Infosys’ R Seshasayee says no ‘hush money’ paid to Rajiv Bansal; Vishal Sikka’s $11 mn pay courtesy high targets

By: and |
Published: February 14, 2017 7:58:00 AM

Even as he tried to downplay differences between the Infosys board and the company’s founders, R Seshasayee, chairman of Infosys, on Monday asserted there had been no impropriety relating to the severance payout to former CFO Rajiv Bansal.

Chairman of the Infosys board R Seshasayee and CEO Vishal Sikka at a press conference in Mumbai on Monday Chairman of the Infosys board R Seshasayee and CEO Vishal Sikka at a press conference in Mumbai on Monday

Even as he tried to downplay differences between the Infosys board and the company’s founders, R Seshasayee, chairman of Infosys, on Monday asserted there had been no impropriety relating to the severance payout to former CFO Rajiv Bansal.

In a point-by-point rebuttal of the several allegations made against the Infosys board over the past few days, Seshasayee said suspicions that Bansal had been paid silence money were ‘disturbing’.

NR Narayana Murthy, founder, Infosys, had hinted the former CFO may have been given “hush money”. Other founders have raised issues relating to corporate governance at the IT major.

Addressing a press conference, Seshasayee said the board had applied its mind on the severance pay and that it had been a business judgement. “It was not a governance issue and the board had accepted business judgements could be wrong,” he said.

CEO Vishal Sikka said Bansal had parted ways with Infosys as there had been an issue of “team chemistry” though the former CFO had performed well. Seshasayee observed that in retrospect, the ‘judgement’ call might have perhaps been different had the processes been different. “The gap was the subjectivity in determining the severance and it would serve everybody better if the subjectivity was taken out,” he said.

In Bansal’s case, the matter had been investigated by an independent law firm and overseen by a global law firm, after the anonymous whistleblower — who claimed silence money had been paid — failed to furnish evidence.

Although the severance pay, at the time of separation, had been fixed at Rs 17.3 crore, the amount paid out was Rs 5.4 crore, after payments were discontinued in April 2016.

 

Seeking to play down differences between the board and the founders, he said, “We are a bunch of professionals and there is no conflict, there is a convergence of interests.” He added while there could be differences in views, perceptions or business judgements, it would be the job of the board to listen to messages.

“They are important, it is our obligation to listen, assimilate, be sensitive to these comments and calibrate our action,” the chairman said. Murthy said in a recent interview he had received mail from employees who were upset at the payouts to certain employees. Other founders have called for cash to be paid out to shareholders. Sikka said on Monday the firm had a capital-allocation plan.

In the case of David Kennedy, general counsel, Seshasayee explained an employment contract was in place. “It is the duty of the company to honour the contract,” he said, adding the board had made sure the disclosures were adequate internally and externally. “We were not in doubt,” he said.

Seshasayee also defended independent director Jeffrey Lehman’s re-appointment saying an exception had been made, since without his presence the average age of the board would have been just 2.1 years.

He defended raising Sikka’s compensation to $11 million, pointing out the fixed component had come down $5.08 million while the variable piece had gone up. “Aligning the CEO’s compensation to value creation is a contemporary practice,” Seshasayee observed, saying the performance-linked pay had been tied to very high targets.

Seshasayee pointed out that expenses by the CEO and management needed to be seen in proper context; he believed it could be a ‘cultural’ difference that was leading to concerns of profligacy. “Focusing on cost without focusing on value is a disservice,” he said, pointing out the global company was on the cusp of major transformation and an address on High Street should be seen in this light. Sikka, he said, had flown between 50,000-60,000 km a month between November and January and chartered flights accounted for just 8% of the travelled distance. Moreover, Infosys did not own a corporate jet.

Infosys has put in place a framework for severance pay without room for a ‘subjective element’ and based on geographies.

 

NR Narayana Murthy spikes rumours, says his Infosys ‘objections’ not ‘called off’

Infosys founder NR Narayana Murthy on Monday denied that he’s called off his objections related to the hefty severance payouts to two former employees and governance issues at Infosys, according to reports appearing in a section of the media.
“No, I have not withdrawn my concern,” Murthy told a business newspaper in response to reports which suggested that he has mellowed and has withdrawn his objections. “They (issues and concerns) have to be addressed properly by the board and full transparency should be given and people responsible for it should become accountable. The positive tweet by one of the directors is encouraging,” Murthy is reported to have said. Earlier in the day, he is reported to have told a wire agency that he has made a point and now it was for the board to sort it out.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.