Murthy blasts Infosys’ old board, defends own role

30 Aug 2017


Infosys founder N R Narayana Murthy on Tuesday again raised concerns about ''poor governance'' by the previous board of the company, primarily the ''non-transparent'' manner in which it addressed issues surrounding the high severance pay of former chief financial officer Rajiv Bansal.

He also said co-founder Nandan Nilekani coming back to lead the company as non-executive chairman of the board would bring back achhe din (good days) to Infosys (See: Nandan Nilekani vows to clear Infosys of bad blood).

''My main concern is the poor governance practised by the previous board,'' Murthy said at an institutional investor conference organised by Investec.

He went on to say that the board, led by Seshasayee, failed to explain the actual reason for the ''excessive sum as severance to the ex-CFO, Mr. Rajiv Bansal''.

Murthy defended his own role in a months-long war of words with the company's board that led to changes at the top, saying his actions were in the interest of shareholders.

He said he hoped the company's management would rally behind Nilekani, who was named as non-executive chairman last week.

Vishal Sikka, the first CEO of Infosys drawn from outside its founders, resigned this month, blaming Murthy for creating an "untenable atmosphere".

Sikka's sudden exit sparked a sell-off that wiped billions of dollars off Infosys's market value, forcing India's No 2 IT services firm to reshuffle its board and bring back Nilekani.

"In fact, based on Nandan's media interviews and the recent changes in the board, I believe that corrective actions have already begun," Murthy said.

The return of Nilekani, who is credited with quadrupling Infosys' revenue to $2 billion, has cheered investors - he is widely expected to end the board's row with founder executives, help clients and boost employee morale.

Nilekani told investors last week his priorities were to find a CEO, reconstitute the board and shape future strategy.

'Inconsistent' replies
Murthy in his statement questioned that manner in which the board gave ''inconsistent'' replies to the issue of the high severance pay to Bansal. When Bansal left in 2015, Infosys agreed to pay him Rs17.38 crore as severance - which equalled about two years of his pay. However, the company actually paid only about Rs5 crore before the payments were suspended.

''On July 15, 2016 when I asked the board members, in the presence of Nandan (Nilekani) and (K) Dinesh, why they agreed to pay such a huge severance amount, Mr. Jeff Lehman (board member) said it was confidential and could not be disclosed to us! Ms. Roopa Kudva (board member) said that we had to sign an NDA if we wanted to know the reason! So much for shareholder transparency and democracy! On October 14, 2016, Mr Seshasayee told us that the Board agreed to pay this sum because they felt generous!'' he said.

Bansal's severance pay has been one of the main contentions of the ongoing battle between Infosys' founder, its former board and Sikka.

Murthy quoted verbatim from a whistleblower complaint, which said that Seshasayee lied about the reason for payments made to the ex-CFO ''to protect the company from its secrets being compromised''.

He also took issue with a company statement about an independent investigation which absolves the management from allegations regarding benefiting directly from the acquisition of Israeli software firm Panaya and other acquisitions.

''This statement does not mention whether the investigation addressed the allegations of the whistle-blower regarding the serious governance deficits of the Board and the CEO in the matter of the severance agreement with the ex-CFO,'' said Murthy.

Murthy has consistently held that Infosys should release the full report of the investigation into the allegations made by the whistleblower.

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