Infosys co-founder Narayana Murthy and five other founders had stepped down as promoter-shareholders to ensure that the new Board could be free from influence and execute their roles. They then started acting as merely advisory board members. But once Vishal Sikka took over as CEO of Infosys, things at the company began to change and in a manner that was not appreciated in many ways by the original founders.

 

According to Economic Times, Infosys has defended the hike given to Pravin Rao and in a rebuttal, Vishal Sikka in a statement mentioned how the company had reduced Rao’s fixed pay while allowing an increase in variable pay based on performance. He also said it was a necessary increase to bring it on par with the peers, to maintain the competitiveness and to retain key talent keeping in mind the interest of the shareholders and long-term interests.

 

In a statement, the company said the cash component of Rao's salary, including annual cash bonus, has fallen 10.6% to Rs 4.6 crore from Rs 5.2 crore earlier while the performance-based component, directly linked to company and individual performance, has been increased to 63% from 45% of total compensation.

 

Governance experts are of the view that there is nothing wrong in the compensation given to Rao and that Narayana Murthy’s constant objections to the way things are being run in Infosys may harm the company’s stocks and future.

 

Murthy, expressing his displeasure at Rao’s salary hike had said : “Giving nearly 60% to 70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper.

 

 “This is grossly unfair to the majority of the Infosys employees including project managers, delivery managers, analysts, programmers, sales people in the field, entry level engineers, clerks and office boys who are toiling hard to make the company better.”


Previously when Murthy raised questions on Sikka’s salary, R Seshasayee, non executive Chairman, Infosys had said in a press conference in February the salary revision was discussed many times. The practice was taken up according to global standards including factors like longevity and performance. It motivated to make Vishal to lead the company.

 

An article in Firstpost quotes Seshasayee as saying: "There are some shareholders who think this is excessive. We have to do what is best and to vast majority. In many many companies, compensation packaging is approved by board. Since we were revising his package, we thought of going to shareholders before giving it. We do not believe there is any issue of governance."

 

Seems like it is the same attitude being taken now as well. The board meeting is set to be held from April 12- April 13 but before that this issue of compensation is bound to make more headlines.