Proxy firms question Infy's severance package to ex-CFO

Experts say that offering of a "non-compete fee" to top executives during separation is a standard practice

Non-disclosure of the severance package offered to Infosys' former chief financial officer (CFO) Rajiv Bansal in his annual compensation for FY16 has been questioned by proxy advisory firms and experts.

However, most of them agree that offering of a "non-compete fee" to top executives during separation is a standard practice.

In FY16, Bansal's total annual compensation was Rs 23.02 crore, including a gross salary of Rs 1.31 crore. This compares with a total annual compensation of Rs 4.72 crore he earned in the preceding year, according to the company's annual reports.

It is a standard practice among tech companies to include "non-compete fee" in the severance package, said Shriram Subramaniam, founder of InGovern Services, a proxy advisory firm. In case of Infosys, Bansal was the CFO for less than two years. The package, they say, is commensurate to his role in the company. "I am surprised they neither disclosed the amount nor made any announcement about the compensation," added Subramaniam.

Bansal, a chartered accountant, had joined Infosys in 1999. In November 2012, he took over as the CFO of Infosys, replacing V Balakrishnan, who decided to take up other roles in the company. Bansal joined taxi aggregator Ola as CFO after quitting Infosys.

"The compensation package of Rajiv Bansal, as outlined in our annual report, includes fixed pay, performance bonus and long term bonus. In addition, at the time of his exit, the company signed an enhanced non-compete and non-disclosure agreement, which includes a severance package, to be paid over a period of time," Infosys said in a statement.

"It is a bit unusual," said Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS), a proxy advisory firm. "It perhaps makes sense if someone is being asked to leave, but when someone is resigning from the company, why is there a need to pay him extra?" he added.

In FY16, Bansal was the second highest paid employee after CEO & MD Vishal Sikka, who was given an annual compensation of Rs 48.73 crore, including variable pay and other components. Chief Operating Officer U B Pravin Rao, who is also a board member, was compensated with an annual package of Rs 9.28 crore.