Infosys Ltd’s board did not record the proceedings of a 12 October 2015 meeting where it discussed paying Rs17.38 crore in severance pay to former chief financial officer Rajiv Bansal, said an executive familiar with the development.
The omission again raises doubts on decision-making by the board of India’s second largest services firm, which has just emerged from a tussle with founders led by N.R. Narayana Murthy over corporate governance issues, including the payment to Bansal and a 55% increase in CEO Vishal Sikka’s pay to $11 million a year in 2016.
Infosys’s board only put this payment on record or “minuted” the discussion when it met on 14 January 2016, when the company announced its fiscal third-quarter earnings, the executive cited above said on condition of anonymity.
This could possibly be one reason which peeved Murthy, who questioned the unexplained and generous payment and publicly lashed out at the board. In published remarks, Murthy even questioned whether severance payments were being made as “hush money” to suppress “some information harmful to the company”. On Monday, non-executive chairman R. Seshasayee denied the allegation, which he said was “disturbing”.
“All decisions taken by the board must be documented at the appropriate time. If indeed true, it is surprising for a company like Infosys to not have maintained comprehensive and complete minutes,” said Hetal Dalal, chief operating officer, Institutional Investor Advisory Services, a proxy advisory firm. “While we believe the amount of severance pay is not material in the context of Infosys’s size, the transaction—and the disclosures around it—could have been handled significantly better.”
Significantly, Sikka gave his nod to the separation agreement, which was subsequently approved by the board after it was justified by Infosys’s chief compliance officer David Kennedy, according to two executives, including one board member and the person cited in the first instance. The board member also requested anonymity.