NR Narayana Murthy: PM’s Independence Day speech: Infosys co-founder NR Narayana Murthy calls this idea...

NR Narayana Murthy: PM’s Independence Day speech: Infosys co-founder NR Narayana Murthy calls this idea... [ad_1]

Infosys co-founder NR Narayana Murthy termed Prime Minister Narendra Modi's idea of "Competitive Cooperative Federalism" as brilliant.

7 biggest issues causing tussle between Infosys and the company's founders

7 biggest issues causing tussle between Infosys and the company's founders

Infosys co-founder NR Narayana Murthy's statement to the media saying that he is "distressed" by what is happening at Infosys has brought the ongoing spat between the company's founders and management out in the open. According to insiders, the trouble has been brewing for past many months between the founders, who own some 13% stake in the company, and Infosys management led by CEO Vishal Sikka. Former SAP CTO Sikka happens to be the first non-promoter CEO of the country's second-largest IT company. Here's a look at 7 issues that are behind the current tussle at Infosys.

CEO Vishal Sikka’s salary

One big flashpoint is said to be CEO Vishal Sikka's salary. In fiscal year 2016-17, Sikka's compensation saw a sharp increase to $11 million, from $7.08 million in 2016. Infosys says that the cash component of the salary has actually come down for Sikka with most of it in restricted stock units (RSUs) against extremely steep targets. Sources close to Sikka say that he actually gets less cash now than when he was chief technology officer at German software major SAP. Infosys founders one big concern has been the 55% increase in CEO compensation that appears particularly large when average salary hikes have hovered in the single-digits of 6% to 8% at the company.

Severance package for former CFO Rajiv Bansal

High severance packages to departing top executives, such as CFO Rajiv Bansal and legal counsel David Kennedy, too has been an issue of friction. Founders claim that no explanation has been goven for the high severance package of Rs 173.8 million (24 month’s pay) announced for former CFO Rajiv Bansal. The untimely exit of David Kennedy and his compensation package too has been a thorny issue.

Appointment of Punita Kumar Sinha as an independent director

Some promoters are said to be upset over the appointment of Punita Kumar Sinha, an investment banker and wife of Union minister Jayant Sinha, as an independent director. Infosys co-founder NR Narayana Murthy abstained from voting on her appointment. While emphasizing that he had great respect for her as a professional, he grounded his objection in the fact in that the entire history of Infosys, it had never invited the spouse of any active politician to the board. Sikka and the board's argument to this was that she was eminently qualified -- having been a fund manager with Blackstone and Oppenheimer, among others -- and that the decision was taken on merit.

Two power centres

Infosys is also said to be battling concerns that it has two power centres, with senior executives sometimes being called upon to brief a few promoters informally about the working of the company.

​Innate skepticism about aggressive acquisitions

According to some insiders, the founders are still attached to a business model that is facing an existential crisis, and are wary of aggressive acquisitions that are necessary to grow the company. "They are just too conservative when it comes to investing in the future," told a Young Turk to Times of India. The gameplan to position Infosys as a next-generation services company leveraging automation, artificial intelligence and analytics, requires different skillsets and bold acquisition strategy, say industry experts. Infosys, under the founders, has traditionally been wary of large acquisitions.

'Old guard doesn't want to let go'

There's also a perception among the new generation that somewhere deep down, the 'old guard' doesn't want to 'let go' of a company they built from scratch. CEO Vishal Sikka is the first non-promoter CEO of Infosys.

​Founders want chairman R Seshasayee to go

The founders of Infosys Ltd are said to have expressed unhappiness with non-executive chairman R Seshasayee over some of the decisions taken by the company’s board in the past two years. They claim to be upset with the board for not closely scrutinizing some of the company's recent decisions which they claim have been at odds with established practices. Reports also suggest that Seshasayee was even asked to consider stepping down.

"Whenever the Prime Minister speaks he brings out lots of wisdom. I am so happy that he has used 'competitive cooperative federalism'. It is a brilliant idea," Murthy said on the sidelines of inauguration of Synergetic Security operation Centre of SISA here.

Addressing the nation on India's 71st Independence Day earlier this morning, Modi had said: "Since I have myself been a Chief Minister for long, I know that states are important for the growth of a country. I understand the importance of chief ministers and state governments.

"And that is why we focused on cooperative federalism and now competitive cooperative federalism. And now we are taking all decision together."

Appreciating the comment, Murthy said the competitive aspect of the slogan would make states compete with each other to attract investors and entrepreneurs and thereby create more jobs.

He said there are areas where states would have to cooperate with the federal government in terms of fighting illiteracy in education, healthcare and nutrition.

Stating that there are many problems in the country, he said every state should cooperate fully with the union government to solve them as it was not fair to blame the Centre alone to find solutions.

"There are areas where states can compete each other and areas where they can cooperate with each other," Murthy said.

Asked how he measured the success of the demonetisation exercise and that of GST, Murthy said the Union government needs to be congratulated on both fronts as demonetisation has unearthed a lot of black money and GST would start yielding benefits to businessmen and government going forward.

"Demonetisation has removed a lot of black money. There is no doubt the Prime Minister himself said that somewhere around Rs 1.25 lakh crore of black money has been unearthed and removed. I think this is something we should all congratulate the government," he said.

"GST is a mechanism wherein there is less and less hassle for business people and therefore it should be welcomed. And I believe GST will start yielding tremendous benefits to business people as well as to the government going forward," he said.



Asked as to how good was the action taken on shell companies post demonetisation, Murthy congratulated Modi as well as Finance Minister Arun Jaitley, saying it was a step in the right direction, which would help the Indian economy.



On what India should look forward to achieve by the next Independence Day, Murthy said he looks at it in a slightly different way.



"If we can create an India where the poorest child in the remotest part of the country has access to decent education; decent healthcare; decent nutrition and decent shelter, and has the confidence that society will enhance opportunities for that child to become better economically and socially...all of that we should try to achieve."

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