Appoint interim chairman to talk to Infosys founders: Ex-CFO V Balakrishnan

Balakrishnan added that disclosure levels at Infosys were 'very bad' on the large severance payments

As the rift between the founders and its board widens at Infosys, its former CFO V Balakrishnan on Sunday said an interim chairman should be appointed at the earliest to "effectively" engage with its billionaire co-founders.

Demanding that Chairman Ramaswami Seshasayee step down, Balakrishnan said the chairman should take responsibility for the "lapses" in corporate governance at the Bengaluru-based company.

"I think the founders had raised certain issues on governance, which had happened in the last two years and I said the right way for the board ... Is not to take a confrontational approach," Balakrishnan said. 

"Somebody has to take responsibility for all the lapses. That is why I had suggested chairman stepping down, getting an interim chairman and effectively engaging with founders and come to a conclusion," Balakrishnan told PTI in an interview.

Balakrishnan – who worked with Infosys for over two decades – seemed to be espousing the grouse of co-founders NR Narayana Murthy, Nandan Nilekani and others, who together own 13 per cent of the company.

Some of the co-founders have publicly aired concerns about CEO Vishal Sikka's $11 million pay and expensive severance packages for former executives, Rajiv Bansal (CFO) and David Kennedy (General Counsel).

"...There seems to be a lack of trust between the board and the founders ... Whenever a large shareholder in any public company raises some concerns, boards generally talk to the shareholders directly, take its concern on board and address those concerns. Here you have the company (Infosys) appointing a law firm to mediate. I don't see any company doing that," he said.

"If required, re-constitute the board and move on," he said, adding that this kind of a "public spat" is always a distraction for any company that affects the morale of employees and client sentiments.

Asked about his views on the board backing Seshasayee, Balakrishnan said: "I don't know whether the board is fully backing him (Seshasayee) because at the end of the day, the issue is that there are large shareholders who are not ordinary shareholders, who are iconic founders who built the company."

"They raised some issues of governance and I think the board should address that. You cannot hide behind the fact that no we are all together, we are following practices," he said.

Balakrishnan went on to say that disclosure levels at Infosys were "very bad" on the large severance payments made in last few years.

"It was a big let down. You can't make such a large payment and give some wishy washy statement on why they made the payment. So I think the value system seems to be compromised. The governance disclosures were lacking and somebody has to take responsibility for it. The board takes the collective responsibility but the responsibility lies mainly at the door of the chairman," he said.

Sikka was paid Rs 48.7 crore in base salary, bonus and benefits last year as compared to the base salary of Rs 4.5 crore for a partial period in 2015. His annual compensation was raised to $11 million (Rs 74 crore) last year. Sikka, 49, whose term has been extended till 2021, took over as CEO in 2014.

Former CFO Rajiv Bansal was paid Rs 17.38 crore or 24 month's salary, as severance package. Its former general counsel David Kennedy received severance payments of $868,250 (Rs 5.8 crore) and other reimbursements over 12 months.

"I think it is in the best interest of the company for the board to shed its ego and effectively talk to the large shareholders and settle the issues," said Balakrishnan, who, along with former CFO T V Mohandas Pai, had sought a $1.8 billion buyback in 2014 just as Sikka was taking over.

The board had not responded to his suggestion then.

Citing the example of Cognizant, he said it is a global practice that the board takes immediate action on concerns raised by shareholders.

"They (a section of investors) wrote a letter to the board that they (Cognizant) reconstitute the board and called for a big buyback ... Board spoke to them and agreed. That is how the whole world works. When a large shareholder raises some concerns, they have to engage with them and address the concern," Balakrishnan said.