Narayana Murthy says corporate governance has declined at Infosys, seeks appointment of 'good people'
Even as Infosys denied any governance lapses and emphasised that its board was "fully aligned with the strategic direction" of CEO Vishal Sikka, founder Narayana Murthy has raised questions about 'hush money', seeking an overhaul of the board.
In an interview to Economic Times, Narayana Murthy questioned if large severance payments to departing employees, particularly ex-CFO Rajiv Bansal, constituted “hush money“ and bemoaned what he described as a “concerning drop“ in corporate governance at the company.
There have been reports of simmering differences between the CEO and its founders over issues like the pay hike given to Sikka and the severance package of two former senior executives. Infosys has, however, defended itself saying all these decisions were made "in the overall interest of the company" and that it had made "full disclosures" on all developments.
However, Murthy has sought the appointment of “good people like“ NYU Stern professor Marti Subrahmanyam as co-chairman; the replacement ofJeffrey Lehman as the head of an important board committee. He has also sought the appointment of unnamed former Infosys employees “schooled“ in the company's values as directors.
When asked about declining corporate governance, Murthy stated that the founders worked hard till the day they left the company voluntarily on October 14, 2014, adding, they have seen "a concerning drop in governance standards at Infosys, since June 1, 2015," when R Seshasayee took over as chairman of the board.
Murthy also said that good governance is about doing what is fair in a transparent manner with full accountability accepted by senior leaders and board members for their actions.
Speaking about how the chairman could have handled the issue of severance pay, Murthy said, "The chair of the Remunerations and Nominations Committee (Jeffrey Lehman) must have convened a meeting, discussed the prevailing practice of the company in the matter of paying huge severance pay, checked whether there is any special need for moving away from that policy, its impact on the reputation of the company, its impact on employee morale, and the future financial liability for the company. The committee should then have voted against it since I do not see any special need in this case."
Amid reports of tension between Infosys founders and its management, CEO Vishal Sikka on Thursday asked employees not to get distracted by speculations that question the company's commitment to "governance, integrity and values".
"...let us keep a sharp focus on the execution of our strategy. Let us not get distracted by media speculation that is designed to stir up gossip or rehash old rumours or speculate on the unknowns, around visas, or anything that questions our commitment to governance, integrity and values, in order to generate headlines and create, in the words of The Wire, Eardrum Buzz," Sikka said in an internal mail.
"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.
Read the full interview here.
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