Murthy joins fight, slams ex-Board’s ‘inconsistencies’

Infosys co-founder NR Narayana Murthy on Tuesday took the fight right into the opposition camp, claiming that former chairman R Seshasayee’s statements concerning severance pay to former CFO Rajiv Bansal were inconsistent.

In an address to investors, Murthy said there were several variations in the statements of the earlier Infosys board over a period of time, and that it had not answered key issues raised by a whistleblower in February.

He, however, welcomed Nilekani’s appointment, stating that “now, we can all sleep better knowing that, under his leadership, the corporate governance standard practised by Infosys will be on par with the global best standard.”

On corporate governance:

Murthy pointed out that he had only raised issues about corporate governance of the board, and could not be held responsible for CEO Vishal Sikka’s resignation. “The very Board members to whom I have put forward questions on their governance deficit have instead misdirected it towards the CEO, perhaps to avoid answering my questions.”

The earlier board had in a statement said Murthy’s “continuous assault is the primary reason that… Sikka resigned despite strong board support.”

Murthy did make a few references to the Panaya case, but not in as much detail as analysts expected.

InGovern, a proxy advisory firm, said the company should go ahead and make the report on the Panaya deal public. “Nilekani should have in his press conference said that a white paper on this will be put out. They themselves are driving the agenda and they should provide the answers,” Shriram Subramanian of InGovern said.

Murthy further said the previous board reported in May 2016 and through other communication channels that the company had entered into an unusual agreement to pay an excessive sum as severance to the ex-CFO, Bansal, in October 2015. On June 18, 2016, Seshasayee told the shareholders at the AGM that the Board agreed to pay that sum to Bansal because he was “privy to a lot of price-sensitive information”.

“As there were several adverse media reports, Nandan, the other co-founders and I asked Seshasayee on June 28, 2016, how the Board arrived at this strange decision to pay such a large sum as severance. Seshasayee told us that the decision was taken by David Kennedy, the former General Counsel,” Murthy said.

 

On severance pay:

 

Murthy went on to add that on July 15, 2016, when he asked the board members, in the presence of Nilekani and K Dinesh (another co-founder), why they agreed to pay such a huge severance amount, Jeff Lehman, the board member said it was confidential. Another board member, Roopa Kudva said they would be informed about the reason only if they signed an NDA. Both Lehman and Kudva were independent directors.

 

On October 14, 2016, Seshasayee told them the Board agreed to pay this sum “because they felt generous”. “Given such a set of inconsistent responses from the Board, would not any concerned shareholder come to the conclusion that the Board was not being transparent and was, perhaps, misleading us, the shareholders?,” Murthy asked.

Seshasayee, who is currently in the US, did not take calls, nor did he respond to messages.

Link: Business Line – 29 Aug 2017