Se­shasayee Sig­nals Truce with Founders

Infy man­age­ment & founders agree not to let dis­putes spill into pub­lic space Core Is­sues not Ad­dressed: Bala

The Economic Times - - Front Page - Our Bureau

In­fosys chair­man R Se­shasayee sig­nalled the first signs of a rap­proche­ment with the IT com­pany’s founders to in­vestors on a con­fer­ence call where he re­lated news of his con­ver­sa­tion with the founders on Sun­day aimed at en­sur­ing dis­putes did not spill over into the me­dia. There would likely be far fewer pub­lic bat­tles now, he told the in­vestors.

“I spoke to the founders day be­fore yes­ter­day and we agreed that we should not have these dis­cus­sions through the me­dia. It does not re­flect well on the in­sti­tu­tion. We have a re­newed com­mit­ment not to let this spill into the pub­lic space,” Se­shasayee said on the call which took place on Tuesday evening.

The founders would con­tinue to give their views to the com­pany, he added.

Se­shasayee also listed out steps such as in­sti­tu­tion­al­is­ing a sev­er­ance prac­tice to pre­vent such is­sues from aris­ing in the fu­ture.

In an in­ter­view with ET last week, In­fosys co­founder NR Naray- ana Murthy said cor­po­rate gover­nance stan­dards at the com­pany had dropped and that an out­sized sev­er­ance pay­ment to some em­ploy­ees could look like ‘hush money’.

Se­shasayee said the board would also look at the vari­able pay that would be paid to CEO Vishal Sikka this year. An­a­lysts had asked if there was enough flex­i­bil­ity in how the pay­ment would be made even if cer­tain met­rics had not been met due to a tougher ma- cro-eco­nomic en­vi­ron­ment.

“There is flex­i­bil­ity for the board to balance the mo­ti­va­tion to the CEO and main­tain the fidelity to the tra­jec­tory of the am­bi­tious tar­gets set. That will be the role of the board,” Se­shasayee said.

Sikka’s salary had been raised to $11 mil­lion from $7 mil­lion last year and was one of the is­sues lead­ing to con­cerns among the founders.

In­fosys jus­ti­fied the in­crease, say­ing a greater por­tion of the salary in­crease was in the form of vari­able pay which was tied to strict and steep tar­gets. The Ben­galuru-head­quar­tered IT firm has said it wants to reach $20 bil­lion in rev­enue by 2020, with a 30% mar­gin. In­fosys is hov­er­ing at the $10 bil­lion in an­nual rev­enue mark with a mar­gin of 25%.

The em­bat­tled board chair­man also dug his heels in, say­ing he had no plans of leav­ing the board. “There was a sug­ges­tion that I should step down given the lapses. Given the sup­port of the board, I have de­cided not to do that,” Se­shasayee said.

For­mer In­fosys ex­ec­u­tives V Balakr­ish­nan and TV Mo­han­das Pai have said Se­shasayee should be ac­count­able for lapses and step down. Founder Murthy has also sug­gested the board ap­point a co-chair­man ‘schooled in In­fosys val­ues’.

An­a­lysts on the call seemed far more con­cerned about the in­creas­ingly ac­ri­mo­nious spat’s im­pact on cus­tomers and the com­pany’s per­for­mance. In­sti­tu­tional share­holder Op­pen­heimerFunds also pointed out that the dis­trac­tion of the board bat­tle was com­ing at the worst pos­si­ble time for the IT com­pany – with un­prece­dented tech­nol­ogy changes and pro­tec­tion­ism in ma­jor mar­kets rais­ing their heads. CEO Vishal Sikka had said the com­pany had not seen any neg­a­tive fall­out on the client front.

“There is no ques­tion about this from clients. In fact, over the last four days sev­eral clients have writ­ten in with strong words of sup­port. I have re­ceived six-seven emails from large clients about this,” Sikka said. He said he has talked to top per­form­ers and man­age­ment to calm the sit­u­a­tion.

Sikka also said that of the top man­age­ment, only chief operating of­fi­cer UB Pravin Rao and he were in­volved in dous­ing the fires that had been lit over the last few days. “Only my­self and Pravin spend time on this. The rest of the man­age­ment is fo­cused on their job,” Sikka said.


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