Infosys tweaks severance pay rules

Infosys Ltd shares opened firm today after news reports suggested that the row over corporate governance at the company may end soon with founder Narayana Murthy affirming faith in non-executive chairman R Seshasayee.

Infosys shares opened 0.72 per cent higher at Rs975 on BSE, while the BSE Sensex opened 0.41 per cent higher.

Murthy said Seshasayee's has the ''highest integrity'' and that he has no issues with the board.

Murthy's comments come ahead of chief executive Vishal Sikka's meeting with institutional investors on Monday and a board-convened first media interaction in its history.

However, the Infosys founder has not given a clean chit to the company's board, which has agreed to change the severance pay rules of its management team, which Murthy, the most visible face of the company he founded and led as CEO for years, had criticised as violation of corporate governance norms.

Murthy said he is still concerned with the governance lapses at the helm of the company. He also called for full transparency in governance and demanded that people responsible for it should become accountable.

Besides Murthy, other former executives like T V Mohandas Pai and V Balakrishnan had also criticised the Infosys board over governance issues.

Infosys board, however, say the concerns are due to ''perception challenges'' because of a combination of shifts – from founder-chief executive officer to founders-led board to professional chief executive and an independent board.

Also, Infosys is in a transformative phase from an IT services company to services and software entity.

''As for the quantum (of compensation to Rajiv Bansal, then the finance head, at end-2015), while it is not ordinary, when we look back in hindsight, lessons could have been learnt and action has been taken,'' said Roopa Kudva, independent director at Infosys and managing director of Omidyar Networks, a company that looks at social impact investments, in a phone interview. ''We have done benchmarking for severance pay, according to each country and reworked the senior management contract to reflect it.''

She said there are no irregularities or 'hush money' paid in the Bansal episode at Infosys, which has strong internal audit controls.

Infosys has hired law firm Cyril Amarchand Mangaldas to engage with stakeholders, including the founders, and take suggestions to recommend to the board, even as it independently engages with them as large investors.

The founders collectively have around 13 per cent of the stake in Infosys. Life Insurance Corporation has 7 per cent.

''The most important thing is that the founders and the board need to have a good alignment. These differences are based on perception challenges. That is what we are trying to overcome,'' said Kiran Mazumdar-Shaw, a board member and chairman of Biocon.

Sikka, who took over as the first non-founder chief executive, has focused on transforming the company from a services firm to one that sells services and software. He had also set an ambitious target of $20 billion annual revenue by 2020 against the current year target of $10 billion.

Kudva, who is on three committees at Infosys (audit, finance and investment, and risk and strategy), says in Sikka's compensation there is a higher variable component, not in cash but with stocks, linked to achieving of targets.

However, the market is still abuzz that Infosys board will be making some important announcements at its meeting with investors and the media on Monday evening in Mumbai

Meanwhile, markets regulator Securities and Exchange Board of India (Sebi) is closely watching the developments at the company.