Seeking to clear the air on corporate governance issues and the massive severance package to former CFO Rajiv Bansal, Infosys Chairman R. Seshasayee assured there is “no such issue” and that the company is on “a transformation journey” from a founder-led entity to a professionally managed one.
Speaking to mediapersons here on Monday evening, he however admitted that the severance pay to Bansal was an “error of judgement” by the company board due to a subjective element which guided the drawing up of such packages.
“In determining the severance package of Bansal, when he left the company in October 2015, there was a business judgement by the board and this amount was agreed to be paid. In retrospect, I have no hesitation in saying that this compensation would have been different, had the judgement, made in the circumstances, been different. We had some subjectivity in making this judgement,” Seshasayee said.
“It would serve everyone concerned much better, if that subjectivity element is taken away from severance packages,” the Chairman added, describing in euphemism what was clearly a major error in business judgement.
In fact, Seshasayee said that on the review of severance packages globally conducted with the help of a consultant, Infosys has removed this “subjective element” from the severance package contracts being applied since 2016.
“Business judgements can be wrong, perceptions can be different,” he said in defence of the decision to do away with the earlier practice that has led to the controversy over Bansal’s compensation package.
Seshasayee also told reporters that though a sum of Rs 17.30 crore, or equivalent to 24 months’ salary, was agreed to be paid to Bansal on his departure, he had “actually been paid Rs 5 crore something because the payment was suspended in April 2016”.
In this connection, Infosys Founder-Chairman N.R. Narayana Murthy said last week that the company had previously never paid such high compensation to any other executive in possession of “highly competitive (corporate) information”.
“Certain acts of the board’s corporate governance could have been better. Several people on the board had highly competitive information. A former Chairman said at the AGM that he had highly competitive information,” Narayana Murthy told the CNN-News 18 channel in an interview.
Referring to a whistleblower’s complaint about alleged payment of “hush money” to Bansal, Seshasayee clarified that two independent investigations revealed no wrongdoings by the company or its former CFO.
On the issue of corporate governance, he assured that whatever is happening currently is part of the change in the company as it veers from a founder-led to a professionally-driven one.
“It is a challenging transition and we have to deal with it in a sensitive fashion. This does not mean that the board and the founders have divergence. I passionately believe that this model of professional board and management is the right model for the country,” Seshasayee added.
In this regard, he dismissed apprehensions about “a boardroom battle” in the IT bellwether, between the board members and promoters of the company.
“I don’t think there is any battle. There is no conflict of interest… There is only convergence of interest. It is the job of the company’s board to listen to all,” he said.
Seshasayee added that appointments of Punita Kumar Sinha and D.N. Prahlad on the board were not a corporate governance issue.
“We are proud to have Punita Kumar Sinha on our board. She should not be judged by the profession of her spouse. There are three women (directors) and we don’t think we can look at it as a governance issue,” Seshasayee said.
On Sinha, he said his name was suggested when the company was looking out for people with deep understanding about the business.
“We are proud to have him as he has rare and deep understanding of the industry. I do not see that as a corporate governance issue,” Seshasayee added.
Defending the revised pay to its CEO Vishal Sikka, he said it was not done arbitrarily.
“We had a global consultant to benchmark his pay with similar global consultants, mainly US companies, and meant to ensure as a motivational package,” Seshasayee said.
To a query on potential buyback options as part of a capital allocation plan, he said the company is examining various options, including the buyback option.
“There is a capital allocation plan, and it shall be reviewed periodically. There is no decision on the table with regard to the exact plan of action, but a buyback is not ruled out,” he asserted, dispelling market rumours on this.