Four bones of contention between CEO Sikka and Infosys founders
NEW DELHI: There are indications of a rift between the first non-promoter CEO of Infosys, Vishal Sikka, and a section of the IT major's promoter-shareholders who are said to have expressed concern over what they see as shifting values.
The founders, together, own 12.75% in Infosys, with N.R. Narayana Murthy and his family owning the largest block. Majority of the board, led by chairman R. Seshasayee, however, backs Sikka.
Below are the major flash-points between the company and its founders:
1. Sikka's salary
A sharp increase in Sikka's compensation early last year is said to be the biggest flash-point. The company says Sikka's cash compensation had actually went down and the increase has been primarily in RSUs (restricted stock units) and stock options, which are directly linked to incredibly steep goals. Experts say the Infosys founders' policy of low compensation worked as they had huge equity stock in the company which paid handsome dividends, an advantage that senior executives who joined much after the company's storied IPO, didn't have.
2. Severance package
Former CFO Rajiv Bansal's large severance pay of Rs 17.4 crore is the cause of another major difference. The company says the employment contracts of key members of the executive team include a severance clause, and such clauses are guided by the complexity of the role as well as country-specific regulations.
Also Read: Trouble in Infosys? Signs of rift between Sikka and some founders
3. The appointment of Punita Sinha
Punita Sinha, wife of Jayant Sinha who is Minister of State for Finance, was appointed an independent director last year. The appointment has raised concerns with founders but the board says she is eminently qualified for the job.
4. Growth through acquisitions
Sikka has maintained that Indian IT's older businesses of application development & maintenance, infrastructure management and BPO are slowing and the margins are falling. He believes companies need to innovate and offer value-added services. This move also demands significant acquisitions. But sources said that some of the founders are not in favour of acquisition-based business model.
The founders, together, own 12.75% in Infosys, with N.R. Narayana Murthy and his family owning the largest block. Majority of the board, led by chairman R. Seshasayee, however, backs Sikka.
Below are the major flash-points between the company and its founders:
1. Sikka's salary
A sharp increase in Sikka's compensation early last year is said to be the biggest flash-point. The company says Sikka's cash compensation had actually went down and the increase has been primarily in RSUs (restricted stock units) and stock options, which are directly linked to incredibly steep goals. Experts say the Infosys founders' policy of low compensation worked as they had huge equity stock in the company which paid handsome dividends, an advantage that senior executives who joined much after the company's storied IPO, didn't have.
2. Severance package
Former CFO Rajiv Bansal's large severance pay of Rs 17.4 crore is the cause of another major difference. The company says the employment contracts of key members of the executive team include a severance clause, and such clauses are guided by the complexity of the role as well as country-specific regulations.
Also Read: Trouble in Infosys? Signs of rift between Sikka and some founders
3. The appointment of Punita Sinha
Punita Sinha, wife of Jayant Sinha who is Minister of State for Finance, was appointed an independent director last year. The appointment has raised concerns with founders but the board says she is eminently qualified for the job.
4. Growth through acquisitions
Sikka has maintained that Indian IT's older businesses of application development & maintenance, infrastructure management and BPO are slowing and the margins are falling. He believes companies need to innovate and offer value-added services. This move also demands significant acquisitions. But sources said that some of the founders are not in favour of acquisition-based business model.
