Top execs at Infosys being paid too much: Narayana Murthy
10 February 2017
Infosys co-founder N R Narayana Murthy told a financial daily that the software giant needs to bring in Marti Subrahmanyam, who is a professor at New York University's Stern School of Business, as co-chairman in the board and appoint D N Prahlad, an independent director with the firm, as the chair of the nomination and remuneration committee.
Speaking to The Economic Times, Murthy questioned the large severance package offered to the company's former chief compliance officer David Kennedy and former chief financial officer Rajiv Bansal. He also raised objections to chief executive officer Vishal Sikka's compensation package. He sought the replacement of independent director Jeffrey Lehman as the head of the nomination and remuneration committee.
Murthy's interview to the financial daily comes even as Infosys' board of directors has appointed law firm Cyril Amarchand Mangaldas to engage with the company's founders over concerns raised by them on disclosures and transparency.
According to Murthy, Sikka generally requests for some of his time when the latter is in India, and the two usually meet at Murthy's house to talk over a shared meal.
In the interview, Murthy said since he voluntarily left the company in 2014, their discussions have always been centred around technical topics. Calling Sikka "a rare technocrat", Murthy made it clear that neither had he ever sought to advice Sikka on how to execute strategy as the CEO of Infosys, nor had Sikka ever sought his advice on such matters. Further, none of the founders had sought to intervene in Sikka's functioning.
Murthy asserted that Sikka had been given a free hand and that the culture at Infosys ensured that predecessors have always wished for the best for their successors.
While Murthy asserted that there was no personal split between the founders and Sikka, one of the original concerns raised by the founders had been the high pay package offered to Sikka. This topic of contention came up in the ET interview too.
Murthy explained that in developed countries, companies with good governance have a 1:2 ratio between the CEO's salary and the salary of the employee at the next level. At Infosys, Murthy said, the difference between the CEO's salary and the entry-level salary for a software engineer stands at 2,000 times.
Stating that capitalism is still nascent in India, Murthy said that it was the responsibility of the "leaders of capitalism" to ensure that these ratios are lower. This is one area where Murthy has pushed for a change, stating that the chair of the nomination and remuneration committee and the chair of the board have a huge responsibility when it comes to such things.
Further, keeping with his views on the topic, he sought the replacement of Lehman as the head of the nomination and remuneration committee.
The founders have also highlighted the issue of large severance packages offered to departing high-level employees, particularly Bansal and Kennedy. Murthy brought up the issue during the interview, stating that such large packages smacked of some irregularity, and would look like "hush money" to outside observers.
"Providing huge severance pay (with 100 per cent variable) to some departing employees while giving only 80 per cent variable for employees in the company is one such example," Murthy told ET.
Further, Murthy said that terming such high packages as "generosity", even if nothing objectionable had taken place, would only appear to be "arrogance towards honest employees, total lack of fiduciary responsibility, and an unbelievable lack of application of mind".
Murthy's prescription for the what he viewed to be the current issues ailing Infosys was to bring in former Infosys employees, who have been "schooled in the Infosys values", in various capacities. Particularly, though, he suggested that Marti Subrahmanyam needed to be brought in as co-chair in the board.