Infosys lost the arbitration battle against Bansal over his severance package and has been directed to pay the pending amount of Rs 121.70 million with interest to their former CFO.
Infosys should pay its former chief financial officer Rajiv Bansal his severance amount by clawing back the remuneration the company paid to the members of the Infosys board led by former chairman R Seshasayee, an anonymous whistleblower has written to market regulator Sebi.
According to the report, the whistleblower demanded that the Securities and Exchange Board of India (Sebi) steps in to protect the interests of Infosys’ minority shareholders.
“Why (should) shareholders’ money be used for the stupidity of earlier board members?” the whistleblower wrote in the letter.
The whistleblower’s missive comes after Infosys lost the arbitration battle against Bansal over his severance package. The arbitration tribunal directed the IT firm to pay Bansal the pending amount of Rs 121.70 million with interest. Infosys’s counterclaim for refunding the previously paid severance amount of Rs 52 million was also been rejected.
In October 2015, Infosys’s then CFO Rajiv Bansal quit, and one of the reasons for his exit was attributed to his differences with the management over the acquisition of Panaya, an Israeli automation software company it acquired for $200 million.
Bansal was offered a severance package of Rs 174 million by the previous board headed by R Seshasayee. The unprecedented level of the severance package, which was equivalent to close to 24 months of his salary, sparked a huge controversy.
Founders like N R Narayana Murthy raised questions over governance.
This led to halting of the assured payout after the initial payment of Rs 50 million. Subsequently, the dispute went to arbitration over the remaining amount, with former Supreme Court Justice R V Raveendran acting as the sole arbitrator.
After the arbitration tribunal’s order, Infosys said it would take legal advice before taking necessary actions following which Bansal filed a caveat in a civil court in Bengaluru against Infosys. The caveat remains in force for 90 days and if during that duration no case is filed by the opposite party, the caveator has to again file a fresh caveat.
The whistleblower alleged that the former board members failed in their fiduciary duty.
“All of them received substantial payouts for their role as board members but failed to act in the interests of shareholders.This has caused heavy destruction of shareholders values. The company had not come out clean either on releasing the investigation report or explaining clearly the obscene payout,” the letter said.
“I request Sebi to set an example by requiring the company to ‘claw back’ the payout from the earlier board members,” the whistleblower’s letter stated, according to the report.
As per a clawback, an employer or benefactor takes back money that has already been disbursed, possibly with an added penalty based on fraud or accounting errors. As a US-listed entity, Infosys has a claw-back provision signed in contracts with all its senior executives. – Business Standard