‘Huge’ severance pays heat up Infosys beef
new delhi — The rift between founders and the board of Infosys came to the fore with co-founder N.R. Narayana Murthy raising questions about the “huge” severance package of ₹23 crore paid to its former CFO, leading to disquiet among employees and investors.
Murthy said he would not have flagged concerns if it had not been for the 1,800 e-mails he received from employees and investors highlighting the severance pay and governance issues at Infosys.
“If we had not seen the kind of thing that happened, if I had not received 1,800 e-mails from employees, from various investors about the severance pay, about some or the other governance issues, I would have had no worries,” he said.
Stating that no severance packages were given to employees like Mohandas Pai, V. Balakrishnan, B.G. Srinivas and Ashok Vemuri when they quit, Murthy said: “Therefore, there is a little bit of a consternation as to why such a huge severance pay was paid.”
“Let me make it very very clear that it is not the management that concerns me. I think we are quite happy with Vishal Sikka; he is doing a good job. However, what concerns some of us, particularly the founders and seniors, former Infoscions is that there have been certain acts of governance that could have been better,” Murthy told news channel CNBC-TV18.
He cited the example of a 30-month severance pay being given to former chief financial officer Rajiv Bansal that amounted to ₹23 crore.
He said there is no other case in the history of corporate India in the last 50 years where a departing CFO was paid 30 months of severance pay.
“So, it is not that common [a practice]”, he added.
“The chairman said at the AGM that he [Bansal] had some highly-confidential competitive information. But anybody who knows our industry can quickly come to the conclusion that there are so many people in the company, senior people that have such competitive information,” Murthy contended. He added that there were several senior people in Infosys who had left and had such competitive information, but the company did not pay anyone of them.
“So, therefore it has led to some kind of confusions... we are all judged by our actions... it is very important for us to not only do the right thing but also to be seen doing the right thing. I think that is the whole issue,” Murthy said.
Citing an instance of a former legal counsel who was paid 12 months of severance pay, Murthy pointed out: “That is again a little bit of consternation”.
“Overall, the issue is whether the renumeration and nominations committee and the board is actually spending adequate time on these issues, are they asking questions like is this what happens normally in India or what will the world think of us if we pay such huge sums or are we going to pay such huge sums to key people that leave the company,” he said. Murthy said that the committee and the board also needs to look into aspects like financial liability and implications on the company.
“There are lots of questions that need to be asked before you come to a conclusion to change the policy from three months severance to such a large sum, that is the issue,” Murthy added.
“The board is fully-aligned with the strategic direction of Dr. Vishal Sikka and is very appreciative of the initiatives taken by him in pursuance of this transformation,” Infosys chairman R. Seshasayee said in a statement.
“Vishal and the board, while being pleased with the company’s resumption of industry leading performance on many parameters, are keen to further accelerate the progress and achieve even more shareholder value increase, on the foundation of sound governance. We will remain undistracted with this focus,” he added. — PTI