From Narayana Murthy to Mohandas Pai: Why they feel Infosys must explain what it is hiding

BT Online   New Delhi     Last Updated: February 11, 2017  | 12:04 IST
From Narayana Murthy to Mohandas Pai: Why they feel Infosys must explain what it is hiding

Even before corporate governance issue between Ratan Tata and Cyrus Mistry could settle, it is back again and this time at India's second largest software giant - Infosys.

Differences between the promoters of Infosys and the board erupted over Rs 49 crore package of CEO Vishal Sikka and the hefty severance packages given out to two top executives.

Reports suggest that Vishal Sikka gets a package which is much higher than his counterparts in other Indian IT companies. And, this sparked a debate over corporate governance and transparency at Infosys.  

Even though Infosys CEO Vishal Sikka appealed employees not to get distracted by 'gossip' about Infosys, the dust is unlikely to settle anytime soon as company's founding members have started reacting very strongly over the issue.

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Here are the voices that matter

NR Narayana Murthy
In an interview to Economic Times, Infosys co-founder NR Narayana Murthy said that such 'generosity' - severance pay - points to utter arrogance towards honest employees, total lack of fiduciary responsibility, and an unbelievable lack of application of mind.

He said: "Providing huge severance pay (with 100 per cent variable) to some departing employees while giving only 80 per cent variable for employees in the company is one such example. Such payments raise doubts whether the company is using such payments as hush money to hide something."

"First is for the chair of the nomination and remuneration committee and the chair of the board to accept their mistakes and show contrition. Second is to follow the good practices of pre-2014 Infosys and improve upon them. Third is for the board to consult from time to time experts like Mohandas Pai, Bala, Marti Subrahmanyam and Omkar Goswami in finance and good governance," Murthy further suggested.

Mohandas Pai
Ex-Chief Financial Officer Mohandas Pai raised the similar concern and said that board should give a detailed answer and not take shelter under 'bland' statement that decisions were taken in the interest of the company.

"The founders who have built the company and created a value system have raised serious issues. As far as I know, no CFO in India has got a 24-month separation," Pai said. He was referring to ex-CFO Rajiv Bansal's severance package of Rs 17.38 crore, equaling 24 months of pay.

He also explained as to why the board should look at high salaries and look at what shareholders have got out of it. "From April 2011 till January 2017, the shareholder value has not increased at all and the market capitalisation of the Bengaluru-based IT major has also remained at the same level during the period," he said.

"And if you look at how shareholders have suffered in the last five years compared to the salaries paid to the management now and what was paid to the management earlier, the high compensation paid to people is excessive. It's "very good shareholders" who are former founders and are asking tough questions to the board," ex-CFO said.

JN Gupta, Former ED, SEBI
Joining Murthy and Pai, SEBI's Former Executive Director JN Gupta also expressed his displeasure over the current issue and suggested the board to talk to shareholders. "Infosys was known for its gold standard of governance and somehow or other, this current episode has dented its image. So the best thing would be to go ahead and engage with the shareholders who have raised the issue and see to it that all the issues are settled," former SEBI ED said"

"But then the question comes who is right. Both will lay claim to being right and we really do not know who is right. That is why a third party is an ideal solution to settle this issue because then nobody  can blame that it was a biased opinion. Anyway one thing is very clear if the disclosures have not been proper, something has been hidden and then it is not up to the standard that has been set by Infosys in the corporate governance. I would say Infosys has to reset its clock and come back to the same governance standard which it followed earlier," Gupta said.


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