The recent settlement application to the Securities and Exchange Board of India (SEBI) by Indian IT services major Infosys on severance pay package to its former chief financial officer Rajiv Bansal might be an attempt to avoid future confrontation with company founder N.R. Murthy. Apparently, market regulator SEBI had made an inquiry into the alleged inadequate disclosures and lapses of corporate governance when Infosys announced the severance package to Bansal.
Industry experts feel that the new CEO-appointee Salil Parekh might have asked the company to do this so that there is no further allegations from Murthy on the subject after the former joins the company.
“By filing a settlement application with the market regulator SEBI, Infosys wants to make it clear that it stands by high standards of values and corporate governance which its founders Murthy and Nilekani had laid for the company. I feel that the company also wants to ensure that Murthy does not raise any further allegations on the severance package by showing that it is keeping SEBI apprised of the developments about the severance package. Bansal, who had approached the arbitration tribunal with regard to the sudden suspension of the severance package by Infosys, is bound to emerge successful and Infosys, in most probability, will have to pay the balance amount of Rs 12 crore, that too with interest. It was a settlement between the two and Infosys cannot deny Bansal the balance money. Though former CFO Mohandas Pai is strongly against this severance package because he did not get it, but he had stock options of Infosys shares,” explained Kris Lakshmikanth, founder and CEO of recruiting firm Head Hunters India Limited.
With the settlement application, Infosys wants to show that they are following all the procedures by keeping market regulator informed on the severance package. “I feel that till the time Murthy is alive, he will keep raising objections in case he finds that there are any lapses of corporate governance on part of Infosys. However, Bansal is sure to get the balance severance money as the company of a stature of Infosys cannot breach the agreement it has had with Bansal. Infosys will pay the balance amount to Bansal soon,” remarked Alok Shende of Mumbai-based Ascentius Consulting.
Broadly, the company wants to resolve the allegations against it on its failure to seek prior and separate approval of the nomination and remuneration committee and the audit committee in relation to the severance agreement signed with Bansal. The application can also be aimed at clearing all regulatory hurdles with regard to the severance package to Bansal in the future.
