Infosys founder N R Narayana Murthy once again raised corporate governance issue with the company as he has opposed and criticised the hike in salary for chief operating officer U B Pravin Rao. This latest development further reveals the rift between the founders and the board of Infosys which also includes the management. The Infosys Board in February had sought shareholders approval for a 35% rise in compensation for Rao to Rs 8.5 crore and it has received the nod from majority of institutional investors and also Infosys co-founder Nandan Nilekani, show the filings with the stock exchanges.
However, Murthy in a statement released to the media late on Sunday said, “Giving 60 to 70% increase in compensation for a top-level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6-8% is, in my opinion, not proper.” “This is grossly unfair to the majority of the Infosys employees… (from project managers to office boys) who are toiling hard to make the company better. The impact of such a decision will likely erode the trust and faith of the employees in the management and the board,” he said.
This is the second time in the recent past that Murthy has raised serious concern with the Infosys board on compensation given to senior executives of the company. He has been critical on the compensation paid to CEO Vishal Sikka.Further lashing out to the compensation to be paid to the COO, Murthy said, “With what conscience can a decent person like Pravin (a man schooled in Infosys values for over 30 years) tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair. No previous resolution in the history of the company has received such a low approval.”
Murthy has raised several key issues with the Board of Infosys especially on the corporate governance issues which also included certain questionable dealings in the acquisition of Panaya. It also involved a whistle blower letter which made certain damaging allegations. However, Infosys strongly defended its actions and also stated that all the dealings with regard to Panaya has been above board. Though, it has once again referred the whistle blower letter to the audit committee to investigate on the allegations. Murthy, who hired Rao three decades ago and helped elevate him to COO and to the board, said this was the time to demonstrate the fairness in compensation that the company had practised since inception.
He added, “Finally, given the current poor governance standards at Infosys, let us also remember that these targets for variable pay may not be adhered to if the board wants to favour a top management person.” This once again puts Infosys in a difficult position as the company is set to announce its fourth quarter results on April 13. The company set itself a $20-billion revenue target by 2020, nearly double its expected revenue in 2016-17.