Vishal Sikka vs Salil Parekh’s Infy CEO contract: Retirement at 60, garden leave, no-compete clause vis-a-vis TCS, Wipro
Vishal Sikka (left) and Salil Parekh
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After the disagreement with its former CEO Vishal Sikka, Infosys has relied on an iron-clad, detailed employment agreement for current CEO, Salil Parekh. Here’s how the two contracts differ, on a few points:
VISHAL SIKKA
Compensation A key sore point between Infosys co-founder Narayana Murthy and Sikka was the hefty compensation that the latter was being paid. A look at Sikka’s updated agreement shows that no amounts have been mentioned. Only the terms for fixed pay, variable pay and stock compensation have been enumerated.
Employment term “The term of this agreement shall begin on April 1, 2016 (the “Effective Date”),and terminates on March 31, 2021 or such other term as decided by shareholders from time to time (the “Employment Term”).”
Vishal Sikka Severance terms “The company may, in its discretion, satisfy its notice obligation under this section by providing Executive with the equivalent of 90 days of his (a) base pay, (b) an amount equal to 3 times the liquidated pay-out as defined below, and (c)other compensation and benefits that Executive would have earned during the notice period had Executive remained employed during such notice period.”
Non-competition “The receipt of any severance benefits...will be subject to Executive executing a non-competition agreement to the extent that a non-competition agreement is enforceable under the applicable laws.”
Cause for being fired Sikka had six conditions laid out as causes for termination. Reasons included: “Executive’s material failure to abide by Company’s code of conduct or code of ethics policies resulting in demonstrable injury to the company or its reputation” and “willful misconduct or breach of fiduciary duty for personal profit by executive”.
From Marc Faber To John Schnatter, Top Bosses Who Were Sacked For Being Racially Offensive
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Racing To The Exit
24 Jul, 2018
Recently, several top executives in global companies have had to face the music for being racially offensive.
Here are some who had to pay for their words or actions with their jobs.
(Text: Rashmi Menon)
John Schnatter, Papa John’s Pizza
24 Jul, 2018
The US pizza tycoon and founder of Papa John’s Pizza, was forced to step down from the company he founded, after he hurled racially offensive slurs and spoke insensitively about violence against minorities while on a conference call with a media agency. While he later apologised for his actions, investors weren’t happy with the bad publicity and asked him to step down. However, just days after he left, Schnatter told a news publication that he had made a “mistake” by stepping down and criticised the board for not doing “proper due diligence”.
(Image: Reuters)
Jonathan Friedland, Netflix
24 Jul, 2018
A communication officer is usually adept at handling crisis and negative publicity instead of becoming the cause for it. Netflix’s chief communications officer, however, found himself in such a predicament. Friendland, who joined the company in 2011, was pulled up and fired for using racially offensive language during a meeting with colleagues. In an apology before leaving, Friedland said, “Leaders have to be beyond reproach in the example we set, and unfortunately, I fell short of that standard when I was insensitive in speaking to my team about words that offend in comedy.”
(Image: AP)
Ulyana Sergeenko, Fashion Designer
24 Jul, 2018
At the height of Paris Couture Week, Russian designer Ulyana Sergeenko and entrepreneur Miroslava Duma found themselves in a PR crisis. Sergeenko came under fire for sending a bouquet of flowers to Duma with the handwritten note, “To my n****s in Paris.” Duma shared the note on Instagram adding a heart emoji to show affection for the designer. To make matters worse, that same evening, a 2012 video of Duma started doing the rounds, in which she is seen making homophobic comments about a blogger and transgender model. Duma has since been removed from her position as a board member at The Tot, a baby fashion label.
Marc Faber, Publisher, Boom And Doom Report
24 Jul, 2018
In the October issue of his newsletter last year, the Swiss investor, who resides in Thailand, was widely criticised for writing, “Thank God white people populated America, and not blacks. Otherwise, the US would look like Zimbabwe…” The comment cost him a seat on the board of three companies. Three other companies too booted him out, while international TV channels, who would give him air time for his expert opinion, distanced themselves.
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SALIL PAREKH
Compensation In Parekh’s case, the numbers are clearly spelt out: be it annual salary of Rs 6,50,00,000 or a variable pay of Rs 9,75,00,000 which will be payable to the current CEO over the next few years, subject to the company meeting “milestones” as agreed upon.
Employment term “The initial term of this Agreement will be for a period of five years beginning on the effective date, provided however that this Agreement may be extended for a successive term of three years on mutually agreed terms and conditions...However the executive will retire upon reaching the age of 60, unless the Company agrees to continue to employ the executive.” While in Sikka’s agreement, there is no mention of a retirement age, in Parekh’s there is.
Salil Parekh Severance terms While the terms of settling the notice period remain largely the same, there is the additional inclusion about garden leave. Infosys reserves the right to put Parekh on garden leave — suspension from work on full pay — during the notice period.
Non-competition The receipt of any severance benefits will be subject to Parekh not violating any of the agreed upon terms as per the contract. In the event that he does so, the severance payouts will stop with immediate effect, and he will have to return any payouts that have been disbursed previously.
One of the terms lists out the names of the major competitors that Parekh cannot work with during the restricted time period (TCS, Accenture, IBM, Cognizant, Wipro, Tech Mahindra, Cap Gemini and HCL Technologies). Something that was missing from Sikka’s agreement.
Cause for being fired Parekh has 14 of these, including, “Executive’s misuse of alcohol or drugs which interferes with Executive’s performance of Executive’s duties for the company, or which is harmful to the reputation or goodwill of the company,” and his “failure or refusal to follow the reasonable and lawful instructions of the Board.”
Ron Gutman And Other CEOs Who Were Fired For Their Toxic Leadership
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No Margin For Toxic Leadership
16 May, 2018
Ron Gutman, CEO of the startup HealthTap, was fired earlier this month for ‘toxicity’ in the workplace. Here are others who were booted for creating an unhealthy work environment. (Image: Shannon Tellis)
In The Hot Seat
16 May, 2018
Travis Kalanick
Fired from: Uber
Following a tumultuous six months of scandal, Uber cofounder Travis Kalanick was forced to step down after a sexual harassment blog post by a former employee set off a chain reaction of complaints and allegations against the company. The consecutive scandals highlighted a ‘toxic bro culture’ that had thrived under Kalanick’s leadership. Already under scrutiny after a video of him berating an Uber driver went viral, Kalanick was finally asked to resign.
Breaking News
16 May, 2018
Ehab Al Shihabi
Fired from: Al Jazeera America
Barely two years after launching Al Jazeera America in 2013, interim-CEO Ehab Al Shihabi was demoted to COO amid allegations of sexism and anti-Semitism. He was replaced by Al Anstey, who has served as MD of Al Jazeera English since 2010. A former senior vice-president claimed that under Al Shihabi’s leadership, women employees were excluded from meetings. Another departing employee blamed Al Shihabi for presiding over a “culture of fear”. He was subsequently let go from any position in the network.
Ringing In Change
16 May, 2018
Peter Chou
Fired from: HTC
When Chou suddenly resigned from his position as CEO in 2015, rumours of his ‘abrasive management style’ started to make the rounds. According to former executives, Chou ‘openly berated managers and overrode their decisions, often with little discussion’. Sales, marketing, product and design teams were intentionally kept separate, and parallel teams were created, sometimes for the same task. His shoot-from-the-hip approach left managers uncertain of their positions, damaging company morale and causing HTC to rapidly drop in market value.
Off The Cuff
16 May, 2018
Dov Charney
Fired from: American Apparel
After years of weathering sexual harassment lawsuits that were denied, dismissed, settled or sent to arbitration, American Apparel founder and CEO Dov Charney was ousted by the board in 2014 over “alleged misconduct” of company funds and inappropriate behaviour with employees. An investigation revealed that he had sexual liaisons with employees and models, exchanged pornographic and explicit emails, text messages and took videos and photographs' of these encounters using company property. Prior to being ousted, Charney was also accused of trying to choke a male employee and throwing dirt at him.
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