Infosys press conference as it happened: Sesashayee, Vishal Sikka clarify on governance row

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Infosys press conference as it happened: Sesashayee, Vishal Sikka clarify on governance row
  • 19:30 (IST)

    Vishal Sikka on capital allocation: Board looks up policy time and again

    Vishal Sikka on capital allocation: The board will look up to capital allocation policy time and again.

    Seshasayee adds that the company works for the entire group of stakeholders. "That is a fiduciary responsibility. We get inputs and we do consult with other co-founders too. We must have a way of reconciling diverse views."

    There have been suggestions tha the company should allocate its huge cash pile in better way. Former executives like Mohandas Pai has suggested that the company should do share buyback just like Cognizant.

  • 19:20 (IST)

    Seshasayee asks media to not get into issues that are not value add to shareholders

    Faced with a barrage of questions, Seshasayee requests the media to not get into issues that are not value addition.

    "There is a road for the management and for the board. Please do not get into issues that are non value added to stakeholders.

  • 19:15 (IST)

    Seshasayee says would not like to have anything spilling into public

    Seshasayee on public debate on the rift between founders and the board: We would not like to have anything spilling into public. Whatever it takes us to do, we will do it (to not happen).

  • 19:08 (IST)

    Seshasayee says shareholders, board have given me a job, I will do it


    ​Seshasayee says governance is a collective decision of the board. "We are all committed to principles of governance. That there is lack of governance is a matter of perception. So far as I am concerned, the shareholders have given me a job. The board has given me a kob. I will do it."

  • 19:02 (IST)

    Seshasayee promises there won't be any more Rajiv Bansals


    According to Vishal Sikka, Rajiv Bansal was a great CFO but had chemistry issues with the team.


    Seshasayee explains that with regard to severance, the company has benchmarked process.


    "There is a certainty to it. There wont be any more Rajiv Bansals. There was issue with alignment with him. We took a business call to move on. What we are discussing is not the amount discussed. As long as we have gone through improprieties. Then we can discuss it. We get suggestions of potential candidates from founders and others too.

  • 18:52 (IST)

    Vishal Sikka says we are custodians of this business, we have upheld values


    Vishal Sikka says: At the outset, let me repeat what Seshasayee said. We are custodians of this business. The strategy I have laid out is new, renew. I left India barely out of teens. Why I came to Infosys was because of the keenness on tradition and upholding values. We have done well in performance in revenue terms, customer satisfaction or opening new frontiers. We have upheld values. These are not easy times.

  • 18:48 (IST)

    Seshasayee ends the remarks: We live in a glass house; it is good but don't stare at us too long

    "We live in a glass house. And it is good as it gives able enormous responsibility. But please do not stare at us too long. We have 80,000 shareholders, employees, management and investors. And have a job to do. We have learnt a lesson and will make judgment. We will retain gold standards."

  • 18:42 (IST)

    Seshasayee says finance controls in co is gold standard, it is a robust system

    "We need to recognise that a global company that is on cusp of a new business. And needs globally diverse talent should not be disturbed. Prahlad said that we must try to have a soul of a very small mind. Should have no expenditure incurred without value.

    "The finance controls in Infosys is gold standard. That is a robust system. Thanks to the founders and we have a strong internal system. We have scaffolding to see that no process falls off. On governance, looking forward, the fact that there is so much excitement is that we haven't done enough communication. It is a unique company. Except for banks you don't have an independent board and professionals. In a company, like Infosys you have vast shareholders.

  • 18:37 (IST)

    Seshasayee reiterates co doesn't have corporate jet; Vishal travelled in chartered flight

    "I have been asked why Vishal Sikka is using corporate jets. Roopa Kudva has been at pains to say we don't have corporate jet. Sikka was traveling 60 to 80,000 kms per month. 8 percent of this was on chartered flight. 


    "It is important to equate cost and issues. Bay Area is a fantastic place and a place for implementating innovation. Vishal thought we should have a place in high street. 

    "To have a branding not in back office. And took place on rent. He discussed with me.  The figure quoted is a million. What is being picked up is a number, without understanding the true value."

  • 18:27 (IST)

    Seshasayee says suspicion of hush money in Rajiv Bansal's pay deeply disturbing


    On the allegation about Rajiv Bansal's severance package: What is most important is the suspicion that this was hush money, which is deeply disturbing.


    "We had an anonymous whistleblower message. When first anonymous whistleblower complaint was made, we looked at it regardless of it being anonymous or not signed. We responded saying if you can give this complaint to a law firm and we will pay for it."

    "We said twice but no response. We gave it to an independent law firm. Found nothing wrong."


    We went to various law forms and our processes and found no reason to silence. We put it on our website. Now this case with a certain history and is being repeated. The answer is the same.

  • 18:22 (IST)

    On CEO Vishal Sikka's salary, Seshasayee says we do not believe there is any issue of governance

    On Vishal's salary: The salary revision discussed many times. Process we went through is a global benchmark. We looked at benchmark consideration globally. Included longevity, performance-linked. It motivated to make Vishal to lead the company.


    "There are some shareholders who think this is excessive. We have to do what is best and to vast majority. In many many companies, compensation packaging is approved by board. Since we were revising his package, we thought of going to shareholders before giving it. We do not believe there is any issue of governance."

  • 18:18 (IST)

    Punita Sinha a very accomplished woman; should not be judged by her spouse

    "Punita Sinha is a very accomplished woman. A woman should not be judged by her spouse. We are very proud of our 3 women directors."

    That's quite an explanation that should end the debate on why Sinha was appointed on the board.

  • 18:12 (IST)

    R Seshasayee says will answer all your questions; this is not a battle
     

    In opening remarks R Seshasayee says: "You have lots of questions and we will answer each of them. You have been describing it as a battle but we have here a few stakeholders and founders and nothing but good intentions in mind. When you have built an institution with passion, you will be concerned. For sure, there will be differences in perceptions, judgement.


    "It is our interest as members of board to listen to these voices, be sensitive to them and calibrate our actions. I suggest to take away your view of this as a battle. This institution is built on Very strong governance values and it is our duty to uphold them."

  • 17:38 (IST)

    How the company fared under Vishal Sikka in one chart

    As Infosys board members gear up for the press conference, here's a table that shows how the company fared under CEO Vishal Sikka.

    Sikka is the first non-founder CEO of Infosys.

    It is to be remembered that the critics of the corporate governance practice at Infosys have time and again reiterated that their problem is not with Sikka's way of functioning.

    Earlier in the day, Sikka said at an investor meeting that compared with two-and-half-years ago, it is disappointing to see the rate of growth. "More should have been done by now," Sikka said.

    A look at the company's revenue growth performance on a quarter-on-quarter basis in the last 10 quarters shows it achieved a robust 8.2 percent rise in the second quarter of FY16. While revenue growth stood in the range of 1.4-4.1 percent in the following quarters thereafter, the company witnessed a dismal performance in the third quarter of FY17 as growth slipped 0.2 percent amid growing challenges in its key US and European markets.

    On the bottomline parameter, Infosys witnessed a strong 7.3 growth in net profit during the second quarter of 2014-15 as things began to look upwards following a change of guard with Vishal Sikka taking position as the company's new CEO.

    While second quarter of 2015-16 was easily the company's best performance, clocking net profit growth of 12.1 percent, global headwinds in the form of subdued IT spending by key clients and more focus on SMAC segment began to take toll on the company's financials. As a result, Infosys' net profit witnessed a de-growth of 4.5 percent before rebounding to 4.9 percent in the second quarter of 2016-17 and 2.8 percent in the following quarter.

  • 16:20 (IST)

    Roopa Kudva defends capital allocation policy; says buyouts part of transformation
     
     

    Infosys' independent director Roopa Kudva has strongly defended the company's capital allocation plans, and suggested that acquisitions would be part of the transformation agenda. In an interview with Moneycontrol over the weekend, Kudva said Infosys has well-driven team in place to evaluate the cash allocation policy.
     
     

    “The board reviews capital allocation policy and the principles behind the same. There is a strategic direction that has been set and acquisitions would be part of the transformation agenda. The move is to acquire strategic companies that are value-accretive that can help new and existing businesses,” she said.

    Her statement comes in the backdrop of the growing clashes between the founders and the board, with the former alleging that salaries and severance packages given were not in the best interest of the company. Since taking charge as Infosys CEO, Vishal Sikka has been focussing on opportunities in the SMAC (social, mobile, analytics & cloud) segment, although the founders feel enough opportunities are still available in the services business due to signs of fatigue among top IT giants like Accenture and IBM.
     

    Also, T V Mohandas Pai recently told analysts that Infosys has a cash pile of $5.25 billion, and the company should consider rewarding the shareholders by considering buyback of shares.

  • 15:57 (IST)

    Did Panaya acquisition trigger the rift between founders, board? 

    According to a report in The Economic Times, the trigger for the difference in opinion between the Infosys board and the founders was the acquisition of Israeli software company Panaya in February 2015. The board's approval for the $200 million acquisition raised suspicion of the lack of proper due diligence and governance. It is being reported that the Israeli firm was valued six times its revenue, even though the company was on the verge of shutting and had laid of several employees before the execution of the deal.

  • 15:57 (IST)

    Did Panaya acquisition trigger the rift between founders, board? 

    According to a report in The Economic Times, the trigger for the difference in opinion between the Infosys board and the founders was the acquisition of Israeli software company Panaya in February 2015. The board's approval for the $200 million acquisition raised suspicion of the lack of proper due diligence and governance. It is being reported that the Israeli firm was valued six times its revenue, even though the company was on the verge of shutting and had laid of several employees before the execution of the deal.

  • 15:52 (IST)

    Will co announce board level changes? Will Marti Subramaniyam return?

    As investors and the market gear up for thte press conferencce of the Infosys board memebers, the question on everybody's mind is whether the company will announce a change at the board level. The reason for this is that NR Narayana Murthy had in an interview suggested that in order to redeem the lost credibility the company should bring back Marti G Subrahmanyam, a professor of finance, economics and international business at New York University’s Stern School of Business, as co-chair.

    However, a report in the Business Standard on Monday said that if the company has to bring back Subramaniyam, it will have to pass a resolution to change the age limit for independent directors. Subramaniyam is now above 70, which is the retirement age limit for the company.

In an unexpected turn of events, NR Narayana Murthy, co-founder of Infosys, on Monday said he is stopping the battle that he started waging with the company's board over corporate governance issues though his concerns remain.

"Let me stop. I have made a point, paying such large sums of money is confusing. Now they have to sort it out," Murthy was quoted as saying in a report in Bloomberg Quint.

Later in an interview to CNBC-Tv18, Murthy said, "I have not withdrawn my concern.' adding that the concerns have to be addressed properly by the board.

Narayana Murthy and Vishal Sikka

Narayana Murthy and Vishal Sikka

The founders of the company, a pioneer in the IT services in the country, had been bringing to notice of the board a few corporate governance issues in its functioning. Murthy, along with Nandan Nilekani and Kris Gopalakrishnan had written to the board pointing out the issues and lack of transparency.


In the letter, they had also asked why Sikka's compensation was raised (to $11 million in 2017 from $7.08 million in 2016) and hefty severance packages offered to two top-level executives who quit the company.

Murthy, who has gone public with his views, questioned "paying the former CFO (Rajiv Bansal) a 30-month severance pay".

Infosys, however, has denied any corporate governance lapses, and has emphasised that its board is fully aligned with the strategic direction of Mr Sikka and is very appreciative of the initiatives taken by him in pursuance of this transformation.

Murthy has made it clear that his problem is not with Sikka or his capability but with the functioning of the board.

"The board comprises of good intentioned people with high integrity but even good people sometimes make mistakes; this is one such case," Murthy said in the interview to CNBC-TV18 today.

Meanwhile, Sikka at an investor meeting today said he shared a heartfelt warm relationship with Murthy. "NRN & I usually talk about quantum physics and technology," he told at a investor meet.


He also complained that the drama being played out in the media is extremely distracting and also stressed the need to continue staying engaged and ignoring the noise.

The latest developments come just ahead of a press conference by the Infosys board today evening.

There are expectations that the board members will clarify on some of the issues raised by the founders at the media briefing.

Here are the key issues raised by the founders:

1) Sikka's compensation: Sikka's compensation was raised sharply to $11 million in 2017 from $7.08 million in 2016. Of $11 million, $3 million is fixed salary and $8 million variable component, which is subject to the company achieving its targets. However, company sources have brushed aside the concern saying Sikka's compensation was misplaced and the hike is more in optics. Also, according to them, 98 percent of the company shareholders favoured the salary revision.

2) Severance package to former execs: The severance packages given to former Chief Financial Officer Rajiv Bansal and General Counsel David Kennedy have not gone down well with the founders. While Bansal was paid Rs 23 crore Kennedy received an aggregate of $868,250 plus reimbursements for COBRA (insurance) continuation coverage over a period of 12 months. Raising the issue Murthy had said he would not have flagged concerns if it had not been for the 1,800 e-mails he received from employees and investors highlighting the severance pay and governance issues at Infosys. He even said in an interview that if the high payment is not explained clearly, it amounts to "hush money".

3) Punit Sinha's appointment on board: This is another contentious issue raised by the founders. Sinha is wife of Union minister Jayant Sinha. Murthy has not been in favour of appointing a politician's wife on the board. However, the board has been of the view that Sinha is a qualified to be on the board.


Published Date: Feb 13, 2017 07:38 pm | Updated Date: Feb 13, 2017 07:43 pm



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