Infosys Chairman R Seshasayee admitted ‘cultural differences’ with its founders that has led to a public spat and assured that stakeholders would be consulted, even as he maintained that the board would assert its independence.
Seshasayee, who has been called to account for “governance lapses” by founder N R Narayana Murthy, would not quit the company as he was elected by shareholders and the board, while pointing that Infosys would continue with the tradition of maintaining gold standard in corporate governance set by the founders.
“Shareholders and the board have asked me to do a job. As long as they don’t ask me… I will do my job,” Seshasayee told a rare board-convened media interaction in Mumbai on Monday.
He maintained it was “not a battle with the founders” but an engagement with those who have nothing other than the best interests of the company in mind.
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Seshasayee and Chief Executive Officer (CEO) Vishal Sikka said they were engaged with founders as the company transforms into a services and software company, received their inputs to improve governance, while admitting that lapses were corrected by bringing in processes.
“I have no hesitation to say that the cultural milieu is different,” said Seshasayee, while clarifying the issues raised on Sikka’s salary compensation and former Chief Financial Officer Rajiv Bansal’s severance pay were handled with full transparency.
Murthy first raised concerns over corporate governance in May 2016 and since then has been engaging with the board for clarity, which he maintained till Monday morning has not been addressed.
“No, I have not withdrawn my concern. They have to be addressed properly by the board and full transparency should be given and people responsible for it should become accountable,” said Murthy in a statement, after Bloomberg quoted him saying “let me stop. I have made my point”, indicating truce.
Infosys co-founder Nandan Nilekani, who has maintained silence on the developments at the company, declined to comment late on Monday evening.
“The board is putting up a brave face. It has accepted lapses and says it has taken corrective action,” said Shriram Subramanian, managing director of InGovern Services, a proxy advisory company. “For now, Narayana Murthy should stop dwelling on past issues. The company, hopefully, has learnt it is under intense scrutiny and be more transparent in future.”
Since last week, the board has taken pains to explain corrective actions have been taken in bringing in rules on severance pay, put in processes in disclosure on Sikka’s expenses that henceforth would be approved by the audit committee headed by Roopa Kudva, an independent director and managing director of Omidyar Networks. It also clarified that Bansal certified the acquisition of Panaya, an Israeli software company and the severance pay for former Chief Compliance Officer David Kennedy were as per contract.
“Focusing on the past without focusing on the value is a disservice. If you expect the CEO to contact customers, it is important that we have the equation with cost and value,” said Seshasayee, on Sikka’s use of a chartered jet to meet clients. He also pointed that the office in Palo Alto, Silicon Valley’s high street was a front office for demonstrating technology work of Infosys than being a development centre.
Former Infosys board member T V Mohandas Pai demanded that the company make public the exit contract and severance pay details with Bansal and pointed that the board had skirted issues on the values of the company.
Sikka, who claimed it was a heartfelt relationship with Murthy and founders, said the focus was on company’s second phase of growth journey to transform into a services and software company.
Earlier in the day, Sikka presented his achievements over the past two-and-a-half years, saying the company would achieve revenue of $10 billion by March, according to its forecast, against $8.5 billion when he took over, dropped attrition to below 15% from 24.2% and employee morale up. He admitted the consulting business had failed and would focus on the next journey of making Infosys services and a software company.
- Infosys board admits compensation to Chief Financial Officer Rajiv Bansal was subjective; it has streamlined process for all senior management employees
- Says Vishal Sikka’s pay adheres to global benchmarks; his compensation has high variable component linked to $20-billion target of 2020; all his expenses have to be approved by audit committee
- Governance going forward, the board will consult all stakeholders