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Are Infosys promoters unhappy with Vishal Sikka?

There is a growing divide between Infosys founders and its CEO Vishal Sikka, according to a report by The Times of India. 

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There is a growing divide between Infosys founders and its CEO Vishal Sikka, according to a report by The Times of India

According to the report, There are four main points of contention - a departure from company values, a spike in Sikka's compensation, appointment of Union Minister Jayant Sinha's wife Punita Sinha as an independent director, and large severance pay for ex-CFO Rajiv Bansal.

Sikka who was appointed in 2014 as its first non-founder CEO, was brought on board with much gusto. 

At the time of his appointment, shareholders lauded the move:

Srinath Batni Wholetime director

We had a great team, and the new leadership with Vishal (Sikka) as the CEO and MD will take advantage of these new opportunities to take our company to greater heights.
 

Srinivas Rao A shareholder

Having a Punjabi (Sikka) at the top would make the company more aggressive.
 

Sita Bhatt Shareholder

Sikka is the right man and the right choice that the company had made.
 

*All quotes from an earlier Business Standard report

However, in April last year, when Sikka was awarded a two-year extension to his five-year term till 2021, Mint wrote that only 23.57% promoter votes were cast in favour of the move. While the reason for the abstention by the promoters was not known at the time, the report said that according to two unnamed executives, "the promoters may have abstained from voting to indicate their displeasure at the terms." The aforementioned TOI report said promoters and shareholders felt there was a shift from the company's values, a la the Tata Sons - Cyrus Mistry debacle, led by the ouster of the now ex-Chairman, after he was accused of compromising on Tata's values. 

According to the TOI report, Infosys' spokesperson said that all the decisions taken by the company were bona fide with appropriate disclosures. 

Sikka's compensation 

Sikka was given a 55% hike in his compensation to $11 million when he was given an extension as MD and CEO in 2016. The company reiterated that $5 million out of the new compensation would be paid in stock options tied to the company's performance. This would be in accordance with the target set by Sikka to make Infosys a $20 billion revenue company by 2020. 

High severance pay

According to the TOI report, the company's spokesperson said that high severance packages were being paid so that the company could move to international standards. Bansal was paid Rs 17.3 crore as severance pay. The IT major said, "apart from Bansal, two others - Michael Reh, an executive VP, and David Kennedy, legal counsel-were also paid substantial severance packages when they quit."

Punita Sinha's reppointment as independent director

In the same meeting, where the Board voted to extend Sikka's term by two-years, they also voted to appoint Union Minister Jayant Sinha's wife Punita Sinha as an independent director. While there are reports questioning her appointment, TOI said that the company said she was well-qualified for the job.

When the board had voted for her appointment last year, only 23.57% of promoter votes were cast in favour.

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