Infy founders, board clash over governance, compensation

The rift between founders of Infosys and its board spilled out in the open today with co-founder Narayana Murthy questioning executive compensation and corporate governance at India's second biggest software services exporter led by Vishal Sikka.
"Let me make it very very clear that it is not the management that concerns me. I think we are quite happy with (CEO) Vishal Sikka. He is doing a good job. However, what concerns some of us particularly the founders, and seniors, former Infoscions is that there have been certain acts of governance that could have been better," Murthy said.
Murthy, along with other co-founders Nandan Nilekani and S Gopalakrishnan are believed to have written to Infosys board asking why Sikka's compensation was raised and hefty severance packages offered to two top-level executives who quit the company.

Sikka was paid Rs 48.7 crore in base salary, bonus and benefits last year as compared to base salary of Rs 4.5 crore for a partial period in 2015.
Murthy has questioned "paying the former CFO (Rajiv Bansal) a 30-month severance pay which amounted to Rs 23 crore."
"The Chairman said at the AGM that he had some highly confidential, competitive information but anybody who knows our industry can quickly come to the conclusion that there are so many people in the company, senior people that have such competitive information.

"In Infosys itself, we have had 2 CFOs who left before and several other senior people who are on the boards...Senior VPs, etc who have such competitive information but we didn't pay anyone of them. So therefore, it has led to some kind of confusion...," he told news channel CNBC-TV18.

Asked about market speculations that Bansal was paid off because he had damaging information on Infosys, Murthy said: "I hope it is not the case."
Former executives Mohandas Pai, Ashok Vemuri, V Balakrishnan and B G Srinivas were never paid any severance pay, he added.
Infosys, however, has denied any governance lapses.
"The board is fully aligned with the strategic direction of Dr Vishal Sikka and is very appreciative of the initiatives taken by him in pursuance of this transformation," Infosys Chairman R Seshasayee said in a statement.
"Vishal and the board, while being pleased with the company's resumption of industry leading performance on many parameters, are keen to further accelerate the progress and achieve even more shareholder value increase, on the foundation of sound governance. We will remain undistracted with this focus," he added.

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"As a board member, I would certainly say that there has been no breach in governance issues. Yes, there may be judgement calls on which we differ with the promoters, but I think over time we will try and see how we can allay these concerns that the promoters have in terms of the way the board conducts itself," Mazumdar-Shaw said in Bengaluru.
Former CFOs Mohandas Pai and V Balakrishnan have, however, questioned the current management at Infosys.
While Balakrishnan raised concern over the "obscene severance packages", saying it reeked of impropriety, Pai favoured Murthy's stance for re-constitution of the Board.

They both had previously written to board of Infosys seeking return of cash to shareholders via share buybacks.
Murthy went on to cite a Kannada proverb that if you sit under a toddy tree and drink milk, people will think you are drinking toddy (local liquor).
"So, therefore it is very very important for us to not only do the right thing but also to be seen doing the right thing. I think that is the whole issue," he said.
Murthy, who was led Infosys as Chairman twice, along with co-founder Nandan Nilekani, had previously voted against Sikka's salary raises.

Sikka's tenure as CEO was extended in April last year for another five years through 2021.
Murthy said he would not have flagged concerns if it had not been for the 1,800 e-mails he received from employees and investors highlighting the severance pay and governance issues at Infosys.
On industry practice concerning CEO pay, Murthy said, "I think as Mr Mohandas Pai said this morning, that there is not one other case in the history of corporate India in the last 50 years where a departing CFO was paid 30 months of severance pay. So it is not that common."

Stating that no severance packages were given to employees like Mohandas Pai, V Balakrishnan, B G Srinivas and Ashok Vemuri when they quit, Murthy said: "Therefore, there is a little bit of a consternation as to why such a huge severance pay was paid".
Murthy has suggested that NYU Stern professor Marti Subrahmanyam be appointed as co-chairman and that former Infosys employees "schooled" in the company's values be roped in as directors.
In an e-mailed reply, Subrahmanyam said while he does not have any specific views about the affairs of Infosys, he would be "happy to help with my counsel if called upon to do so".

Pai, who emphasised that the founders do not want to come back on the board, said they were raising these concerns as they are major shareholders in the company.
"Let me say, none of us want to come back on the Board. We have no vested interest. We are not waiting in the queue. We are doing well in our lives but as shareholders, we have a right to ask and we are asking, that's all," he said.
Infosys founders, along with their family members, owned 12.75 per cent in the company at the end of December 2016, as per the data available on the BSE.

Meanwhile, Union Minister Nirmala Sitharaman today refused to be drawn into the controversy, but maintained that she does not see any conflict of interest in the appointment of Punita Sinha, wife of Union Minister Jayant Sinha, as an independent director on the company's board.