In a no-holds-barred attack, software major Infosys founder N.R. Narayana Murthy on Tuesday said the previous Board practiced poor corporate governance.
“My concern as a shareholder is the poor governance practiced by the previous Board,” said Murthy in a statement to institutional investors in a conference call from here.
Taking strong objection to the hefty severance package given to its former Chief Financial Officer Rajiv Bansal in October 2015, Murthy said the company had entered into an unusual agreement to pay an excessive sum to Bansal, as reported in its regulatory filing on the Securities Exchange Commission (SEC) in the US.
“On June 18, 2016, R. Seshasayee (former Board Chairman) told the shareholders at the AGM that the Board had agreed to pay that sum to Bansal because he was ‘privy to a lot of price sensitive information as CFOs are’. Please note that no previous CFO of the company, nor the current CFO had or have such an excessive severance pay clause in their contracts,” recalled Murthy.
Following adverse media reports on the severance pay to Bansal, Murthy said current non-Executive Chairman Nandan Nilekani and other co-founders and he had asked Seshasayee on June 28, 2016 how the Board arrived at a strange decision to pay such a large sum as severance.
“Seshasayee told us that the decision was taken by David Kennedy, the company’s former General Counsel. When we probed further, whether the Remunerations Committee, the Audit Committee and the Board applied their mind to this issue, there was silence from Seshasayee,” noted Murthy.
When Murthy asked then Independent Director Jeffery S. Lehman on July 15, 2016 in the presence of Nilekani and another co-founder R. Dinesh why they (Board Members) agreed to pay such a huge severance amount, the latter replied that “it was confidential and could not be disclosed to us!”
Seshsasayee and Lehman, however, resigned on August 24 along with Co-Chairman Ravi Venkatesan, Executive Vice-Chairman Vishal Sikka and another Independent Director John Etchemendy from the Board, paving way for the return of Nilekani eight years after he left the $10 billion IT major.
“Roopa Kudva (Independent Director) said that we had to sign an NDA (Non-Disclosure Agreement) if we wanted to know the reason! So much for shareholder transparency and democracy!,” Murthy pointed out.
On October 14, 2016, Seshasayee told Murthy and other co-founders that the Board had agreed to pay a hefty sum to Bansal because they 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?,” asked Murthy.