Two months after Infosys founder N R Narayana Murthy questioned the company’s board over issues of corporate governance, the software major Thursday announced a return of $2 billion to shareholders and a dividend payout hike in FY’18. It also appointed former Microsoft India chairman and independent director Ravi Venkatesan as the board’s co-chairman. In February, Murthy had questioned the actions of Infosys board chairman R Seshasayee and others, and recommended the appointment of NYU Stern professor Marti Subrahmanyam as co-chairman. The board agreed to the suggestion but opted for Venkatesan instead. Following Murthy’s criticism, the other co-founders had pointed fingers at the board for governance lapses and urged it to reward shareholders through share buyback as software giant TCS had done in February.
The founders were also unhappy about unutilised cash amounting to over $5 billion with the company and had raised concerns over a pay hike for Vishal Sikka, MD and CEO, severance pay packages for former employees. On Thursday, while declaring its financial performance for the fourth quarter ended March 2017, Infosys announced a return $2.02 billion (around Rs 13,000 crore) to shareholders in the fiscal year ending March 2018. The company added that the manner of the payout would be decided by the board.
The company also announced that it would increase the dividend payout beginning FY’18 to 70 per cent of the free cash flow. “Earlier, the company announced dividend on profit. Now it has changed to a percentage of free cash flows. The net change would be that the payout will go up from 63 per cent of FCF in FY’17 to 70 per cent in FY’18,” said the research head of a leading brokerage firm.
However, the brokerage firm executive said, the friction between the board and the founders is likely to continue till growth returns. “It is largely a perception issue and the friction is expected to continue till growth returns for the company. If there is growth in the company, no one raises these issues,” he said.
For all the latest India News, download Indian Express App nowFirst Published on: April 14, 2017 5:42 am