Following NR Narayana Murthy’s investor call on Tuesday, the Infosys board is likely to see some more exits and though leaving matters to the newly appointed chairman Nandan Nilekani, Murthy made it clear that the investigation report on the hefty severance package paid to the former CFO Rajiv Bansal will have to be made public. At his press conference on Friday, when Nilekani was asked whether he would make the report public as per Murthy’s consistent demand, he had desisted from giving a direct reply by only stating that he would first study the investigation with an open mind and then decide on his next course of action. However, Murthy by pointing to a series of inconsistent responses from the board on the issue seems to have not left Nilekani with much choice but to make it public.
While highlighting the inconsistent responses of the former board members on the issue when quizzed by the founders, including Murthy, the chairman emeritus also reposed his full faith and trust in Nilekani. “Having worked with Nandan for long, I know that he is a stickler for good corporate governance, Murthy said. Murthy added, “Now, we can all sleep better knowing that, under his leadership, the corporate governance standard practised by Infosys will be on par with the global best standard. In fact, based on Nandan’s media interviews and the recent changes in the board, I believe that corrective actions have already begun. As explained earlier, it is this kind of corrective and decisive action that I was looking for in the detailed report. These actions are now being taken. Therefore, we can all move forward from here and look to the future,” Murthy said.
Pointing towards his concerns as a shareholder regarding poor governance practised by the previous board, Murthy highlighted a set of inconsistent responses from the board. For instance, he said that the board reported in its 20-F filing to the Securities and Exchange Commission in May 2016 that the company had entered into an unusual agreement to pay an excessive sum as severance to the ex-CFO Bansal in October 2015. He said that then on June 18, 2016, R Seshasayee, the former chairman, told the shareholders at the AGM that the board agreed to pay that sum to Bansal because he was “privy to a lot of price-sensitive information as CFOs are”.
Murthy said that when he, Nilekani and other co-founders asked Seshasayee on June 28, 2016, how the board arrived at this strange decision to pay such a large sum as severance, Seshasayee told them that the decision was taken by David Kennedy, the former general counsel. When probed further whether the remunerations committee, the audit committee and the board applied their minds to the issue, there was silence from Seshasayee. Murthy said that when on July 15, 2016, he asked the board members in the presence of Nilekani why they agreed top pay such a huge severance amount, Jeff Lehman (the former board member who quit the day Nilekani took over) said it was confidential and could not be disclosed to them. He said that another board member Roopa
Kudva (still on the board) said that Murthy and others would have to sign a non-disclosure agreement if they wanted to know the reason. On October 14, 2016, Seshasayee told them that the board agreed to pay the sum because it felt generous. “Given such a set of inconsistent responses from the board, would not any concerned shareholder come to the conclusion that the board was not being transparent and was, perhaps, misleading us, the shareholders?” Murthy asked. He added that according to media reports the board did not record the minutes of the severance to the ex-CFO at the time the decision was taken.
“This concern was dismissed by the former chairman (Seshasayee) as a mere ‘housekeeping’ matter,” Murthy said. Pointing out that on February 12, 2017, a whistle-blower complaint appeared in the public media regarding the events surrounding the severance payment made, Murthy clarified that the allegations were not his but that of the whistle-blower’s and the board members to whom he put forward these questions on their governance deficit instead misdirected it towards the CEO (Vishal Sikka), “perhaps to avoid answering my questions”.