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14
February 2017
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. The Total Investment & Insurance
Solutions
"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. The Total Investment & Insurance
Solutions
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. The Total
Investment & Insurance Solutions
"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". The Total Investment
& Insurance Solutions
"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. The
Total Investment & Insurance Solutions
"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. The Total Investment & Insurance
Solutions
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. The Total Investment & Insurance
Solutions
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. The Total Investment & Insurance
Solutions
"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.The Total Investment & Insurance
Solutions
