Infosys' internal turmoil: Vishal Sikka defends COO Pravin Rao's pay hike after Murthy, Pai lash out

There seems to be no end to the salary row at Infosys. The company has now responded to founder and former chairman N R Narayana Murthy's criticism of COO U B Pravin Rao's pay hike.
 
Infosys has defended the hike saying considering the four-year vesting period of the stocks given to Rao, the hike came to just 1.4 per cent for 2017-18. The company also justified it saying the cash component was decreased from Rs 5.2 crore to Rs 4.6 crore and it was only the performance-based component that was raised from 45 per cent to 63 per cent.

Also, CEO Vishal Sikka said that the pay hike was benchmarked against peers.

"It is essential for us to see that this revision in his compensation, as with several of our senior leadership team, is focused on making Infosys more competitive, is benchmarked against peers," said CEO  Vishal Sikka in a statement.

He added: "(It) is critical for us to retain key talent and align the long-term interests of our leadership team with that of our shareholders".
 
Infosys, however, has said it took Murthy's comments as "important feedback" and would continue to work with all stakeholders to ensure long-term interest of the company. This is the second occasion in the past few months that the founders and the management have found themselves at loggerheads over salaries of the top level management at Infosys. The co-founders, including Murthy and Mohandas Pai, earlier this year had raised concerns about internal management at Infosys. They had questioned the pay rise given to chief executive Vishal Sikka and severance pay out given to others including finance head Bajiv Bansal.
 
Here are the recent developments related to the Infosys and other related facts:
 
- In October 2014, Murthy stepped down from all executive and non-executive positions in the company. It was commendable that Infosys founders chose to walk away from their creation which then had revenues of $8.2 billion, a net profit of $1.7 billion and a market capitalization of $30 billion.
 
- Promoters over the years diluted their stakes and now held collectively a mere 12.75 per cent in the company, with institutional investors owning bulk of it.
 
- Earlier this year, Narayana Murthy accused the remuneration committee of the board of having failed in its duty of upholding highest norms of governance and questioned whether large payouts was some kind of 'hush money.'
 
- Infosys Chairman R Seshasayee Seshasayee though defended the moves saying that it was an error of judgment and was not hush money. "There will be no more Rajiv Bansal like situation at the company as we have formulated standardised practices and benchmarked severance pay packages." He has also pointed out that only `5.2 crore of the `17.38 crore has actually been paid out and the rest suspended pending certain clarifications.
 
- Sikka says he shares a warm relationship with Murthy even as Seshasayee promised to have a more regular dialogue with the founders and seek their inputs.