Echoing co-founder N R Narayana Murthy’s view, former Infosys CFO V Balakrishnan today 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% to 50% 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 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 COO Pravin 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% of the promoters voting in favour of the resolution while the rest abstained.
Overall, Rao’s salary hike was passed with 67 per cent votes cast in favour and about 33% of the votes against the proposal.
The latest salvo came after Murthy, in an e-mailed statement yesterday, criticised the board’s decision on the steep rise in Rao’s compensation, saying it was not “proper” given that most employees only received a 6% to 8% increase in their salaries.
Murthy has previously also publicly aired his views on what he referred to as “poor governance standards” at Infosys. He had also questioned the steep severance payments made to former employees asking if the same was “hush money”.
He, however, clarified that the abstention from voting was not a reflection of his faith in Rao.
The tussle also saw whistleblowers sending letters to market regulator Sebi alleging irregularities in Infosys’ $200 million acquisition of Israeli firm Panaya.
The company has refuted all allegations, saying these are “misleading”. Sikka and Seshasayee had also called a press conference to explain the company’s stand on the issues pointed out by the promoters.
Asked if it was necessary for the promoters to go public on the issue, Balakrishnan said the board has been taking the feedback, but had not acted on the same.
“I think there are a lot of engagements that happened in the non-public way, but that has not come into any resolution. They had been taking the feedback and not acting on it. That is why it is becoming public,” he added.