Indian IT firm Infosys has reportedly started meditations with its founders over allegations of corporate misgovernance including high compensation to top executives. Cyril Suresh Shroff, the managing partner of law firm Cyril Amarchand Mangaldas, will lead the discussions with founders, ET Now reported citing unidentified sources.
According to the report, the law firm has asked the board of directors about its composition and governance policies. It has also asked the board about the scope of information that can be shared with the founders. The firm has reportedly asked whether founders are eligible for privileged information. Cyril Amarchand Mangaldas will also meet key institutional investors of the company.
Earlier this year Infosys founders N R Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani had written to the board expressing their concerns over corporate governance with the board, including the quantum of salary hike given to the CEO Vishal Sikka, the size of the severance packages given to former CFO Rajiv Bansal and former General Counsel David Kennedy, appointment of independent directors, and allocation of capital. Following these allegations, Infosys had appointed law firm Cyril Amarchand Mangaldas to mediate with the founders.
Murthy had questioned the ability of the board, led by Non-Executive Chairman R Seshasayee, on certain decisions taken by the company in the last one year, feeling that the board should have been more proactive in questioning the decisions at their end.
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On its part, Infosys had said that it had already addressed concerns about executive pay, and that “all decisions had been made bonafide in the overall interest of the company” and that full disclosures had already been made.
Seshasayee had tried to dispel all allegations of misgovernance, saying that Sikka’s compensation package came with very ambitious targets of meeting its goals set for 2020 and that it was finalised in line with the best global standards to promote Sikka’s longevity in the company and to motivate him to lead the company.
However, at the same time, Seshasayee admitted that the company might have erred in awarding a high severance package to ex-CFO Rajiv Bansal, adding that out of the agreed Rs 17.38 crore, the company decided to pay Bansal only Rs 5 crore later, with the remaining amount being withheld pending clarifications on the terms of the severance contract.