Amid reports of founders raising concerns over corporate governance and “excessive” pay packages at Infosys, former chief financial officer T V Mohandas Pai today said the board should give a detailed answer and not take shelter under “bland” statement that decisions were taken in the interest of the company.
“The founders who have built the company and created a value system have raised serious issues. As far as I know, no CFO in India has got a 24-month separation,” said the former Infosys board member.
Pai was referring to ex-CFO Rajiv Bansal’s severance package of Rs 17.38 crore, equalling 24 months of pay.
“And (earlier) CFOs have left the company and they have not got any separation. There is no case for a special treatment for anybody. And the management cannot be generous with shareholder money because it’s not their money. It’s a serious lapse which should be looked into by the board,” Pai told PTI.
He said a former general counsel (David Kannedy) who was with the company for a “very short period” was paid a “very high salary” and “again same thing has been done (given high severance payments)”.
The company has to negotiate contract of employees and not give them a “golden parrot”, Pai commented.
According to the reports, 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 CEO Vishal Sikka and the severance package offered to the two former senior executives.
Asked if salary hike given to Sikka was high, Pai said a CEO’s pay should be linked to his performance, achievement of the annual plan and increase in shareholder value.
“From April 2011 till January 2017, the shareholder value has not increased at all and the market capitalisation of the Bengaluru-based IT major has also remained at the same level during the period,” he said.
“And shareholders have not benefited from high salaries paid to people. The board should look at high salaries and look at what shareholders have got out of it.
“And if you look at how shareholders have suffered in the last five years compared to the salaries paid to the management now and what was paid to the management earlier, the high compensation paid to people is excessive.”
It’s “very good shareholders” who are former founders and are asking tough questions to the board.
He said the board has to answer all the questions after due introspection and cannot “take shelter under bland statement that decisions were taken in the interest of the company”.
“They have to give a detailed answer as to why they have taken such and such decisions and what is the cost benefit. Founders and shareholders are perfectly justified in raising issues, and the board has to listen to them,” Pai added.