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Truce on the cards? Infosys Management, founders to deal bilaterally, says Chairman

In an effort to put reports of rift to rest, Infosys Chairman R Seshasayee has said that the management and shareholders have decided to keep their ‘differences’ within the company and not to publicly air them.
India TV Business Desk New Delhi February 15, 2017 10:20 IST
India TV Business Desk

In an effort to put reports of rift to rest, Infosys Chairman R Seshasayee has said that the management and shareholders have decided to keep their ‘differences’ within the company and not to publicly air them.

Seshasayee, who on Tuesday reached out to the company's billionaire co-founders to see that the rift between them and the management over corporate governance issues does not spill into the open, said that the co-founders and incumbent top executives will interact bilaterally to sort out their differences.

“We agreed that we should not have such interactions through the media and should do it bilaterally. There has been a renewed commitment not to spill any such discussions into the public space,” he said.

Asked if the management had reached out to the promoters over the outstanding issues, Seshasayee replied: "I reached out to the founders, the day before yesterday (Sunday) and we had frank discussions... and both of us agreed that we should not have these kinds of interactions taking place through media." 

In an apparent reference to the public exchanges that have been taking place over the last week, Seshasayee said it is ‘not in the interest of the institution’. 

With some of the co-founders, including N R Narayana Murthy, questioning a steep hike in his pay package, Chief Executive Vishal Sikka, along with Seshasayee, addressed investors for the second day in a row to assuage their concerns. 

Sikka, who reportedly described a whistleblower's letter over severance package to former CFO as a direct, reckless, malicious, slanderous and personal attack on him by diabolical minds, said that Infosys clients have not raised any questions on alleged governance lapses and have come out in ‘strong support’ of the company. 

"There are no questions from clients. In fact, several clients have written very strong words of support. I felt very thankful and was moved by that. Over the last 3-4 days, I have received e-mails from huge clients expressing their strong support," he told investors over a call. 

On Monday, he had met investors and held an elaborate press meet to clear the air over his pay hike and severance package to the former employees -- the issues that Murthy and other co-founders had raised. Other sticky issues included appointment of independent directors Punita Sinha and DN Prahlad. 

At the heart of the spat is also the unused USD 5.25 billion (over Rs 35,000 crore) cash lying at Infosys which former key executives believe should be used to improve shareholders' return rather than reward certain employees with hefty compensation and severance packages. The co-founders, who between them hold close to 13 per cent stake, have contended that the board has not responded satisfactorily to their concerns. 

Sikka said he had met top performing employees as well as some members of the management team, and despite the ‘distractions, the team is focused on performance’. 

"I had a meeting with some of our top performing employees and some of our management team. This kind of noise in the media creates distraction for all of us, but there is a very strong focus on execution. The management team is headstrong and focused on closing of this year and preparing for the next year," he said. 

‘Management did not make timely disclosures’

Meanwhile, company’s former chief financial officer Mohandas Pai has accused it of not disclosing necessary details on Rajiv Bansal's exit with a high severance package of Rs 17.3 crore. 

"In October 2015, they had a press release saying the CFO is going, and both the CFO and CEO said nice things about each other. They did not disclose (the severance package)... They didn't disclose after the December quarter (results)," Pai said.

Pai claimed that the company disclosed the severance agreement it had reached with the then CFO Bansal in the annual report only after the media got a whiff of the matter. 

"Nobody pays you 24 months of severance in India," he said and also questioned the current management's justification on a lack of chemistry between Sikka and Bansal. 

Stressing on the importance of the post, Pai said the CFO is responsible for financial integrity and added that the audit committee of the board should have stepped in with posers on the high payout to "get rid" of a person who is inconvenient to the management. 

Pai, who left the company in 2011, said that the controversy has been triggered because the promoter group led by Narayana Murthy feels that the board has erred in abiding by the high standards of corporate governance with which it had grown the company.