Infosys founders including NR Narayana Murthy, Nandan Nilekani and Kris Gopalakrishnan have raised concerns over the governance of Infosys.
Key issues include increased compensation of Infosys CEO, Vishal Sikka, severance packages of top executives and the appointment of Punita Sinha, wife of Union Minister Jayant Sinha, as an independent director. These issues were raised in a letter written in January, 2017. CEO Sikka’s compensation hike a sticking point Crux of the matter. Infosys aims to become $20 billion Company by 2021 and Sikka’s compensation is linked to its performance.
In October 2016, Sikka’s annual compensation was confirmed at $11 million: of this, $3 million was fixed and remaining variable, subject to the company’s progress. His compensation was approved by 98% of Infosys shareholders and the controversy over Sikka’s pay hike was dismissed as a non-issue. Eyebrows were raised over hefty severance paid to CFO Rajiv Bansal and GC David Kennedy.
CFO Bansal received compensation of Rs. 17.38 crore equivalent to 24-months pay. Similarly Kennedy was given severance of Rs. 6 crore and other reimbursements for 12 months. Inside sources conceded severances were generous but there “wasn’t any impropriety.” Separately, no investor raised concerns making this a dead issue.
Union Minister Jayant Sinha’s wife, Punita Sinha was appointed by Infosys as an independent director. Although there has been controversy over her appointment, the Infosys Board has adopted the view that she is ’eminently qualified’ for this position. Infosys founders critical of Vishal Sikka’s variable pay 10 Feb 2017
Adding to the unhappiness of the Infosys founders with the company’s board is the flexible variable pay of CEO Vishal Sikka. Sources say founders have expressed discomfort at the idea of offering a higher component of variable pay to Sikka. The board, however, is okay with giving a higher proportion of variable pay to Sikka even if Infosys fails to meet targets this year. Whistleblower’s letter malicious, slanderous: Vishal Sikka 14 Feb 2017
A whistleblower’s letter with regards to Infosys alleges that its former Chief Financial Officer (CFO) Rajiv Bansal was paid Rs. 17.4 crore as severance for remaining silent on accounting practices and an overseas acquisition. CEO Vishal Sikka on Monday criticized the attack, calling it “direct, reckless, malicious, slanderous and personal.” He also added that legal recourse will be taken by the company. Decision on hefty severance pay for ex-Infy CFO not recorded 15 Feb 2017
A meeting in which severance pay of Rs 17.38cr was decided for Infosys’ ex-CFO Rajiv Bansal, an issue causing furore in the board, was not initially recorded. Board members have asked if the hefty pay was to buy Bansal’s silence over questionable acquisitions.
Members are also concerned about CEO Vishal Sikka’s $11 million compensation, and appointment of Punita Kumar-Sinha as an independent director. Infosys may announce $2.5 bn share buyback in April 24 Feb 2017
In the footsteps of rivals TCS and Cognizant, Infosys may repurchase its shares worth $2.5 billion in April as it caves to months of pressure from shareholders demanding capital reallocation. Infosys is already battling allegations of fraudulently acquiring a subsidiary. The IT sector is struggling to retain American clients, who account for 65% of the $155 billion industry, facing US government’s protectionist measures.
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