what is infosys’ corporate governance controversy
TRANSCRIPT
What is Infosys’ Corporate Governance Controversy?
The budget announced on February 1 is no longer the talk of the town. It is Infosys, one of India’s largest IT service providers, that is making headlines. Here’s why:
Corporate Governance:• N R Narayana Murthy, the founder of Infosys, has flagged corporate governance concerns.• The other founders, Kris Gopalakrishnan, and Nandan Nilekani, too voiced their concerns to the Board of Infosys.• Corporate governance refers to a set or rules and policies that governs the functioning of a company, like the
compensation paid to a company’s executives.
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First concern—Infosys CEO’s compensation:• Narayana Murthy and the other founders argue that the board is paying too much salary to CEO Vishal Sikka
than needed. • Last year, Infosys announced a raise in the annual compensation of Vishal Sikka, the Chief Executive Officer
(CEO).• His salary was fixed at $11 million for 2017, higher than the $7.08 million paid in 2016.
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Second concern—High severance package:• The founders also raised concern regarding the company giving higher-than-average severance packages in the
past.• Infosys gave a severance package of Rs 17.4 crore to Rajiv Bansal, the Chief Executive Officer, in 2016.• David Kennedy, the outgoing General Counsel of Infosys was given a severance package of Rs 5.9 crore
What Infosys says:• Infosys said in a statement: “The Independent Directors have no interest other than their commitment to enable
this great institution that has been assiduously built by the iconic Founders, to succeed.”
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The market reaction:• The stock market does not see a major problem here.• Over the past one week, Infosys shares gained 2.4% while BSE Sensex traded flat.
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