Note : The above form can be used to intimate the moderators regarding abuse of the platform.
The following table compares Satyam's principal corporate governance practices to those required of U.S. companies.
Standard for U.S. Listed Companies
Our Practice
Director Independence
•
Five of Satyam's nine directors, namely Dr. (Mrs.) Mangalam Srinivasan, Mr. Vinod Dham, Prof. M Rammohan Rao, Mr. T R Prasad and Prof. V S Raju are independent within the meaning of the NYSE standards.
•
A majority of the board must consist of independent directors.
Independence is defined by various criteria including the absence of a material relationship between the director and the listed company. For example, directors who are employees, are immediate family of the chief executive officer or receive over $100,000 per year in direct compensation from the listed company are not independent. Directors who are employees of or otherwise affiliated through immediate family with the listed company’s independent auditor are also not independent.
•
The non-management directors of each company must meet at regularly scheduled executive sessions without management.
•
Satyam's non-management directors do not meet periodically without management directors.
Audit Committee
•
Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Securities Exchange Act. The rule requires that the audit committee (i) be comprised entirely of independent directors; (ii) be directly responsible for the appointment, compensation and oversight of the independent auditor; (iii) adopt procedures for the receipt and treatment of complaints with respect to accounting and auditing issues; (iv) be authorized to engage independent counsel and other advisors it deems necessary in performing its duties; and (v) be given sufficient funding by the board of directors to compensate the independent auditors and other advisors as well as for the payment of ordinary administrative expenses incurred by the committee.
•
The company has an audit committee which meets all of the requirements of Rule 10A-3.
•
The audit committee must consist of at least three members, and each member must be independent within the meaning established by the NYSE.
•
Satyam's audit committee consists of four members and all the members are independent under the NYSE’s rules.
•
The audit committee must have a written charter that addresses the committee’s purpose and responsibilities.
Satyam's audit committee has a charter outlining the committee’s purpose and responsibilities.
At a minimum, the committee’s purpose must be to assist the board in the oversight of the integrity of the company’s financial statements, the company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence and the performance of the company’s internal audit function and independent auditors.
The audit committee is also required to review the independent auditing firm’s annual report, describing the firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review or peer review of the firm and any steps taken to address such issues. The audit committee is also to assess the auditor’s independence by reviewing all relationships between the company and its
auditor. It must establish the company’s hiring guidelines for employees and former employees of the independent auditor.
The committee must also discuss the company’s annual audited financial statements and quarterly financial statements with management and the independent auditors, the company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies, and policies with respect to risk assessment and risk management. It must also meet periodically with the internal auditors and the board of directors.
•
Each listed company must have disclosed whether their board of directors has identified an Audit Committee Financial Expert, and if not the reasons why the board has not done so.
•
Satyam do not have an individual serving on its audit committee as an “Audit Committee Financial Expert,” as defined in applicable rules of the Securities and Exchange Commission. This is because its board of directors has determined that no individual audit committee member possesses all of the attributes required by the definition of “Audit Committee Financial Expert.”
•
Each listed company must have an internal audit function.
•
Satyam has a separate department for its internal audit function.
Compensation Committee
•
Listed companies must have a compensation committee composed entirely of independent board members as defined by the NYSE listing standards.
•
Satyam's compensation committee has four members, each of whom is independent within the meaning of the NYSE standards.
•
The committee must have a written charter that addresses its purpose and responsibilities. These responsibilities include (i) reviewing and approving corporate goals and objectives relevant to CEO compensation; (ii) evaluating CEO performance and compensation in light of such goals and objectives for the CEO; (iii) based on such evaluation, reviewing and approving CEO compensation levels; (iv) recommending to the board non-CEO compensation, incentive compensation plans and equity-based plans; and (v) producing a report on executive compensation as required by the Securities and Exchange Commission to be included in the company’s annual proxy statement or annual report. The committee must also conduct an annual performance self-evaluation.
•
Satyam's compensation committee reviews among other things its general compensation structure, and reviews and recommends the compensation and benefits of directors and the chief executive officer, subject to ratification by the Board of Directors.
Nominating/Corporate Governance Committee
•
Listed companies must have a nominating/corporate governance committee composed entirely of independent board members.
•
Satyam do not have a nominating/corporate governance committee.
The committee must have a written charter that addresses its purpose and responsibilities, which include (i) identifying qualified individuals to become board member; (ii) selecting, or recommending that the board select, the director nominees for the next annual meeting of shareholders; (iii) developing and recommending to the board a set of corporate governance principles applicable to the company; (iv) overseeing the evaluation of the board and management; and (v) conducting an annual performance evaluation of the committee.
Equity-Compensation Plans
•
Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with
•
The Company is in compliance with this requirement.
limited exceptions.
Corporate Governance Guidelines
•
Listed companies must adopt and disclose corporate governance guidelines.
•
The company is fully compliant with Clause 49 of the listing agreement of Indian Stock Exchanges, with regard to corporate governance guidelines.
Code of Business Conduct and Ethics
•
All listed companies, U.S. and foreign, must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.
•
Satyam has adopted a Code of Business Conduct and Ethics Policy, which is available at www.satyam.com.
From the above dislosures it appears that Satyam was not following all standard corporate governance practices as required by US laws.
