Risk & Compliance

Infosys Fines Exec for Tardy Reporting

Audit committee slaps a hefty fine on a top executive for "inadvertently" violating company's stock sale rule.
Marie LeoneAugust 30, 2006

Infosys Technologies, a Nasdaq-listed software and IT consulting company based in India, has fined one of its executives what amounts to more than one-quarter of his salary for breaking the company’s code of conduct.

Srinath Batni, an executive director who heads up the Strategic Groups unit for the Bangalore-based Infosys, was fined about $10,700 for failing to notify the company, in a timely manner, that he sold 10,000 company shares the week before, according to a regulatory filing. Infosys’ insider trading rules state that directors and officers may buy or sell company stock only after prior notification is given to the company. Further, notification must also be given within one working day of the stock sale.

Batni notified the company of his intent to sell shares, however, he was eight days late reporting the completed transaction to the company. Although the company said Batni’s violation was inadvertent, it was considered a technical violation in the eyes of the Infosys audit committee, which is responsible for monitoring management’s compliance with business conduct standards.

Batni, whose annual salary is $38,330, collected about $144,700 in total pay (salary, bonus, and other cash compensation) in 2005, and was directed by the board to pay his fine to charity.

The fine may not seem like a significant penalty to top executives working at Infosys’ U.S.-based competitors, such as IBM Global Services, Accenture, or EDS. But consider that on a percentage basis, Batni’s fine is equivalent to slapping EDS chief executive Michael Jordan with a $208,000 fine. Jordan took home $2.8 million last year in salary and bonuses last year.