Infosys former bosses back Murthy, decry hefty pay hikes to top brass
The IT bell weather’s former director, TV Mohandas Pai, and the former chief financial officer, V Balakrishnan, slammed the present leadership for approving impressive salary hikes to some of the top brass even though their performance was not spectacular.business Updated: Apr 03, 2017 18:34 IST
Joining Infosys founder-chairman NR Narayana Murthy, two former bosses of the company on Monday decried hefty pay hike to top officials and termed it “terrible” at a time when juniors were asked to sacrifice on wages.
The IT bell weather’s former director, TV Mohandas Pai, and the former chief financial officer, V Balakrishnan, slammed the present leadership for approving impressive salary hikes to some of the top brass even though their performance was not spectacular.
The criticism was directed to the present CEO Vishal Sikka as well.
Amid the new controversy, Infosys shares closed down 1.1% in the Mumbai market whose benchmark Sensex was up 1%.
Murthy said on Sunday the compensation hike to Rao approved by the board in February was not “proper” and “will likely erode the trust and faith of the employees in the management and the board.”
“Giving nearly 60-70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 to 8 per cent is, in my opinion, not proper,” Murthy had said.
Pointing out that Infosys’ board was “misguided”, Pai said the fundamental problem was the pay hike given earlier to CEO Vishal Sikka “without any justification”, because of which other executives were also expecting higher pay.
Pai said salary levels in India cannot be compared with that in the US.
“I totally agree with Murthy that it was not proper. We should have Indian norm for compensation. We can’t follow American norm. We (Infosys) are not an American company,” Pai, who was also formerly CFO of Infosys, told PTI.
At a time when the salary for entry level software engineers had not been raised in the IT industry in India for the past seven years despite 60% inflation during the same period, Pai said it is totally wrong to hike the compensation for top-level executives.
The salary of Chief Operating Officer (of Infosys) three-four years ago was Rs 3.5 crore or Rs 4 crore. Now, it has gone up to Rs 12 crore, according to the Chairman of Manipal Global Education Services and Aarin Capital.
“I think unless people at the bottom (software engineers) get good, regular hike, paying people at the top for doing nothing...for long period of time is totally wrong,” Pai said.
“That too we have been paying (compensation hike) for a person who has been in the company for 30 years,” he said without naming the present COO, UB Pravin Rao.
“If somebody has done spectacularly well, then it’s okay. Performance is not spectacular. Salary is spectacular,” he said.
“When you see CEO getting so much, then COO will say: what about me? I cannot be paid one-tenth of what CEO is being paid,” he said.
“The fundamental error was increasing CEO’s salary from $7 million to $11 million without any justification,” Pai further said.
Agreeing with Murthy, Balakrishnan said a pay hike for a top executive is “terrible for any leadership” when subordinates were being asked to “sacrifice” on wages.
He reiterated the need for reconstituting Infosys board, stating that the golden standards of governance and value system that Infosys was known for is “being decimated under the current leadership”.
The comments follow eruption of a fresh row between the founders and the current management.
“I tell all subordinates that you have to sacrifice and you have to make sure your wage increase will be less, we have to cut costs while I will take 40-50 per cent increase (in compensation hike), I think it is terrible for any leadership to do,” he told ET Now.
He added that Infosys Chairman R Seshasayee should step down and the board should be reconstituted to ensure the governance and value system of the company are protected.
This is not the first time that questions have been raised on decisions taken by the Infosys board. Two months ago, high payouts to CEO Vishal Sikka and former employees, Rajiv Bansal and David Kennedy, had triggered a rift between the board and the company’s founders.
The promoters -- which include the founders -- together hold about 13% stake in the Bengaluru-based company.
“I think Infosys is a golden standard in terms of governance, disclosure and value system. I think it is being decimated under the current leadership. I think the board is not acting the way it should be,” Balakrishnan said.
Infosys -- India’s second-largest software services firm-- had said in October that it would raise Rao’s salary to include a fixed compensation of Rs 4.62 crore and a variable compensation of Rs 3.88 crore per annum, apart from stock compensation worth Rs 4 crore based on performance.
The resolution, which was put to vote between February 23 and March 31, saw only 24 per cent of the promoters voting in favour of the resolution while the rest abstained.
Overall, Rao’s salary hike was passed with 67% votes cast in favour and about 33% of the votes against the proposal.
Murthy has previously flagged concerns over “poor governance standards” at Infosys. He had also questioned the steep severance payments made to former employees asking if the same was “hush money”. (With inputs from PTI)