Infosys governance row: What’s been happening so far

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New Delhi: Infosys Ltd co-founder and former chairman N.R. Narayana Murthy and other founding members have raised questions about corporate governance in the second-largest information technology company in India.

At the heart of the controversy lies an exponential increase in compensation for chief executive officer (CEO) Vishal Sikka and an “unusually high severance payment” for two top-level executives, particularly former chief financial officer Rajiv Bansal, who left the company last year.

Here are major highlights related to the tussle at the Infosys:

■ 13 February: On Monday, Murthy reportedly called off his fight with the board, saying the company will deal with the questions about corporate governance that have been raised. Infosys has scheduled a media conference for Monday evening in Mumbai.

■ 13 February: Infosys independent director Kiran Mazumdar-Shaw is hopeful of a early solution to the severance pay issue as rift between Narayana Murthy and Vishal Sikka widens.

■ 11 February: Vishal Sikka reportedly advises Infosys senior management not to get distracted by the ongoing row, and instead focus on company’s business and strategy

■ 10 February: Infosys CEO Vishal Sikka gets the support of Oppenheimer Funds—the IT major’s third-largest institutional investor.

■ 9 February: Murthy in an interview to the Economic Times said that the large financial deals given to exiting senior employees “raise doubts whether the company is using such payments as hush money to hide something”. He also spoke of “a concerning drop in governance standards at Infosys”.

■ 7 February: Infosys Ltd may end the practice of giving an annual revenue forecast because of the difficulties associated with estimating how much its US clients will spend, especially after Donald Trump became the President.

■ January 2017: The board of Infosys Ltd has inducted director D.N. Prahlad into the nomination and remuneration committee (NRC) that oversees the nomination process and the incentives and pay offered to its senior-most executives, including the chief executive. Prahlad, a relative of Infosys founder N.R. Narayana Murthy, will now be one of the five members of the current NRC; the decision may make it more difficult for the management to award higher salaries to its senior executives.

■ December: In the third week of December, founders including N.R. Narayana Murthy, S.D. Shibulal and Kris Gopalakrishnan had a meeting with V. Seshasayee, chairman of the board, and Vishal Sikka, Infosys’s CEO, according to two executives familiar with the development. The founders expressed their unhappiness with Seshasayee, citing corporate governance issues.

■ October: The appointment of D.N. Prahlad, a relative of founder N.R. Narayana Murthy and a former employee of Infosys Ltd, as an independent director on the company’s board hasn’t gone down well with at least one proxy advisory firm.

■ September: Infosys stopped the remaining installments of the severance payment of Rs17.38 crore promised to former chief financial officer (CFO) Rajiv Bansal after some of the company’s founders expressed their unhappiness with the decision. Bansal, who joined Infosys in October 1999, resigned on 12 October 2015 and left the company at the end of last year to join as head of finance at ride-hailing service Ola, run by ANI Technologies Pvt. Ltd.

■ May: Infosys Ltd paid Rs.23.02 crore severance pay, salary and other benefits to Bansal last year, drawing criticism from proxy advisory firms and analysts for awarding an unusually high compensation to an outgoing executive.

■ April: Only around 23.57% of promoter votes were cast in favour of a resolution reappointing Vishal Sikka as CEO. He was appointed CEO in 2014 for a five-year term.

■ February 2016: The Infosys board decided to reward Sikka with a 55% rise in compensation, to $11 million.