Murthy slams 35% pay hike of COO:-
The Chief Operating Officer of Infosys, the country’s second largest software exporter on governance issues, Pravin Rao, received a 35% salary hike. The move was approved by co-founder Nandan Nilekani and a majority of institutional investors. It was, however, criticized by Narayana Murthy and other founders of Infosys, resulting in a rift between them and the board. Only 24% of promoters voted in favor of the hike, 33% voted against it and the rest of them refrained from voting.
Rao, who was hired by Murthy 30 years ago, helped elevate him to COO, said in an e-mail on Sunday evening that this was the time to demonstrate the fairness in compensation that the company had practiced since the day it was established. Murthy wrote, “Giving 60-70% increase in compensation for a top-level person when the compensation for most of the employees was increased by just 6-8% is, in my opinion, is not proper.
This is grossly unfair to the majority of the Infosys employees who are toiling hard to make the company better.” He added, “The impact of such a decision will likely erode the trust and faith of the employees in the management and the board.
” Murthy , on Sunday, being disappointed by the decision decided that it was Rao’s duty to decline the raise said, “With what conscience can a decent person like Pravin tell his juniors that they should work hard and make sacrifices to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair.” He went ahead to say, “No previous resolution in the history of the company has received such a low approval.” He agreed that the governance standards at Infosys are currently poor adding. “Let us also remember that these targets for variable pay may not be adhered to if the board wants to favor a top management person.”
All these events have resulted in the fall of shares of Infosys by over 1% on Monday. In early trade in the BSE, the shares slipped by 0.94% to Rs 1,011. Shares of the company went down by 1.15% to Rs 1,010.45.