No breach of corporate governance practices, asserts Infy Chairman

Differences between Infosys’ founders and the board continued on Monday with the company’s Chairman R Seshasayee dismissing all allegations of a breach in corporate governance and, at the same time, calling for the need to have a professionally-run board and management.

Terming it a difference of perception due to cultural gap, Seshasayee gave a point-by-point rebuttal of all issues raised by Infosys’ founders, particularly NR Narayana Murthy. Defending the pay hike given to CEO Vishal Sikka, Seshasayee said, “We hired a global consultant to benchmark the compensation with that of other US companies. We wanted to ensure that we give motivated compensation.

“The company used postal ballot for the approval of Vishal’s compensation as a measure of good governance practice and 98 per cent were in favour,” he said.

Sikka took over as the CEO of the firm on August 1, 2014. He was awarded a 55 per cent hike in compensation in February 2016. Murthy along with other founders, Kris Gopalakrishnan and Nandan Nilekani wrote to the board expressing their concerns over this pay hike.

Infosys’ founders, who own 12.75 per cent of the firm, have also questioned severance payouts given to others, particularly to former finance head Rajiv Bansal.

Seshasayee insisted there was no lapse in governance. He said that while the amount agreed upon was ₹17.3 crore, Bansal was actually paid ₹5 crore, adding that India’s second-largest software exporter has conducted a thorough probe after it received a whistle-blower complaint over the issue.

Sikka also defended Bansal saying that the decision to let him leave the company was made because of a lack of chemistry. Former Infosys CFO TV Mohandas Pai, however, said there is still no clarity around who negotiated this package, especially considering the fact that in India, no employer gives more than three months’ severance package.

Responding to speculations that the company had hired a law firm to mediate with the founders, Seshasayee said law firm Cyril Amarchand Mangaldas was not brought in to mediate but to give a roadmap on governance.

“If you have a promoter-led organisation, you will tend to see a board with a unified viewpoint, representing the promoters’ viewpoint,” he said, talking about the importance of a professionally-run board and management.

Seshasayee said the board had a discussion with Murthy and wanted to resolve the matter amicably without letting it spill out to the media and insisted that such events create huge distraction for the company. Sikka said he continues to maintain a ‘heart-felt relationship’ with Murthy, talking about how on Monday morning the two were chatting over Sikka’s Apple Watch. “We have no issue with the promoters. I deeply value their advice,” Sikka said.