get a PhD at Harvard, and this guy gets it in 3 years? rite.
Then imagine what it does to self esteem, pride etc.

Don't you think he would feel "inferior" in the presence of guys who got their Ph.D because of their talent, hard work and brains?

And that inferiority comples would influence every decision he makes in his work and life.
>>>>Years ago, there was an article in the WSJ on affirmative action, which pointed out (rightly) the pitfalls of the AA program. I don't remember the specific details, but what I do remember is a letter from a reader which asked the WSJ editors if they had looked into another type of affirmative action, the one that involved family names and endowments that they themselves were probably beneficiaries of. The reader went on to say he had worked in Wall Street for several years and he could easily list a bunch of senior management guys who wouldn't have had access to their office buildings, much less jobs, were it not for their family connections.

A (offensive, politically incorrect) reality: PhD of foreigners > White Americans > women > African Americans at any given university. KEYWORD: There are a few exceptions.

For every Raghuram Rajan reaching the top, you have 500 others biting the dust for "environmental" reasons. That is one reason why it is so important to favor those who are deprived of these "advantages."

by nevada Fri Sep 06, 2013 12:45 pm

So another Indian businessman treats a public company like a family business and this is a disappointment because Murthy projected himself to be "different". Is he the same as everyone else or is he worse because he is a hypocrite?

by Petrichor Fri Sep 06, 2013 12:49 pm

The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!

by truthbetold Fri Sep 06, 2013 5:15 pm

Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!

one can identify this as nepotism . nothing wrong with that either as long as murthy does not indulge in breastbeating about falling standards and morals.

by Petrichor Fri Sep 06, 2013 5:55 pm

truthbetold wrote:
Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!
one can identify this as nepotism . nothing wrong with that either as long as murthy does not indulge in breast-beating about falling standards and morals.

If he has pointed out nepotism as a corporate governance issue at other places, then a case could be made out for hypocrisy. On the other hand, if the Board reached out to him in retirement and beseeched him to return, and given his advancing years, he lays down conditions for his 'temporary' return that included a slate with Rohan as a member, I don't see that in the same light. In this case, Rohan would be the 'muscle' and he would have to work hard to gain respect amongst the satraps.

by Marathadi-Saamiyaar Fri Sep 06, 2013 8:10 pm

Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!

YES. THEY CAN

Yes. We can also say whatever we feel like. Yes. He is a hypocrite. I think the KOCHs are better.

by Merlot Daruwala Sat Sep 07, 2013 7:07 am

Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!

That's true. Only, NRN is known for his holier-than-thou stance, positioning himself as a thought-leader on corporate governance in India. To see him go back on those very principles is a sad sad travesty.

by Rishi Sat Sep 07, 2013 9:25 am

Merlot Daruwala wrote:
Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!
That's true. Only, NRN is known for his holier-than-thou stance, positioning himself as a thought-leader on corporate governance in India. To see him go back on those very principles is a sad sad travesty.

Very simple.

His son was very young when he was mouthing off all those platitudes about corporate governance, ethics, integrity etc.

NRN did not realize that one day his fatherly instincts will take over.

by Seva Lamberdar Sat Sep 07, 2013 9:30 am

Rishi wrote:
Merlot Daruwala wrote:
Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!
That's true. Only, NRN is known for his holier-than-thou stance, positioning himself as a thought-leader on corporate governance in India. To see him go back on those very principles is a sad sad travesty.
Very simple.

His son was very young when he was mouthing off all those platitudes about corporate governance, ethics, integrity etc.

NRN did not realize that one day his fatherly instincts will take over.

It seems the fatherly instincts in this case waited for the right moment (for the son to take over the family business).

by Petrichor Sat Sep 07, 2013 10:21 am

1. Rohan's contract is for the same term as NRN's - 5 years. Expires in 2018.
2. Corporate Governance standards only focus on duty-of-loyalty. Nepotism, per se, is not a huge deal. Think of a manufacturing town where the bulk of the town population is employed at the local steel mill. You would have bunch of relatives, sometimes working in close proximity at the mill. You can extrapolate to the senior levels.
3. As long as shareholders get adequate value (returns), the Board should ensure duty-of-loyalty to the corporate interests in any employment contracts. That's it.

ps. why don't y'all find nepotism highlighted in a discussion of "corporate governance standards" and share it here!!!

by Marathadi-Saamiyaar Sat Sep 07, 2013 10:41 am

Petrichor wrote:1. Rohan's contract is for the same term as NRN's - 5 years. Expires in 2018.
2. Corporate Governance standards only focus on duty-of-loyalty. Nepotism, per se, is not a huge deal. Think of a manufacturing town where the bulk of the town population is employed at the local steel mill. You would have bunch of relatives, sometimes working in close proximity at the mill. You can extrapolate to the senior levels.
3. As long as shareholders get adequate value (returns), the Board should ensure duty-of-loyalty to the corporate interests in any employment contracts. That's it.

ps. why don't y'all find nepotism highlighted in a discussion of "corporate governance standards" and share it here!!!

Sorry ...nada..not happening... Nepotism - justifiable, explainable, or otherwise is still plain nepotism. NRN is just another guy and cannot claim high ground.

Yes...he is right - technically - in what he said. But, he should just shut the fyuck up and stop pontificating on principle and ethics and stick to profiteering - for his corporation and his family.

by Merlot Daruwala Mon Sep 09, 2013 10:28 am

Petrichor wrote:2. Corporate Governance standards only focus on duty-of-loyalty. Nepotism, per se, is not a huge deal. Think of a manufacturing town where the bulk of the town population is employed at the local steel mill. You would have bunch of relatives, sometimes working in close proximity at the mill. You can extrapolate to the senior levels.

1. Yes, nepotism is not a huge deal if your only reading on the topic is from Forbes, that hagiographic periodical for the rich and privileged. For everyone else, it is an obvious breach of shareholder interest - and therefore a corporate governance issue - when the company's key executive roles are staffed by individuals whose sole qualification is their privileged birth. In this particular case, all those impressive educational credentials might qualify Dr Murthy to a professorial vocation, but not to be assisting at the helm of a complex corporate turnaround.

2. Nepotism becomes a huger deal when the guru of corporate governance in India sets a rule very early on in his company, that none of the founders' children will work in the company. And after all the other founders dutifully adhere to this rule and their kids go on to do their own thing in life, the big man breaks that very rule and springs his progeny on the company.

by Petrichor Mon Sep 09, 2013 11:03 am

>>Nepotism becomes a huger deal when the guru of corporate governance in India sets a rule very early on in his company, that none of the founders' children will work in the company.<<

Did not know this...stand corrected.

PS. I think the current HBS, McKinsey type thinking is to work with family-owned firms without bothering too much about nepotism. Also see Ringling Bros. case for a detailed review of the concept of duty-of-loyalty.

by Petrichor Mon Sep 09, 2013 11:21 am

Merlot Daruwala wrote:
For everyone else, it is an obvious breach of shareholder interest - and therefore a corporate governance issue - when the company's key executive roles are staffed by individuals whose sole qualification is their privileged birth. In this particular case, all those impressive educational credentials might qualify Dr Murthy to a professorial vocation, but not to be assisting at the helm of a complex corporate turnaround.[/font][/font]

If we are discussing nepotism in general (and no longer the INFY instance), then it my opinion that if the Board is satisfied that the beneficiary of nepotism will have his/her first loyalty towards the company's interests, the company's returns to shareholders will not be compromised (best candidate for the job after reasonable search etc.), there is no case to be made for inferior corporate governance. The larger the company, the more professional the management structure, the less it is an issue that the nephew of the managing director is supervising the mailroom.

In fact I would argue that the term corporate governance applies more towards protection of shareholders' interests, structure of board and other such weighty matters rather than piddly hire-n-fire decisions unless there is some kind of significant corporate liability.

by Merlot Daruwala Mon Sep 09, 2013 11:41 am

Petrichor wrote:
PS. I think the current HBS, McKinsey type thinking is to work with family-owned firms without bothering too much about nepotism. Also see Ringling Bros. case for a detailed review of the concept of duty-of-loyalty.

Bwahaha..sorry to disabuse you about the McKinsey types but I hope you can see that it would be enromously detrimental to their own self-interest to be too finicky about these little things. They are paid agents of the proprietors and have zero interest in looking out for the minority shareholders. Their thinking on the matter is irrelevant to this discussion.

by Merlot Daruwala Mon Sep 09, 2013 11:49 am

Petrichor wrote:
Merlot Daruwala wrote:
For everyone else, it is an obvious breach of shareholder interest - and therefore a corporate governance issue - when the company's key executive roles are staffed by individuals whose sole qualification is their privileged birth. In this particular case, all those impressive educational credentials might qualify Dr Murthy to a professorial vocation, but not to be assisting at the helm of a complex corporate turnaround.[/font][/font]
If we are discussing nepotism in general (and no longer the INFY instance), then it my opinion that if the Board is satisfied that the beneficiary of nepotism will have his/her first loyalty towards the company's interests, the company's returns to shareholders will not be compromised (best candidate for the job after reasonable search etc.), there is no case to be made for inferior corporate governance. The larger the company, the more professional the management structure, the less it is an issue that the nephew of the managing director is supervising the mailroom.

In fact I would argue that the term corporate governance applies more towards protection of shareholders' interests, structure of board and other such weighty matters rather than piddly hire-n-fire decisions unless there is some kind of significant corporate liability.

Dear sir, this is not about loyalty but about competency. Board complicity in nepotism doesn't sanctify anything - it merely calls into question the board's own legitimacy. And stop trying to drag in red herrings about mailrooms and what not. We're talking about a new power center in Infosys, the Chairman's Office, that will oversee and override the existing power structures. And Dr Murty's lack of relevant credentials to be part of such a center.

You're welcome to your opinions on CG. But the classical boundary cover anything, big or small, which affects shareholder interests.

by Petrichor Mon Sep 09, 2013 12:29 pm

And since when did company management become a popularity poll with shareholders voting their likes and dislikes of individual appointments?!!

Dear MD...shareholders elect the board for a reason and there is a lot of agency-related issues that apply to the delegation of these powers. It is your belief that Rohan doesn't have the 'relevant credentials'. The Chairman of the INFY board doesn't think so and the board trusts him to make this call. Should INFY be beholden to every activist shareholder with minimal shareholding that has wannabe-aspirations to capture the mic and cry hoarse over sanctimonious vestiges of their OCD-addled interpretations of 'correctness' and their letters to editor?

Does Rohan get a org chart under him? Have execs been made to report to him?

Indians need to stop following Theory and try things out in Practice.

by southindian Mon Sep 09, 2013 12:49 pm

Rishi wrote:
Merlot Daruwala wrote:
Petrichor wrote:The issue is between NRN and the Board. In C-suites, people can choose whatever team they are comfortable with. Typical desi breast-beating and sanctimony here!!
That's true. Only, NRN is known for his holier-than-thou stance, positioning himself as a thought-leader on corporate governance in India. To see him go back on those very principles is a sad sad travesty.
Very simple.

His son was very young when he was mouthing off all those platitudes about corporate governance, ethics, integrity etc.

NRN did not realize that one day his fatherly instincts will take over.

How is Rohan's launch any different from KNidhi's, Sonia's, Amitabh's, Rakesh Roshan's, Mulayam's, Laloo's launch of their children in "conducive environments"?

If the children succeed they are hailed as great visionaries/leaders.

by Merlot Daruwala Tue Sep 10, 2013 1:03 am

Petrichor wrote:And since when did company management become a popularity poll with shareholders voting their likes and dislikes of individual appointments?!!

Strawman alert. Shareholder views barely count for much in a country where promoter families rule the roost but nepotism certainly takes the sheen of a company's corporate governance record and the stock trades at a diminished "management quality" premium, if not an outright discount, vis-a-vis peers with a better record. Some day, when you are bored enough to come down from your ivory tower and get your lily-white hands dirty with stock analyses, you might discover that similarly-performing family owned companies routinely trade at a discount versus publicly owned, professionally run companies. Guess what is the difference between the two? Yeah. The same N-word that is not such a huge deal for you.

Petrichor wrote:The Chairman of the INFY board doesn't think so and the board trusts him to make this call. Should INFY be beholden to every activist shareholder with minimal shareholding that has wannabe-aspirations to capture the mic and cry hoarse over sanctimonious vestiges of their OCD-addled interpretations of 'correctness' and their letters to editor?

Another strawman. No, Infy is not beholden to anybody and Infy's Chairman is free to appoint whoever he likes as part of the Chairman's Office. Only, when the leadership talent in the company, including potential CEO-candidates start heading for the exits as a consequence of such coterie-building, and the promised turnaround of the company takes much longer - if ever, the markets will punish the stock with further derating and the Board will have nobody else to blame for destroying shareholder wealth but themselves.

Petrichor wrote:Does Rohan get a org chart under him? Have execs been made to report to him?

Bwahahaha..Org charts?? Really?? Rich, coming from someone who in another moment will be exhorting Indians to be "practical".

Petrichor wrote:Indians need to stop following Theory and try things out in Practice.

Haha again. Btw, do similar practical considerations also govern your opinion on corruption? Is that also no huge deal for you?

by Petrichor Tue Sep 10, 2013 12:14 pm

Merlot Daruwala wrote:
Another strawman. No, Infy is not beholden to anybody and Infy's Chairman is free to appoint whoever he likes as part of the Chairman's Office. Only, when the leadership talent in the company, including potential CEO-candidates start heading for the exits as a consequence of such coterie-building, and the promised turnaround of the company takes much longer - if ever, the markets will punish the stock with further derating and the Board will have nobody else to blame for destroying shareholder wealth but themselves.

Are you referring to the leadership talent that presided over the anemic returns of the past few years?

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1378843200000&chddm=2512&chls=IntervalBasedLine&cmpto=NASDAQ:CTSH;NSE:TCS&cmptdms=0;1&q=NYSE:INFY&&fct=big&ei=qEEvUtjHJKnLiQLSSg

The rest of your points is pure speculation above.

by Petrichor Tue Sep 10, 2013 12:35 pm

Merlot Daruwala wrote:
Strawman alert. Shareholder views barely count for much in a country where promoter families rule the roost but nepotism certainly takes the sheen of a company's corporate governance record and the stock trades at a diminished "management quality" premium, if not an outright discount, vis-a-vis peers with a better record. Some day, when you are bored enough to come down from your ivory tower and get your lily-white hands dirty with stock analyses, you might discover that similarly-performing family owned companies routinely trade at a discount versus publicly owned, professionally run companies. Guess what is the difference between the two? Yeah. The same N-word that is not such a huge deal for you.

Family-owned is quite distinct from Family-managed. If you have any research on this super-granular attribution analysis of company performance due to 'management quality' and how to separate it out and refine it further into gaps between the nephew's performance and another equivalent IIT-IIM race horse, please do share.

There are many examples of family owned and professionally run companies, both in India and other places.

by Idéfix Tue Sep 10, 2013 12:48 pm

Petrichor wrote:2. Corporate Governance standards only focus on duty-of-loyalty. Nepotism, per se, is not a huge deal...

ps. why don't y'all find nepotism highlighted in a discussion of "corporate governance standards" and share it here!!!

Where did you pick up the notion that corporate governance standards only focus on loyalty? If a CEO appoints his son to a key position, the son may be very loyal to the company, but there is still a potential conflict of interest for the CEO. Such conflicts of interest are very much related to corporate governance.

Infosys's own corporate governance policy states this about board members:

Generally, the members are between 40 and 60 years of age, and are not related to any Executive Directors or Independent Directors.

http://www.infosys.com/investors/corporate-governance/Documents/Board-composition.pdf

If duty of loyalty was all that mattered, why do they need this provision in their policy on board composition?

by Marathadi-Saamiyaar Tue Sep 10, 2013 1:14 pm

Petrichor wrote:
Merlot Daruwala wrote:
Strawman alert. Shareholder views barely count for much in a country where promoter families rule the roost but nepotism certainly takes the sheen of a company's corporate governance record and the stock trades at a diminished "management quality" premium, if not an outright discount, vis-a-vis peers with a better record. Some day, when you are bored enough to come down from your ivory tower and get your lily-white hands dirty with stock analyses, you might discover that similarly-performing family owned companies routinely trade at a discount versus publicly owned, professionally run companies. Guess what is the difference between the two? Yeah. The same N-word that is not such a huge deal for you.
Family-owned is quite distinct from Family-managed. If you have any research on this super-granular attribution analysis of company performance due to 'management quality' and how to separate it out and refine it further into gaps between the nephew's performance and another equivalent IIT-IIM race horse, please do share.

There are many examples of family owned and professionally run companies, both in India and other places.

Agree that kids of Bill Gates, Warren Buffet, Andy Grove, Michael Dell, and Seymore Hersch are not as smart as Dr. Rohan Murthy, BS, MS, PhD (Harvard)

by Petrichor Tue Sep 10, 2013 1:21 pm

First, on conflict of interest: Yes, if the CEO appoints his son to a key position that is construed to be directly within the supervisory ambit of the CEO regular HR policies on conflict of interest would come into play. And if that son is merely the head of the mailroom, such conflicts could be wa(i)ved away.

Second, on the board composition: The Directors are agents of the shareholders. Whereas the people hired to work for the company are employees. INFY policy on board composition addresses not a conflict of interest or potential for flaw in duty-of-loyalty vows but a sensible approach to diversity of the Board and promote healthy board dynamics. Equally there are many family-owned businesses where this might not be the case and that in, and of itself, does not vitiate duty-of-loyalty standards.

by Idéfix Tue Sep 10, 2013 1:25 pm

Petrichor wrote:First, on conflict of interest: Yes, if the CEO appoints his son to a key position that is construed to be directly within the supervisory ambit of the CEO regular HR policies on conflict of interest would come into play. And if that son is merely the head of the mailroom, such conflicts could be wa(i)ved away.

Second, on the board composition: The Directors are agents of the shareholders. Whereas the people hired to work for the company are employees. INFY policy on board composition addresses not a conflict of interest or potential for flaw in duty-of-loyalty vows but a sensible approach to diversity of the Board and promote healthy board dynamics. Equally there are many family-owned businesses where this might not be the case and that in, and of itself, does not vitiate duty-of-loyalty standards.

In this case, the son will be directly supervised by the father, while both are employees of the firm. INFY has positioned itself as "different" and "better" when it comes to corporate governance in India, and the rules against family members of board members being added to the board are part of that difference. That indicates a higher standard than a simple loyalty test.

by Petrichor Tue Sep 10, 2013 1:35 pm

NRN is not an employeee. He is technically an agent of the shareholders. And he is an 'executive director' in that he has an executive contract with the board, for five years, to supervise and do what he deems fit. He hired a stenographer for his office and he had hired another individual who he deems fit for 'his' office. This individual was then promoted by the Board to be a VP of the company. That individual also has 5 years of employment. I see no technical issue here so far.

If the main complaint is that NRN had said he will never hire his children and he has done so;
or INFY put out press releases or news conferences that they are 'different' and 'better' because of this prohibition on relatives, in the past;

then obviously that would be hypocrisy and I am not arguing against that at all.

by Idéfix Tue Sep 10, 2013 1:47 pm

Petrichor wrote:NRN is not an employeee. He is technically an agent of the shareholders. And he is an 'executive director' in that he has an executive contract with the board, for five years, to supervise and do what he deems fit. He hired a stenographer for his office and he had hired another individual who he deems fit for 'his' office. This individual was then promoted by the Board to be a VP of the company. That individual also has 5 years of employment. I see no technical issue here so far.

If the main complaint is that NRN had said he will never hire his children and he has done so;
or INFY put out press releases or news conferences that they are 'different' and 'better' because of this prohibition on relatives, in the past;

then obviously that would be hypocrisy and I am not arguing against that at all.

INFY's own corporate governance policy treats Executive Directors as part of the management team, i.e. employees. It says:

The CEO is responsible for corporate strategy, brand equity, planning, external contacts and other management matters. He is
also responsible for achieving the annual business targets and acquisitions. The CEO, the other Executive Directors, and senior management personnel are responsible for achieving targets. They make periodic presentations to the Board on their responsibilities
and performance.

by Petrichor Tue Sep 10, 2013 1:52 pm

>>management team, i.e. employees

The terms are not synonymous. Executive directors may not be fired for cause. They may be relieved of their executive functions. They will continue to be directors i.e., agents of the shareholders. They can only be stripped of their directorship by the shareholders.

by Idéfix Tue Sep 10, 2013 1:56 pm

Petrichor wrote:>>management team, i.e. employees

The terms are not synonymous. Executive directors may not be fired for cause. They may be relieved of their executive functions. They will continue to be directors i.e., agents of the shareholders. They can only be stripped of their directorship by the shareholders.

So executive directors are employees as well as directors. It is in his role as an executive (i.e. employee) that the senior Murthy needed an executive assistant, and it is in that role that he will supervise his son.

by Petrichor Tue Sep 10, 2013 2:24 pm

And there are two very special contracts that he and his son have executed with the board that dictate how it will all pan out. Apparently the contracts have been filed with regulators there - wonder if it is public domain. Else, we will be speculating.

by Marathadi-Saamiyaar Tue Sep 10, 2013 3:13 pm

Petrichor wrote:And there are two very special contracts that he and his son have executed with the board that dictate how it will all pan out. Apparently the contracts have been filed with regulators there - wonder if it is public domain. Else, we will be speculating.

Sorry...by today's modern management practices , this is unethical and may even be illegal, EVEN in India, in a publicly held company.

SaamiYaar has spoken.

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