New Delhi: IT major Infosys today defended pay hike to chief executive Vishal Sikka and the severance package of two former senior executives saying all decisions were made "in the overall interest of the company", amid reports of simmering differences between the CEO and its founders.
Shares of the company dived 1 per cent on BSE today. The Bengaluru-based firm said it has made "full disclosures" on all developments. "With regard to concerns on governance... we would like to reiterate that all decisions have been made bona fide, in the overall interest of the company, and that full disclosures have already been made thereon," Infosys said in an emailed statement.
The reports said Infosys founders N R Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani had written to the board last month expressing their concerns over pay hike to chief executive Vishal Sikka, and the severance package offered to two senior executives.
Infosys founders, along with their family members, owned 12.75 per cent in the company at the end of December 2016, as per the data available on the BSE. "The Board receives suggestions and inputs from various stakeholders, including promoters, which are evaluated with due importance. The company will continue to be guided by the overall interests of all stakeholders," Infosys said in its response.
The concerns raised include severance package of Infosys' former CFO Rajiv Bansal and ex-general counsel David Kennedy For the period of April 1-October 12, 2015, Bansal is slated to receive Rs 23.02 crore compared to Rs 4.72 crore that he received for the entire FY'15, as remuneration.
In January, Kennedy quit Infosys and is due to receive severance payments of USD 868,250 (Rs 5.85 crore) and other reimbursements over 12 months. Besides, last year, Infosys had raised the annual compensation of Sikka, whose term has also been extended till 2021, to USD 11 million.
This includes an annual base salary of USD 1 million, variable pay of USD 3 million (subject to company achieving certain targets) and the rest in stock compensation. Commenting on the development, Greyhound Research Chief Analyst and CEO Sanchit Vir Gogia said.
"This is standard industry practice and not out of the ordinary and hence, deems no criticism of any sort." "Separately, with the letter that has been sent out with reported governance issues, while there may be some truth in what has been reported, it's critical to note that the governance issues havent been proved (yet) and it will be unfair to draw conclusions on the basis of the letter," Gogia said.
He further pointed out that there will always be differences on how an organisation is run, especially once the founders are no more at the helm. Separating ownership from control is one of the long standing battles for founders and the latter raising concerns post stepping down from the helm is both correct and expected, he said.
"We witnessed a similar scenario at Tata Sons only recently. Such changes and counter actions by investors are a standard practice globally and such instances shouldn’t be blown out of proportion," he said....