Infy Management Should not Get Distracted by Noise: Seshasayee
Chairman defends decisions that some founders criticised, says co committed to highest standards of corporate governance
Infosys chairman R Seshasayee defended the management decisions that have sparked an escalating row with the IT company’s founders led by NR Narayana Murthy. Breaking his silence on the matter, Seshasayee told Kala Vijayraghavan and Lijee Philip in an interview that he had no intention of quitting since the board had declared its full faith in his leadership. He also rejected the accusation by former board member TV Mohandas Pai that the board hadn’t been communicating with the Infosys founders. Murthy had alleged breaches of corporate governance standards in an explosive interview with ET last week. These related to what was considered an excessive severance package for former CFO Rajiv Bansal and CEO Vishal Sikka’s compensation. Seshasayee said less than a third of Bansal’s agreed severance had been paid out and that Sikka’s compensation was fully aligned with the interests of stakeholders. Edited excerpts:
There is speculation you will step down.
The board has expressed its full confidence in my leadership, as has been made clear in the press release. The shareholders elected me to the board, and the board sees no reason whatsoever for me to step down. Whatever decisions that have been taken are collectively taken by the board. I have been given a job to do and I intend doing it conscientiously.
This is not a fight for control... so what is the issue?
We don't have an issue with anyone. As you say, this is not a fight for corporate control. We are a professional board and we are committed to uphold the highest stan- dards of governance that this company has always been known for. We recognise that there could be different viewpoints when it comes to a business judgment. We are sensitive to these viewpoints from different stakeholders and will always calibrate our actions, taking these into account. Mohandas Pai says there is no engagement between the founders and the board... why do you need a law firm here?
This is completely untrue. We have been continually engaged with the founders. I and the board mem- bers collectively have had several conversations with the founders, over the last one year. We had a meeting between the board members and the promoters as late as January 2017! Cyril Amarchand Mangaldas have been engaged, not because there is a dispute, but in order to receive inputs on governance processes and structures, including board composition, not only from the promoters, but also from other key stakeholders. Several names are being suggested to be part of the board. Will the board composition change?
If there are proposals for nominations to the board from different groups of shareholders, we need a process to select them, and ensure fair representation within the framework of law, while not compromising the character of an independent board. Cyril Amarchand will guide us in this process.
Do you think the compensation paid to (former chief financial officer) Rajiv Bansal was too high? What are the concerns of the founders here? First, we are talking about a decision that was taken in October 2015. The decision was to pay Rajiv Bansal a severance pay of Rs 17.38 crore. The circumstances were explained several times. This took into account complex circumstances and it was a bona fide business judgement.
Second, the amount that has actually been paid is only Rs 5.2 crore! The balance payments have been suspended since April 2016 and the reasons for suspension have also been explained.
Third, please see the press release dated October 21, 2016. It’s a suo moto disclosure comprehensively explaining the investigations done on the basis of an anonymous complaint that alleged that this could have perhaps been hush money, the findings by independent and reputed law firms after exhaustive investigation that there was no impropriety whatsoever, and the disclosures made thereon. what more needs to be done.
Why have these issues surfaced now? As the chairman of Infosys, what are your biggest priorities now? As the chairman, my biggest priority is to ensure that the management does not get distracted by all these noises and continues to focus on the many challenges and win the market battle while the board continues to do its job of governance to the highest standards.
Infosys is in a unique situation in terms of the board managing the company and the business environment it is facing. Infosys has a unique construct in terms of a professional board overseeing a professional management.
In a construct where the owner or the promoter or the chief executive is the chairman, it’s easy to function, because the power centre is given. Right or wrong, everyone will obey the leader. There is no room for dissent beyond what the leader will permit. In our construct, there is a phenomenal effort required to build consensus within the board, between the board and the management. Given this complexity, you can see how successful we have been to have a cohesive board and an aligned management.
And, what's more, we are judged by standards far higher than any other company.
How important is it for the founders and the professional board to be in sync with each other? As a board, our task is to find a way to move forward in the best interest of all shareholders collectively. Take the CEO Unfortunately, it does. We have no choice but to work harder. It takes courage and commitment to keep running uphill while a rain of arrows are being shot at you. But we are determined to succeed.