News: Infosys owes $1.68 Mn severance pay to its former CFO

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Infosys owes $1.68 Mn severance pay to its former CFO

An arbitral tribunal has asked Infosys to pay the full severance amount to former Chief Financial Officer Rajiv Bansal.
Infosys owes $1.68 Mn severance pay to its former CFO

In April last year, Rajiv Bansal the former Chief Financial Officer of Infosys had invoked the arbitration clause in his severance contract asking for the rest of his allotted payout. When Rajiv quit the job in 2015, Infosys had agreed to pay him INR 17.38 crore as severance, about two years of pay. But the company paid out only about INR 5 crore before suspending the payments. 

Although Infosys at that time had declined any irregularities, Rajiv Bansal won the case against the company yesterday, thus being entitled to receive the full payment. 

As mentioned in the BSE filing, “The arbitral tribunal has communicated its decision in the arbitration proceedings in relation to the severance agreement between the company and its former CFO, Mr. Rajiv Bansal. As per the award, Infosys is required to pay Mr. Bansal the outstanding severance amount of INR 12.17 crores with interest.”

The amount had earlier been held back by the company after its co-founders, led by Narayana Murthy, alleged that this amount in total was “hush money” for hiding issues of poor corporate governance under the former management team led by then CEO Vishal Sikka. “Such payments raise doubts whether the company is using such payments as hush money,” Murthy had told ET

Now that the tribunal has given its decision and has directed the IT firm to pay the pending amount with interest (12%) effective January 1, 2018, and the arbitration costs, experts predict that Infosys will not appeal any further as it may cause them embarrassment. 

“Now, if Infosys decides to appeal, the case will be heard in the open court, which may ask for more information which the company may not be comfortable in sharing. An open-court hearing could create embarrassment for the firm. So, the company may not pursue the case further,” said Shriram Subramanian, Founder and MD of proxy advisory firm InGovern Research.

Infosys had made a lot of news, recently, with key senior executives leaving the firm and former employees filing complaints for unpaid dues.

A few weeks back, Anuj Kapoor alleged that he was unpaid for the overtime work that he did for a CVS project in Rhode Island for the company and filed a lawsuit against the company for making him work overtime without pay. In the court filing, he highlighted that he worked eleven hours every day and received payment for eight hours or less because CVS refused to be billed for overtime wages. According to the business daily, Kapoor’s manager told him that he would be sent back to India if he refuses working more than 40 hours a week. 

In a span of a few months, Sangita Singh, Executive Vice President, Healthcare and Life Sciences and Nitesh Banga, Senior VP and Global Head of Manufacturing and Edge products, and Chief Financial Officer, M D Ranganath stepped down from their roles. 

In fact, the exit of CFO M D Ranganath from Infosys also led to a 3 percent fall in the stock price of the company, eroding INR 10,079.73 Cr from the company’s market capitalization.

Topics: Compensation & Benefits, Employee Relations

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