Forbes India 15th Anniversary Special

Current friction also a function of cultural difference: Infosys chairman

Infosys chairman R Seshasayee and CEO Vishal Sikka deny subversion of governance standards; say framework needs to be formed to share information lawfully with different shareholders

Published: Feb 13, 2017 06:23:01 PM IST
Updated: Feb 13, 2017 09:17:29 PM IST

Current friction also a function of cultural difference: Infosys chairman
Image: Abhishek Chinnappa / Reuters (Image for illustrative purposes only)

The board of Infosys will look to find a way to “get information flowing” to a certain set of its shareholders (the company’s founders who aren’t a part of active management now) in a lawful manner to reduce the friction seen between the two, according to R Seshasayee, Infosys’ non-executive chairman.

The board and key management of one of India’s largest information technology (IT) companies, including Seshasayee, managing director and CEO Vishal Sikka, chief operating officer Pravin Rao, and independent director Roopa Kudva spent an hour-and-a-half with the media in Mumbai on Monday to clear the air over the controversy that has haunted Infosys over the past few weeks. Other directors of the company including Kiran Mazumdar-Shaw, Ravi Venkatesan, Jeffrey Lehman, DN Prahlad and Punita Sinha joined the press conference remotely.

Seshasayee, who did most of the talking at the interaction, stated that the intention behind hiring law firm Cyril Amarchand Mangaldas wasn’t because the present management and board of the company and its founder-shareholders, including NR Narayana Murthy, were at loggerhead, but to get its guidance on chalking out a governance framework that will take into consideration the well-being of all in a diverse set of shareholders.

“There is no battle (between the founders and the Infosys board). A battle happens if there are conflicting views,” said Seshasayee. “In this case there is a confluence of intentions since we all have Infosys’ best interest at heart. Differences of opinion and divergent perspectives will always be there as the board of the company, it is our responsibility to assimilate the key messages emanating from the noise and calibrate action accordingly.”

Amid public criticism of some of the decisions taken by the company’s board by the likes of Murthy and former chief financial officer TV Mohandas Pai, Infosys’ current management took the opportunity on Tuesday to reiterate its position on various contentious matters. In essence, Seshasayee re-emphasized that all decisions – be it to award a Rs17 crore severance package (albeit only Rs5 crore has actually been paid) to former CFO Rajiv Bansal; or appoint Prahlad and Punita Sinha (wife of union minister Jayant Sinha) as directors; and approve the hike in Sikka’s compensation (from $5 million to $11 million, though $7 million of this is variable and linked to performance and longevity) was taken after following due process.

The Infosys chairman unequivocally stated that while some of the business decisions taken by the board may be criticized and on valid grounds, there was never any lapse of governance. On the issue of the severance package approved for Bansal, Seshasayee stated that while payment of the remaining sum of the package to Bansal had been suspended, Infosys would legally examine possibilities including whether the remaining amount can or should be paid to him, or if it can be renegotiated and the legal implications thereof.

Over the past few days, Infosys’ founders, known for being thrifty, had also brought accusations of profligacy against Sikka. Among the illustrations cited to demonstrate Sikka’s extravagance were usage of chartered corporate jets and a spanking new office that Infosys has got for itself in the US.

The Infosys chairman explained that of the 50,000-60,000km that Sikka flew around the world each month to meet the company’s clients around the world, only 8 percent of that was on chartered flights. Explaining the new office that Infosys has moved into in the Bay Area of San Francisco in the US, Seshasayee said that that was a part of the transition that has been unfolding at Infosys. The company, under Sikka’s leadership, is focusing on becoming a front-office offering innovative digital solutions to clients; from just being a back-office that offers IT support to clients as a vendor. This shift in brand positioning needed Infosys to move to an office with right, high-street address, Seshasayee said.

Responding to a question also in connection with Sikka’s alleged profligacy and extravagant pay, Seshasayee stated that Infosys need to structure salaries for its employees that would measure up to global benchmarks and incentivize them for the stiff operational targets set out for them.

The Infosys chairman also attributed the current difference of opinions between the founders and the board to “cultural differences” between generations. “These differences will always be there between one generation and the other. They have to be recognized and managed within the proper governance framworks,” he said.

Sikka, who spoke sparingly at the press meet, stated that it was the higher goal of transforming Infosys into a new-age organization that will withstand the disruption that automation will bring to the IT sector that drove him in his current job; and not a fancy pay package. He also said: “It is also important not to undervalue oneself. How can we expect our clients not to undervalue us and our sales teams not to undervalue themselves, if we undervalue ourselves.”

Both Sikka and Seshasayee sought to convey a sense that their relationship with Murthy was still cordial and respectful; and that the process of dialogue will continue. “Earlier today I was speaking to him about the Apple Watch, which is the first watch I have had in 20 years,” Sikka said lightheartedly. 

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