This is why Narayana Murthy is angry with Rajiv Bansal’s Rs 17 crore severance pay

Rajiv Bansal, is an ex-employee of Infosys and the severance package paid to him is one of the important reasons why company founder NR Narayana Murthy, is miffed.

 

WHO IS RAJIV BANSAL?

 

Bansal’s job portfolio includes work in the areas of Corporate Finance, Business Finance, Risk, Operations Planning and Assurance, International Taxation, and Mergers and Acquisitions. The base for his career was his work as a chartered accountant and cost accountant. Before joining Infosys in 1999, Bansal had held important portfolio’s at Tata Technologies, Cable & Wireless, and ABB.

 

Rajiv Bansal joined Infosys as Manager of Finance in 1999 with over 18 years of experience. Prior to becoming the CFO, Rajiv was Vice President and Head of Finance. As the Head of Finance, his key priorities included supporting the company's growth, managing critical finance functions and adhering to regulatory and compliance requirements.

 

When he became CFO, Infosys had described him as "a very bright star in the finance department", who had been groomed by outgoing senior, V Balakrishnan. On leaving Infosys in 2016, Bansal joined as head of finance at ride-hailing service Ola, run by ANI Technologies Pvt. Ltd. A job, which he quit as of February 2017, after working one year at OLA, once he became the focal point of the Infosys debate.

 

THE CONTROVERSIAL SEVERANCE PAY

 

 

Bansal’s severance package as CFO, given by Infosys amounted to Rs 17.38 crore, equalling his 24 month’s pay, Infosys said in a statement last year. In 2016 itself, the move had garnered a lot of negative criticism from the Infosys founders. At that time, Infosys claimed that this compensation reflects the “enhanced non-compete and non-disclosure agreement” the company had signed with Bansal. The reason for his resignation has not been revealed by the company.

 

What’s intriguing and got analysts talking at the time was that previous outgoing CFOs like V. Balakrishnan or former head of finance T.V. Mohandas Pai were not given any severance packages and instead of declaring the severance at the time of Bansal’s resignation in October 2016, Infosys had chosen to quietly slip it into the company’s Annual Report.

 

It was highly unlikely move made by a company that upholds transparency in all departments, something which Murthy has also cited as a matter of concern.  Infosys founder Narayana Murthy, however, has pegged the severance pay to be at 30 months and that the company had no history of praying such a huge amount and he insisted that it was not a standard practice in the industry.

 

Also read: Narayana Murthy unhappy with governance at Infosys, feels board needs overhaul

 

In an interview with Network 18’s Vir Sanghvi, on the matter, the founder was asked if the reason for his displeasure was that Bansal had some incriminating evidence against him and that Infosys and that the money paid to silence him, to which Murthy said, “I hope it is not the case, but we are all judged by our actions. In Kannada there is a saying, if you sit under a toddy tree and drink milk, people will think you are drinking toddy. So therefore, it is very important for us not only to do the right thing, but also to be seen doing the right thing. That is the whole issue.”

 

In the interview he further raised concerns that this practice of severance package would be soon be  conceived as the future policy of the company as against the norm (3-month severance package), and that it would have a huge financial implication on the company.

 

In an another interview with Economic Times, Murthy dismissed claims of this being done in the interest of the company. He added that it further emphasised the fact Infosys had something to hide. If there was no harm done to the company, then it raises doubts about fiduciary responsibility. He placed the responsibility squarely on the special nomination and remuneration committee, who would have taken a decision with regards to Bansal’s severance pay.