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Later in an interview to CNBC-Tv18, Murthy said, "I have not withdrawn my concern.'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
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.
Updated Date: Feb 13, 2017 19:43 PM