With questions being raised on corporate governance by the founders of Infosys, led by NR Narayana Murthy, the company’s the board on Monday claimed that “there is no conflict of interest but convergence of interest” and that both chairman R Seshasayee and CEO Vishal Sikka would not be stepping down.
Both Seshasayee and Sikka met the press in Mumbai to clarify their stance after Murthy raised concerns over what he felt was declining corporate governance standards in Infosys. There will be no drop in Infosys’ commitment to promoters, shareholders and customers, and the company and its board will strive to maintain gold governance standards, Seshasayee said. “We live in a glasshouse and it is a huge responsibility. Please don’t stare at us for long, we have to focus on the job at hand,” he said.
Ruling out resignation, Seshasayee said: “That there is lack of governance is a matter of perception. So far as I am concerned, the shareholders have given me a job. The board has given me a job. I will do it.”
Former Infosys directors TV Mohandas Pai and V Balakrishnan had last week demanded that the chairman step down over alleged governance and disclosure issues. The founders who hold over 12.75 per cent stake in the company had sent a letter to the board raising several concerns.
Both Sikka and Seshasayee said this is a fiduciary responsibility. “We get inputs and we do consult with other co-founders too. We must have a way of reconciling diverse views. At the end of the day, we are answerable to all the shareholders. This is a process that has to go on,” the chairman said.
However, Murthy is yet to withdraw his statement on concerns over governance issues. “I have not withdrawn my concern. They have to be addressed properly by the board and full transparency should be given and people responsible for it should become accountable. The positive tweet by one of the directors is encouraging,” Murthy said.
Seshasayee indicated that the severance package of former CFO Rajiv Bansal is under review. Infosys had earlier agreed to a Rs 17.3-crore severance pay but after reviewing company practices it was decided that only Rs 5 crore be given as payout. “Bansal’s severance was not ‘hush money’,” he said and ruled out another investigation. While Sikka said Bansal had “chemistry” issue with the team, Seshasayee said it was an issue of “alignment”.
The Infosys board also defended the compensation revision of the CEO. “It was decided to get shareholder approval through postal ballot before increasing Sikka’s salary, which is an example of good governance,” Seshasayee said.
Last year, Infosys had linked Sikka’s compensation to its aim of becoming a $20 billion firm by 2021. Sikka’s annual compensation of $11 million comprises of $4 million fixed salary — which was cut from $5.08 million — and a $7 million variable pay which is subject to the progress it makes in achieving its targets.
Infosys chairman also defended the payout given to general counsel David Kennedy, saying it was done as per his contract. “Kennedy will receive aggregate severance payments of $868,250 plus reimbursements for COBRA (insurance) continuation coverage over a period of 12 months,” Infosys said last year.
Seshasayee also defended the appointment of DN Prahlad and Punita Sinha — wife of civil aviation state minister Jayant Sinha — on the Infosys board. “We’re proud that someone who has high academic and professional qualification. It’s not a governance issue. Prahlad is well qualified to be on the board as he knows Infosys very well,” he said.
The Infosys chairman also mentioned about the travel of Sikka using chartered flights. Sikka travelled around 50,000-60,000 kms in November, December and January but only 8 per cent of it was through chartered flight.