Refutes claims of differences between board, founders and Sikka; board needs to do better scrutiny, says Mohandas Pai.
Infosys, the country’s second largest software exporter, has been transparent in its actions and there’s been no rift between the founders, the board of directors and its chief executive, Vishal Sikka.
“There is absolutely no (such) problem and yet the media seems to be giving the impression that there is a huge rift,” said Kiran Mazumdar-Shaw, board member, in a telephonic interview.
“There have been issues in the past about the severance package given to former (finance head) Rajiv Bansal,” recalled Mazumdar-Shaw, also chairman of the country’s second largest biotechnology company, Biocon. “There were a lot of concerns about other issues that reflected in the voting pattern, where (some of) the founders abstained from voting. But, all that happened about a year ago.”
Some of the founders of Infosys, who have moved away from running the organisation, and independent analysts had raised concerns over the compensation for Sikka, the package settlements for former finance head Rajiv Bansal and general counsel David Kennedy.
“Nandan Nilekani and Mrs Sudha Murty voted on everything, even though the others abstained (on some resolutions). But, that is one year-old news. All those motions were carried forward because the majority of the shareholders voted in favour,” said Shaw. “They did express their concerns, like why have you given such a generous severance pay to Rajiv Bansal or given such a generous remuneration to Vishal Sikka. But, we answered all those questions.”
Another official, who did not want to be named, says Sikka’s salary is linked to tough targets, with a higher proportion of variable pay.
"If the targets are delivered clearly, the CEO deserves to be paid. If they are not met, it will be correspondingly lower and in the process, the cash component has been brought in. This is far more in line with the investors’ expectations and far more in line with contemporary practice, and that is why the investors overwhelmingly supported,” said the senior official.
However, a former director, T V Mohandas Pai, has justified the questions raised by the founders. "They (the board of directors) have to give a detailed answer as to why they have taken such and such decisions and what is the cost benefit. The founders and shareholders are perfectly justified in raising issues, and the board has to listen to them," Pai was quoted as saying by news agency PTI.
Adding: "And, if you look at how shareholders have suffered in the past five years, compared to the salaries paid to the management now and what was paid to the management earlier, the high compensation paid to people is excessive. Shareholders have not benefited from high salaries paid to people. The board should look at high salaries and look at what shareholders have got out of it.”
Separately, there have been questions asked on the appointment of D N Prahlad and Punita Kumar Sinha, respectively the head of an investment advisory company and wife of Union minister Jayant Sinha, of American scholar Jeffrey S Lehman and Roopa Kudva, managing director of Omidyar Network in India, on the board of the company.
Prahald, a former Infosys employee and a relative of founder N R Narayana Murthy, was recommended to the board by the founders but a final decision to appoint him was taken by the board.
“The board will not recruit somebody just based on the recommendation and we go into looking at the merits. The representative committees and I have personally interviewed Mr Prahlad and we felt he is the right person to add value (to Infosys). It is a very good selection process, just like we did it with Punita,” said Mazumdar-Shaw.
Both the official and she said the company was focused on growth and maintaining of margins in an uncertain business environment.