Infosys founder, board in rift over COO compensation hike
N.R. Narayana Murthy has objected to a 35% hike in COO's compensation and called for a more egalitarian pay structure
The dispute between Infosys’ founders and the company’s current management over compensation to some of its top officials refuses to die down, with the former calling for a more egalitarian pay structure across the company.
The latest row inside India’s second largest software services company is over a 35% rise in compensation for Chief Operating Officer U.B. Pravin Rao, to Rs 125 million (US$ 1.93 million). Infosys founder N.R. Narayana Murthy described the hike as “not proper”.
In an email interview with PTI he said, “The impact of such a decision (compensation hike) will likely erode the trust and faith of the employees in the management and the board.”
He added: “Giving nearly 60% to 70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper.”
“With what conscience, can a decent person like Pravin (a man schooled in Infosys values for over 30 years) tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair. No previous resolution in the history of the company has received such a low approval.”
Murthy said he always felt that senior management should show self-restraint and fight to maintain a reasonable ratio between the lowest and highest salary in corporations in a poor country like India. “The board has to create a climate of opinion for such fairness by their actions,” he said. “This is necessary if we have to make compassionate capitalism acceptable to a majority of Indians who are poor. Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India.”
It may be recalled that Infosys founders had earlier raised objections over a steep increase in the compensation package of Chief Executive Officer Vishal Sikka and hefty severance packages for former executive vice-president David Kennedy and former chief financial officer Rajiv Bansal. The founders still own a 12.75% stake in the company.