Just as the boardroom battle at Tata Group appeared to be ending, media reports indicate that another one is brewing at Infosys, the country’s second-largest information technology (IT) company.
In a letter to Infosys’s board of directors, the company’s founders have reportedly questioned, among other things, the hefty compensation paid to CEO Vishal Sikka and the particularly generous severance packages doled out to former CFO Rajiv Bansal and former chief compliance officer David Kennedy.
For fiscal 2016, Sikka was paid Rs49 crore as salary, which included a variable pay and restricted stock units. This payment was over 750% higher than the Rs4.6 crore he drew between June 2014 and March 2015.
The company paid Rs17.4 crore as severance pay to ex-CFO Bansal who quit in October 2015 to join ride-hailing startup Ola. Kennedy, who quit the Bengaluru-based firm last month, too, was paid $868,250 (Rs5.8 crore).
In the letter, the founders have also reportedly questioned the revenue growth target set by Sikka, seeking to know how Infosys plans to achieve it given the global uncertainties. In 2015, Sikka had set a revenue target of $20 billion by the year 2020. Infosys’s annual revenue is currently around $9 billion.
“The board receives suggestions and inputs from various stakeholders, including promoters, which are evaluated with due importance. The company will continue to be guided by the overall interests of all stakeholders,” Infosys said in a statement replying to Quartz’s query on the latter. “With regard to concerns on governance being discussed in the media, we would like to reiterate that all decisions have been made bona fide, in the overall interest of the company, and that full disclosures have already been made thereon.”
In June 2014, Infosys’s management appointed Sikka CEO, a post successively held by co-founders till then. Sikka, a Stanford alumnus, had spent 12 years with German software major SAP before coming to the Indian tech firm.
Following Sikka’s appointment, the Infosys co-founders, led by NR Narayana Murthy, bid farewell to the company 33 years after founding it. However, the co-founders’ group remains its largest shareholder, with a combined stake of 12.75%. Other prominent co-founders, who were also CEOs, are Nandan Nilekani, S Gopalakrishnan, and SD Shibulal.
Since his appointment, Sikka has been focusing on automating the mundane back-end work that Indian IT companies are known for, and growing the company’s portfolio of innovative offerings. He has beefed up Infosys’s engagement with the global startup community by setting up an investment arm that backs new technologies, with an eye on staying relevant amid a rapidly changing business environment.
Some observers now fear that the boardroom tension at Infosys could trigger a Tata-like coup. In October 2016, Tata Sons, the Tata Group’s holding company, unceremoniously dismissed chairman Cyrus Mistry, and brought back former chairman Ratan Tata to the corner office, albeit temporarily.
Infosys’s founding team, too, may try to oust Sikka, Shriram Subramanian of proxy advisory firm InGovern told television channel ETNow. “They (founders) may move as a shareholder and try to either remove Vishal Sikka or even some other board members who are on Vishal Sikka’s side or supporting Vishal Sikka,” Subramanian said.