Two months after questioning governance standards at Infosys, Co-founder NR Narayana Murthy has again criticised the company’s board – this time over a pay hike to COO Pravin Rao.
“Giving nearly 60 percent to 70 percent 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 six percent to eight percent is, in my opinion, not proper,” Murthy said in an email reviewed by BloombergQuint.
Infosys 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. He will also be getting stock compensation worth Rs 4 crore based on his performance in the financial year 2015-16.
Besides, he is entitled to other perquisites and allowances. The resolution was put to vote between 23 February and 31 March.
Only 24 percent of the promoters voted in favour of the resolution, while the rest abstained, according to the stock exchange filings. Of the 11,191 shareholders who voted, 67 percent voted in favour while the rest rejected it.
No previous resolution in the history of the company has received such a low approval.NR Narayana Murthy
Such a decision is likely to erode the trust and faith of the employees in the management and the board, Murthy said in the email.
Co-founders, including Murthy, had questioned executive compensation and corporate governance at the company in February. Among other things, the differences with the company’s board had cropped up over increased compensation to CEO Vishal Sikka and a severance pay to former CFO Rajiv Bansal.
Murthy again highlighted the governance issues at the company in his latest email. “With what conscience can a decent person like Pravin tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair,” he said in the mail.
Given the current poor governance standards at Infosys, let us also remember that these targets for variable pay may not be adhered to if the board wants to favour a top management person.NR Narayana Murthy
Every senior management person has to show restraint in his or her compensation and perquisites, and should fight to maintain a reasonable ratio between the lowest salary and the highest salary in a corporation, he said.
“This is necessary if we have to make compassionate capitalism acceptable to a majority of Indians who are poor. Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India.”