Global software major Infosys’ Board is under fire again. This time from its former Board Member V. Balakrishnan for letting down its founders by giving a whopping wage hike to Chief Operating Officer U.B. Pravin Rao.
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“The present Infosys’ Board has let down its founders and lost credibility to continue. Its members should be replaced with new people,” Balakrishnan said on Wednesday, two days after the company justified giving Rao a 70 per cent wage hike even after cofounder N.R. Narayana Murthy opposed it in private.
Backing Murthy for raising the red flag at a time when the Indian IT industry was facing lot of pressure due to global headwinds, he said the present Board had lost moral courage by favouring executives and ignoring employees.
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“What moral courage the Board will have to face the employees after denying them similar favour. You can’t justify a 70 per cent wage hike for a senior executive when salaries of middle and senior level techies were muted,” contended Balakrishnan.
Defending Murthy for sharing his concerns with the media over the wage hike to Rao when entry-level and junior employees were not given wage increase over the last two-three years, Balakrishnan said the chief founder was forced to go public after the Board ignored his advice and feelers privately.
“What could Murthy do when the Board for the second time had not considered his opinion, which is valid, as evident from the points he raised in the e-mail to the media on April 2? I think it was his last option, having exhausted all avenues to convince the Board of his concerns and values,” he said.
Murthy, who founded Infosys with six other co-founders 35 years ago, raised lapses by the Board in corporate governance in February, which blew into an all-out war between the promoters and the Board headed by Executive Chairman R. Seshasayee and CEO Vishal Sikka.
Noting that there was a disconnect between the Board and its founders who toiled to build the company from scratch, the former director said when the industry was going through pain, it was immoral to pass it on to the employees than taking and enduring it.
“The Board should have deferred the decision and waited for the industry to turn around. There is a disconnect between the Board and its past, as none of its members carries the cultural legacy of the company and has no sense of history,” lamented Balakrishnan.
Recalling the saying “practice before you preach”, he said the leadership should take the pain and set an example.
“In this respect, Murthy raised a valid point because at the end of the day, it is the Board which should take the moral responsibility and face the pain than passing it to others down the line,” he reiterated.
On the company’s defence that 67 per cent of the shareholders had approved the wage hike proposal in a postal ballot, Balakrishnan said since one-third of shareholders had opposed it (proposal), the Board should have been sensitive to the latter’s decision instead of going ahead with the majority.
“It is the for the first time the company’s history that a Board proposal was voted against by a section of the investors in contrast to the unanimous approval of its resolutions in the past either through postal ballot or show of hands,” he said.
Other cofounders, including Nandan Nilekani, S. Gopalakrishnan and S.D. Shibulal who steered the company as Chief Executives, however declined to join the issue in public though they had conveyed their views to the Board in private.