Infosys chairman Seshasayee dismissed reports revolving around the ongoing boardroom tussle and said that there is no conflict of interest in the company.
Dismissing all reports revolving around the ongoing boardroom tussle in Infosys, company chairman R Seshasayee told the media on Monday that he doesnt think there is any battle. "There is no conflict of interest, there is convergence of interest."
Seshasayee has come out to talk to media amidst the whispers miring around the company's fall of corporate governance, high severance pay of ex-CFO Rajiv Bansal, high compensation of CEO Vishal Sikka and appointment of Union State Minister Jayant Sinha's wife Punita Sinha as an independent director.
Putting a mum to these rumours, the chairman backed the independent director DN Prahlad, the aforementioned Sinha and defended Sikka's pay package saying that the compensation is tied to very high levels of target achievements. Sikka who was appointed in 2014, is the first non-founder CEO of the company and was brought in with much pomp and gusto. The company had last year raised the annual compensation of Sikka by 55% to a whopping $11 million and extended his term till 2021. However, it was also announced that the company, in an attempt to reiterate its goal of becoming a $20 billion (Rs 1.33 lakh crore) firm decided to link Sikka's annual compensation to the progress to achieve its targets. This meant, that Sikka's annual compensation of $11 million, which includes a fixed salary of $3 million (around Rs 19 crore) and $8 million (around Rs 53 crore) under the variable component would be dependable on the company's progress to achieve its target.
Founder Narayana Murthy in an interview with Economic Times had said that the ratio of the CEO salary to the next lower level is generally 1:2 but it was about 1:2000 between the CEO and the entry-level software engineer at Infosys.
An important ingredient that brew the entire controversy was the severance package paid to former CFO Rajiv Bansal. Bansal's severance package, which is the amount given to an employee when they leave the company, amounted to Rs 17.38 crore which was actually his pay of 24 months. Infosys had also announced that its former general counsel, David Kennedy would receive a severance payment of $8,68,250 with other reimbursements over 12 months.
This raised concerns amongst shareholders and founders who doubted whether the company was doing such payments in order to hide something. Former CFO Mohandas Pai said that many people approached him asking why Bansal was being paid so much. "Many people approached me and said why has he been paid, investors asked is there something wrong? Are they paying him to keep quiet?"
Commenting on Bansal's severance pay package, the chairman said, "Suspicion about former CFO Rajiv Bansal's severance pay being hush money is deeply disturbing. Taking out subjectivity and putting severance pay in contracts was a learning from Bansal episode."
Seshasayee had earlier in an interview with ET, said that Bansal was only paid Rs 5.2 crore out of the Rs 17.38 crore decided in October 2015. "the circumstances were explained several times. This took into account complex circumstances and it was a bona fide business judgement...the balance payments have been suspended since April 2016 and the reasons for suspension have also been explained," he was quoted as saying in the report.
Though founders and former executives like Murthy and Pai have openly complained about the fall in corporate governance in Infosys, Seshasayee said, "I dont think there is a governance issue, we are very proud of rich diversity we have on our board." He further asserted that there will be no drop in scale of maintaining the high gold standard of governance.
He also said that the company has been engaging and will continue to engage with promoters and key stakeholders.
In an interview, former CFO Balakrishnan had gone on record to say that Seshasayee must resign. However, the company chairman confidently spoke about his position saying, "I have been elected by Infosys shareholders and the board to do a job, and I will continue to do it."
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