Seshasayee Signals Truce with Founders
Infy management & founders agree not to let disputes spill into public space Core Issues not Addressed: Bala
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.