Suspicion about severance pay being hush money disturbing, says Seshasayee

The truce comes after Infosys' clarification that it has not any engaged in illegal transactions

7:15 PM: Diluted power of the board:

It is not appropriate for anyone to disclose any material (information) to anybody. These are questions from the media. 

I think there is a road for the board, and a road for the management. So long as we have the policy, so long as the conformity, so long as it reflects the value.

We live in a glass house, please don't get into issues that are non-value adding. It is disturbing for stakeholders, nobody bothers.

7:06 PM:Settled differences with Murthy: 

Seshayee:

As I have said, we both have had conversations. We both agree that we need to work in the interest of the organisation, we progress on the improvements to make. What is possible we have done, whatever we have done, we need to communicate more.

We have to invest.

Sikka:

There are no differences with promoters. I meet Murthy four to five times a year. I have very deeply heartfelt relationships. Earlier today we were taking about Apple watch.

His wisdom and experience is deeply valued which is viewed as criticism. I think it is okay to view criticism from founders.

7 PM: Seshasayee on Murthy:

Murthy was gracious enough. We will give the inputs to consider, we don’t need to go through the media.

There would be aberrations. Whether we are able to pull back, we both have congruity of intersts.

6:50 PM: Vishal Sikka addresses the conference:

We are custodians of the institution. Well the management's primary responsibility is to the company

Strategy:

New, Renew and Culture --  first meeting which was in June 2016 and Mr Murthy talked about culture.

I left India when I was barely out of my teens and had the deep adherence of upholding the tradition.

Whil our focus is performance, there is a lot of that we are proud of -- reveneue, margins, restoring the sense of confidence, customer satisfaction. It is really what they value that defines what we are.

6:46 PM: Governance looking forward:

What do we do going forward in terms of governance.

Other than the banks,  why is it necessary in a company like infosys? Because there are vast number of shareholders.

Therefore you have many shareholders, different need for consultations in the board. 

If you have a promoter, or family promoter organisation -- Infosys was always exception. In large number of companies, you will find an unified point of view. 

Diversity of view points, different kind of views. 

In order to do that , we have to do within a legal framework. We have a number of people who are coming to retirement

We need to make sure that the succession plan is orderly so that there is no narrow point of view, of one  group. This is not for the law firm to mediate. It is not about fight, it is about passionate expression of comments.

We will continue to enage with all stakeholders. We are engaging with all founders, we engage with founders, separately, collectively, we get inputs from them.

At the end of the day, we are answerable and to all the sharheolders -- 100 per cent of shareholders. We have fiduciary responsibility for all sharehoders. What we can do and what we cannot do. That is the context in which Cyril Mangaldas Amarchand has been engaged.

6:40 PM: We need to recognise a global company and someone, which is in the cusp of the major transformative itself, rebrand itself, to get the right talent.

The value delivery that is being brought to the global talent. This is a transformation path. 

One of my colleaguges: Prahlad said we should try the soul of the small man. It is still a valid dictum.

There is no expenditure that is incurred without value. It is the responsibilty of the management, the board and it is the responsibilty of the board to ensure that the cost of value is set.

What is the right value of governance? Fundamentally, we should have robust financial controls.

The financial controls in Infosys are of global standards. Thanks to the visionary idea of the founders.

I started as an internal auditor. We have an audit committe chaired by Roopa who is active and engaged. We have instruments to ensure that there are no aberrations, we have policies. 

All of that is in place. 

The reason why we look at numbers -- we are looking at isolation, partially and giving explanations.

6:35 PM: Profligacy of CEO

Why is Mr Sikka using corporate jet? We do not have a corporate jet. He has chartered flights. I was looking at travel details. 

The CEO expenses will be approved by the audit committee. From November to January - Vishal was travelling 50,000-60,000 kilometers a month. Eight per cent of that was on chartered flight.

Focusing on the past without focusing on the value is a disservice. If you expect the CEO to contact customers, it is important that we have the equation with cost and value

6:28 PM: Anonymous whistleblower:

A complaint from an anonymous whistleblower was received, but as a good practice, we look at various angles.

If there is any evidence of wrong doing. We asked them whether you have a law firm who can look at it, at our cost. But no response. We took it oursleves, did it independently. 

There is no intention to silence global law firm, shadowed by our audit firm. Then we put it on our website in October 2016.

We had applied our mind, we cleared that this was the best process to do it. We consulted global law firms, we are not stepping down on various processes. There was no intention to silence.

This was not to silence, no impropriety to do that. We believe that it is being put to rest.

It is the same old issue, we have the same answers. We only be repeating whether it comes now or later, it is the same issue.

6:23 PM: Severance of Rajiv Bansal:

While determining the severance pay for Mr Bansal, we explained the circumstances. At that time, there was a business judgement and application of mind. 

I have no hesitation, perhaps that judgement would have been different if circumstances were different and there were processes.

More certain package available as part of the employment contract. The learning was that the subjectivity element should have been taken away.

One is the severance table for various geographies, various executives. And, we wrote a new employment contract for all key management personnel.

The perception was that there was no application was mind. There was a subjective element. We shouldn't have a subjective element and have made changes in the employment contract in October 2016.

I don't think there was a governance issue.

Is this issue relating to suspicion, is this is hush money -- that is deeply disturbing.

6:18 PM: Shareholders: Postal ballot

We thought it is good that we should get shareholders approval. That is the reason we sent postal ballot. So that it is approved before April.

6:15 PM: Vishal compensation:

It has been suffficiently been explained. 

The data points, high compensation was raised to $11 million. The fixed component has come down from $5.8 million to $3  million. One component was linked to longevity of Vishal. It is normal practice to longevity linked incentives.

The  performance:

It was a three-month process. Aligning the CEOs compensation was normal global practice

We had got benchmarking done by a global consultancy. We linked it to performance-driven compensation at other global consultancies. It included compensation and we also ensured that we gave a motivated package to Vishal for leading this company with a very ambitious target.

That had 98% approval from shareholders. 
 

6:10 PM: Appointment of directors:

Dr Punita: Extremely accomplished professional. You would be agreed a woman should not be judged by the profession of her spouse.

We have three women directors. We don’t think it is a governance issue

Appointment of Prahlad

Criteria: There is no doubt that Prahlad was suggested when we were looking for people with knowledge of the business. Prahlad’s name was recommended by the founders, we had a process, Four of us had the process of meeting him. He has a deep understanding of the business. Considering that we have a board with many industrialists, not having deep knowedge of the industry

6:06 PM:  Seshasayee thanks employees:

I don't look at this as battle. If you have two people with two conflicting views, here the stakeholdres - founders and others who have nothing other than the best interest of the comapny in mind.

Obviously, lot of passion, if you have invested in -- great deal of passion.

We are bunch of professionals, with no other interest than discharging the professionalism withh the best interest in the country.

I don't think this is a battle. For sure, you will have differences, differences in perceptions, differences in business judgements. It is our job as the members of the board to listen to, take nice and the substance that is delivered to us.

Those are messages, it is our obligation to listen to voices, assimilate these voices, and calibrate our actions

We look at it purely as an excerise, to understand various different view points.

I don't think this as a big battleground pitching one against another. The objective of press conference is to look at primarily all issues, the principles that have been raised on governance.

This institution has been built on strong governance values and it is our duty as trustees to uphold and enhance this value system. It is in this context, I lay before you the facts and figures, also the processes involved in the governance.

6:01 PM: Vishal Sikka, Seshasayee, Infosys Chairman are at the press conference.

10:50 AM  Have a wonderful and warm relationship with Mr Murthy, says Sikka

On his relationship with Infosys founders, Sikka said his relationship with founders is wonderful. "I meet Mr Murthy quite often. I have a heartfelt and warm relationship with him. We usually talk about quantum physics, I ran into Kris, I have not seen Nandan for over a year," said Sikka and dismissed media reports as 'distracting drama.'

10:40 AM India would see the biggest impact on jobs due to automation, Sikka, said, quoting a research report.

We have to eliminate our own work to automation, improve productivity, deploy the improved productivity to innovation," Sikka added.

Technology continues to change and we have to continue to adapt, Sikka said. 

"Instead of 10 people, what if we have 3 people to work on it. If we don’t have the software, then some others will take the advantage..Having software together with education is something that is critical for our business.This, in essence, is the nature of our journey ..If you look at the 3.5 million people in our industry, the only thing that I see in the future is automation."

10:30 am: Attrition has come off since my taking over: Vishal Sikka

Infosys CEO Vishal Sikka stressed that attrition has lowered since he took charge. He adds that the company's attrition is rate has fallen below 15 percent (from 23.4 percent) since he joined. "We are simplifying internal processes to become more agile." He also said that during his tenure, $100 mn accounts have increased from 12 to 18.  Endeavour is to move toward transformative projects from grass root level, said Sikka at the investor meet.

He said Core IT services continues to grow; focus remains on renew, innovate, automate

Employee costs as a percentage of revenues have declined, he added. 

In the last 12 months, total number of employees released due to automation stands at 8500. Sikka clarified that they have not been sacked.

One key part of our cultural strategy is the cultural dimension, the other is agility and education

In the last 2.5 years, revenue has gone up from $8.5 billion, and it just crossed $10 billion in LTM basis

We have been investing in onsite learning. We will be able to train everyone in Infosys by year end in design thinking

10:15 AM Revenue has grown $400 mn every quarter since I joined, says Sikka

Speaking at the meeting with institutional investors on Monday, Infosys CEO Vishal Sikka said that despite a challenging environment in the last nine months, Infosys has maintained operating margins. 

Here are the highlights of his speech: 

In the last seven quarters, our utilisation has gone up by 80%

Employ costs have come down

Onsite can do better..Our endeavour has to be on the 30% onsite number

One area of disappointment is the consulting business.  In Q1, negative performance of consulting impacted more than we expected

If you look at on the time - revenue per quarter ha gone by $400 million per quarter, opertaing margins have remained same, operating profits have gone up

When I had joined the attrition rate was at 23.4 percent. It is little below the 15.2 per cent now
 

10:00 AM: Murthy calls off battle with Infosys board

Infosys founder N R Narayana Murthy has called off the battle with the software major's board, while reasserting that the company should ensure corporate governance norms are not diluted.

"Let me stop. I have made a point, paying such large sums of money is confusing. Now they have to sort it out," Murthy was quoted as saying by Bloomberg on its India website.

The truce comes after Infosys clarified that it has not any engaged in illegal transactions or paid "hush money" in the guise of severance pay made to former chief financial officer Rajiv Bansal. The company also made changes to its severance pay rules based on the local laws for such pay in each country.

"As for the quantum (of compensation), while it is not ordinary, when we look back in hindsight, lessons could have been learnt and action has been taken,” said Infosys' independent director Rupa Kudva – who is also the director of Omidyar Networks, a firm that looks at social impact investments – in a phone interview to Business Standard. "We have done benchmarking for severance pay according to each country and reworked senior management contracts to reflect it," Kudva added. 

She also said that there were no irregularities or hush money paid in the Bansal episode at Infosys, which has strong internal audit controls, but has also been found in external audits.

Murthy's backing down comes even as he won small battles with the Infosys board. His recommendation to appoint relative and former Infosys employee D N Prahlad on the board was honoured last year. 

The board members say the concerns were largely due to a transition from a hands-on executive board to to an independent board and the judgement taken on decisions that could lead to changes in perception. 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 have around 13 per cent stake in Infosys, while Life Insurance Corporation has seven per cent stake.