After approving a whopping wage-hike for Chief Operating Officer (COO) UB Pravin Rao, global software major Infosys' board is under fire once again, this time from former board member V Balakrishnan, who said the wage hike approval has let down the company’s founders.
“The present Infosys' board has let down its founders and lost credibility to continue. Its members should be replaced with new people,” Balakrishnan told media yesterday, two days after the company justified giving Rao a 70 per cent wage hike, despite co-founder NR Narayana Murthy’s private opposition.
Backing Murthy for raising the red flag at a time when the Indian IT industry is under pressure from global competition, Balakrishnan said the current board had lost its moral courage and favours executives while ignoring employees.
“What moral courage the board will have to face the employees after denying them a 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 on April 2 about Rao’s wage hike at a time when entry-level and junior employees have not been given raises for two to three years, Balakrishnan said the chief founder was forced to go public after the board ignored his private advice.
“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 others 35 years ago, raised lapses by the board in corporate governance in February, which became an all-out war between promoters and the board, which is headed by Executive Chairman R Seshasayee and CEO Vishal Sikka.
Noting the disconnect between the board and its founders, the former director said that when industry struggles, it is immoral for management to pass that struggle onto employees and not endure the burden itself.
“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,” said Balakrishnan.
Recalling the saying "practice before you preach," he said the leadership should bear the burden 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.
In the company's defence, 67 per cent of shareholders approved the wage hike proposal in a postal ballot, Balakrishnan said. But one-third of shareholders had opposed it, and the board should have been sensitive to the latter's perspective and rejected the proposal, he added.
“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 co-founders, including Nandan Nilekani, S Gopalakrishnan and SD Shibulal have declined to publicly comment, though they conveyed their views to the board privately.