No thaw in the Murthy-Infosys board governance debate

 

The founders of Infosys like N R Narayana Murthy  and former board members like TV Mohandas Pai and V Balakrishnan  have come out in open criticism of the present governance of the company under the current Board members.

 

Executive Members of the Board

Vishal Sikka -CEO

Pravin Rao - COO

Non-executive chairman of the Board: R Seshasayee

Independent Directors: John W Etchemendy, Roopa Kudva, Punita Kumar Sinha, Jeffrey Sean Lehman, Kiran Majumdar-Shaw, DN Prahlad and Ravi Venkatesan.

 

In the last week, a lot has been said and explained, both on the part of the founders, as well as the present Board at Infosys. There were reports of this tussle going the Tata- Mistry way, where the end result was Cyrus Mistry being made to resign from his post. In this case, CEO Vishal Sikka, has time and again made it clear that he enjoys a cordial relationship with the Board. Murthy, on his part, has also clarified that the problem is with the corporate governance and severance packages paid to certain previous employees, which raise issues of integrity and transparency within the company.

 

Also read:Why Infosys-Sikka tussle will not be another Tata-Mistry story

 

Now dealing with rumours of Narayana Murthy having gone soft on the Board and reports of him having withdrawn the complaints, he spoke with Economic Times to confirm otherwise. Murthy dismissed this rumour and said he was very much expecting a reply to the concerns the founders had raised.

 

His emphasised that the board had all people of high integrity and it is human to commit a mistake. The severance pay and governance issues was ‘one’ such mistake, which could be atoned for by re-evaluating and taking corrective action and the Board could redeem themselves by setting an example of good leadership and improving the governance for the better future of the company.

 

Also highlighting a thaw in the standoff is a report in the Business Standard which suggests that the Board has changed the severance pay rule of its management team. Roopa Kudva, one of the independent directors on the Infosys board, is known to have said, “As for the quantum (of compensation to Rajiv Bansal), while it is not ordinary, when we look back in hindsight, lessons could have been learnt and action has been taken. We have done benchmarking for severance pay, according to each country and reworked the senior management contract to reflect it.”

 

Also read: 6 reasons why Narayana Murthy is unhappy with Infosys board​

 

This is being seen by many as a step by the Board to correct its wrongs. The Board directors, however, are of the view that this challenge has risen due to ‘perception changes’. In an interview to ET, Non-executive chairman of the Board, R Seshasayee, has maintained that there will be no stepping down for him. He also remarked that there was no wrestling for corporate control here and that this was just a case of different viewpoints being presented in the case of a business decision.

 

On the issue of severance package paid to Rajiv Bansal, Seshasayee contradicting Murthy’s claims, the amount that has actually been paid is only Rs 5.2 crore! The balance payments have been suspended since April 2016 and the reasons for suspension have also been explained. On the compensation issue of Sikka he added that it was done as per the shareholder interests and value creation than the earlier contract. Despite some of the  promoters not liking this change, the Board had the support of over 98% shareholders in their favour.

 

Also read: Infy tussle: Why fight over misplaced concern for 'values', just demand your rights

 

Vishal Sikka, also, has tried to dismiss the whole stress being laid to the showdown and has remarked that media remarks are just ‘distracting’ from the issue at hand and that too much is being speculated regarding his relationship with NR Narayana Murthy.