NR Narayana Murthy and other Infosys founders have flagged their concerns over transparency and corporate governance at the second-largest software exporter in India. They have also questioned the salary given to Chief Executive Officer Vishal Sikka and the severance package paid to David Kennedy, the firm’s former chief compliance officer.
Led by Murthy, the founders have asked how the company aims to achieve the $20 billion target by 2020, the one set by Sikka, in an unstable global environment. In January, Murthy, Nandan Nilekani and Kris Gopalakrishnan raised their concerns to the board, as Business Standard reports.
The current projections go against Murthy’s ideology of “under performance, over delivery”, the founders said. Murthy and the five other founders stepped down as promoter shareholders for ensuring their influence over the company is reduced when they moved away from their executive positions.
Since Sikka took over as CEO in August 2014, he has pushed the company toward adopting ‘design thinking’, brought in automation and invested in Artificial Intelligence platforms, anticipating a shift in customer spending to cloud from traditional.
The ‘less-people, more-software’ business approach has seen many executives quit, including former chief financial officer Rajiv Bansal and Kennedy.
“There is a question mark on disclosures. Infosys was a gold standard in corporate governance. It doesn’t have that premium now,” said a person familiar with the developments.
Since Sikka’s takeover, several questions have been raised at the company, which analysts say have not been answered satisfactorily.
We have been seeing non-transparency in corporate governance at Infosys. The company has not given a clear reason behind the severance package offered to former chief financial officer Rajiv Bansal. On the other hand, Kennedy had to go without any notice and it seemed as if he was sacked.Shriram Subramanian, Founder, proxy advisory firm InGovern.
“The appointment of DN Prahlad on the board is debated as he is actually non-independent and NR Narayana Murthy’s relative. Infosys’ behaviour in the last two years has been non-transparent,” he added.
Infosys isn’t the only IT services firm where questions have been raised recently. Elliott Management Corporation, which holds a 4 percent stake in Cognizant, has asked for a higher value at around $80-90 per share by the end of the current year.
“It may be justifiable for big company such as Infosys. But the company has not disclosed the performance metrics for Sikka against his high package. What worked for the founders 10 years ago might not work today. They should view the operations from a professional point of view,” said Subramanian of InGovern, pointing that Sikka’s compensation has to be comparable to peers at rival firms.
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