Infosys Founders Raise Corporate Governance Concerns, Says Report. Shares Struggle

Infosys Founders Raise Corporate Governance Concerns, Says Report. Shares Struggle

Market experts say that Infosys has always maintained high corporate governance standards

Shares of Infosys fell 1 per cent today to Rs 934 after a media report said the founders of the company have raised certain corporate governance concerns with the company's board. Infosys founders NR Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani wrote to the company's board last month raising concerns including the pay hike given to CEO Vishal Sikka, according to the report. 

The founders have also questioned the severance package given to two former senior officials, according to the report. Infosys said the decisions had been taken in the interest of the company and the board evaluated with due importance the suggestions received from stakeholders, including promoters. 

Infosys had last year raised the annual compensation of Vishal Sikka, whose term has been extended till 2021, to $11 million, which includes variable pay subject to certain performance-based targets. 

Former chief financial officer Rajiv Bansal's severance package amounted to Rs 17.38 crore, or 24 months' pay, and the agreement was "being administered in accordance with the contractual rights and obligations", Infosys said in a statement last year. 

In a January filing with the US market regulator, Infosys, which is also listed on NASDAQ, said former general counsel David Kennedy would receive severance payments of $868,250 and other reimbursements over 12 months. 

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In another development, Infosys also refused to comment on reports which stated that the company's board is meeting in next few days to consider Rs 12,000 crore share buyback. 

"In this regard, the company would like to clarify that its policy is not to comment on rumors or speculations. Further, the Company has always complied with its reportable obligations under LODR (Listing Obligations and Disclosure Requirements) in a timely manner and will continue to do so," said in a statement to the Bombay Stock Exchange. 

Avinnash Gorakssakar, head of research at Joindre Capital Services, says Infosys has always maintained high corporate governance standards and from the market's perspective, any development on share buyback would be big news. Niraj Dalal, partner at 3A Capital Advisors, is also positive on Infosys shares, citing attractive valuation. (With Reuters Inputs