Infosys: All for Vishal Sikka's fat paycheck, but…

Proxy advisory firm IiAS has recommended shareholders to vote the proposal to appoint Vishal Sikka as Infosys' MD & CEO and also fix his annual remuneration at a maximum of Rs42.5 crore. But IiAS is also raising some concerns

 
Infosys Ltd, India's second largest IT company has called for an extraordinary general meeting (EGM) to ratify the appointment of Dr Vishal Sikka as its managing director and chief executive officer (CEO) and also to fix his annual remuneration at a maximum of $7.08 million or about Rs42.48 crore. 
 
While recommending that shareholders vote for these proposals, proxy advisory firm Institutional Investor Advisory Services India Ltd (IiAS) has cautioned that Infosys and the industry could face new challenges with respect to executive compensation.
 
"Infosys has been conservative in paying its executive directors. This was applicable for both, promoter and non-promoter directors. Now, with the proposed remuneration for the CEO, there may be internal pressure on the board to raise the compensation for other executive directors.  A broader concern with the proposed remuneration is that it is high, compared not just to other Indian IT peers, but corporate salaries in general. This will put pressure on companies to increase their CEO compensations," IiAS said in a release.
 
Infosys has had problems with succession planning in the past. Therefore, instead of turning the clock back and passing the baton among the company’s founders, IiAS said it believes Infosys needs to invest in professional leadership and put a team in place, that can frame the company’s vision for the future. IiAS said, "Infosys’ decision to appoint Dr Sikka must be looked at as an investment in its leadership that will bear returns in the future. Sure enough, one may question the potential return ratios - but you must first invest."
 
There has been much debate about Dr Sikka’s remuneration, it is one of the highest for a professional in corporate India. 
 
IiAS said, "Given that more than 60% of Infosys’ topline comes from North America, Dr Sikka will continue to operate from his current base of California, US, and will shuttle in and out of the company headquarters in Bengaluru. Hence, a more comparable peer base will be global counterparts like Capgemini, Cognizant and Adobe where the remuneration levels for CEOs are comparable and in some cases, higher than what has been proposed by Infosys."
 
"Moreover, above of 80% of his total remuneration, including restricted stock, is variable and based on target achievement. This is a good remuneration practice as it establishes a strong linkage between remuneration and company performance," the proxy advisory firm added.
 
Infosys’ move to hire Dr Sikka is similar to Wipro’s move to transform itself when it hired Vivek Paul in early 1999, when he was asked to run Wipro's software unit in India. Vivek Paul was then the highest paid executive in India, with a salary of Rs4.95 crore, over $1 million (as per the prevailing exchange rates). Wipro was a $150-million company when Paul took over, and it had all the tendencies of a small, traditional company. Paul has been credited with creating a global business and for much of Wipro's growth into a multi-billion dollar company. "For Infosys too, bringing in a CEO who has worked in a leadership role in a global IT company and has strong connectivity in the sector, is a good decision," IiAS said. 
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COMMENTS

Babubhai Vaghela

4 years ago

None in India fit to be CEO Infosys? Or, Infosys not considered them at all? Infosys should tell the Investors.

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Prithvi Info Solutions: Second largest stakeholder denies investing in the company!

US-based Sarat Kumar Addanki, the second largest stakeholder of Prithvi Information Solutions, has made sensational allegations of fraud, mismanagement and possible identity theft against the promoters. He has complained to SFIO, SEBI, RBI and stock exchanges. Will they finally act against Prithvi? 

In an amazing set of allegations, Sarat Kumar Addanki, a US citizen and person of Indian origin (PIO), listed as the second largest stakeholder of the Hyderabad-based Prithvi Information Solutions Ltd (Prithvi), has denied buying or holding a single share of the company and accused the promoters of fraud, identity theft and worse.
 

Mr Addanki, who is shuttling between the US and India due to his mother's illness has also written to the regulators to inform them of the con. Moneylife has copies of his letters to the Serious Fraud Investigation Office (SFIO), the Securities & Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). The letters dated 24 June 2014, allege gross mismanagement, misrepresentation, fraud and potential identity theft. Mr Addanki is shown as the second largest shareholder of Prithvi Information Solutions on stock exchange records provided by the company. He spoke at length with Moneylife to explain how he had been conned. What is worse still, is that one of the promoters of Prithvi, Ms Madhavi Vuppalapati was a former classmate of his in Hyderabad.
 

Curiously enough, despite repeated revelations about the apparent fraud at Prithvi Info Solutions and the legal battle it has been losing against its creditor, Kyko Global Inc of Canada, the regulators have yet to initiate any action. The story so far is as follows:

In September 2012, Anupama Yellajoshyula and Sarat Kumar Addanki were allotted shares under preferential allotment as the 'non-promoter group'. Through these allotments, Anupama became the owner of 86.47 lakh shares (24.99% of total shares) having a face value of Rs10 each, at a premium of Rs16 for Rs22.48 crore, while Sarat Kumar became the owner of 78.80 lakh shares (22.77% of total shares) for Rs20.49 crore during September 2012 with a one year lock-in period. However, Mr Addanki denies buying or holding any of these shares in Prithvi.
 

In his formal complaint to the authorities, Mr Addanki says, "…sometime in the last week of May 2014, I was approached by Kyko Global Inc, Canada who is a creditor of Prithvi. I also saw the article that was published by website 'Moneylife.in' on 29 May 2014 and I was shocked to read that I am the second largest shareholder of the Company, with a holding of about 23% shares (78.81 lakh shares of Rs101- each at an exercise price of Rs261- per share), which were acquired in mid-2012 at a cost of about Rs20 crore."
 

Addanki said he had forgotten about this incident till he was approached by Kyko Global.
He then came across articles written by Moneylife and some publicly available records like details of allotment, EOGM notice and minutes of the meeting. "After allotment of shares, a disclosure is filed with BSE and NSE, purportedly signed by me, which in fact is not signed by me. Apparently this looks like a 'benami' transaction and my identity is being used by some fraudsters to acquire and hold shares of Prithvi," he alleged.

"From the information available, it appeared to me that the company is highly mismanaged, involved in various frauds and the affairs are being managed in a way prejudicial to the interest of stakeholders," Addanki added.
 

According to Addanki, in early 2012, Madhavi Vuppalapati, his friend from college days, suggested that he make some investment in her company, Prithvi Information Solutions. Initially he was interested in making a small investment in a legally permissible way. He said, "During the initial discussions, she asked me to fill out certain forms as well as send her a copy of my passport and other identification documents, which I did."
 

On 21 May 2012, Addanki said, he received an email from Guru Pandyar, vice president for finance at Prithvi, requesting him to send duly completed share account opening forms through a prepaid FedEx label." Subsequently Mr Pandyar called me and informed me that Prithvi will be transferring money to my personal bank accountm, which I can then use to buy Prithvi shares. I could not understand why they would send me funds to make an investment in their own company. However, sensing that there was something odd about this, I backed out of the investment and did not comply with their request for documents nor did I accept any money from them for the investment. I terminated all discussions on this investment and specifically sent Ms Madhavi Vuppalapati a message requesting her to desist from taking any actions pertaining to the investment," Addanki said.

Reiterating that he had not made any investment or remittance from any of his bank account to fund the purchase of Prithvi shares, Addanki raised questions on how the compliance of Foreign Exchange Management Act (FEMA) was done for this particular investment.
 

Addanki said, "I have not signed any share application form or any other documents giving my consent to this investment. I don't hold any demat account in India nor have I received any share certificate as evidence of issue of these shares in my name. Furthermore, I have not received any communication from Prithvi as a shareholder of the company, like notices of General Meetings. Annual Reports and any other communication as a shareholder".
 

"Based on the above, it seems clear to me that my identity has been stolen by somebody to acquire and hold about 23% shares of Prithvi worth Rs20 crore. The money has not been paid by me to buy these shares and I am puzzled how such a large sum of money in US dollars was transferred to buy this big chunk of a publicly traded company. I wish to emphatically state that I have neither applied nor subscribed for the shares of Prithvi in question nor am I a shareholder," he said in the complaint.
 

Mr Addanki also goes on to talk about the other large shareholder inducted into Prithvi Info Solutions. Referring to our writing, he says, "The Moneylife article also states about the largest shareholder being Ms Anupama Yellajoshyula, who is also a US citizen and is the wife of one Srikant Swarna. I understand Mr Swarna is an equity holder of a Prithvi subsidiary called Agadia Systems Inc, based in New Jersey. Mr Swarna, Madhavi Vuppalapati (chairman of Prithvi) and I attended the same college in Hyderabad. Therefore I called Mr Swarna and he was equally surprised that his wife is the largest shareholder of Prithvi. With these two shareholders holding almost 48% of Prithvi equity, there appears to be some mystery around the method of funding of these shares too," Addanki said in his complaint.
 

Interestingly, a legal firm claiming to represent Ms Yellajoshyula has written to Moneylife asking us to "cease and desist" from writing about her. The firm, New York-based Olshan Law (Olshan Frome Wolosky LLP), says , "We hereby demand that you cease and desist from making such statements and from publishing Ms Yellajoshyula's confidential information."
 

“Ms Yellajoshyula has become entangled in the pervasive, systematic fraud perpetrated by Madhavi Vuppalapati and Satish Vuppalapati and their myriad Prithvi companies. There is 'no information' about Ms Yellajoshyula's ownership of any Prithvi shares because no such information exists; any source that claims to the contrary, including any of Prithvi's judgement creditors, is making false, misleading statements and will similarly be subject to legal action to the fullest extent possible,” Olshan Law, says in the letter.


(Shareholding pattern of Prithvi Information Solutions as on 31 Match 2014 Source: BSE)
 

Addanki has requested the authorities to investigate the matter and find out the source of these funds used to purchase the shares of Prithvi Info Solutions in question, the real owners of these shares and persons who are behind these fraudulent and illegal activities which include theft of his identity and fabrication of documents, and take appropriate actions against the culprits.
 

Officials from the SFIO, SEBI, NSE and BSE were not immediately available for comments. Our emails remained unanswered till writing the article. We would incorporate their views as and when we receive it.

 

 

You may also want to read...
 

Who is Anupama, the largest stakeholder of Prithvi Info Solutions?

 

Prithvi Info founder asked to testify before US Bankruptcy Court

 

How & Why Prithvi Catalytic changed its name to Abilius

 

Prithvi Info Solutions: Why regulators are silent over the scandalous saga?

 

Prithvi Info Solution founder's assets auctioned to recover $17 million penalty

 

Prithvi’s recent acquisition despite multiple scandals and losses raises a stink

 

Scam: SEBI Finally Wakes Up

 

Prithvi: No Disclosures

 

No Questions Asked

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COMMENTS

lamp

4 years ago

It is quite sad despite such a huge fraud in US , indian news dosnot report , nor do our financial institution take action

Dayananda Kamath k

4 years ago

he would have got results already if he had approached american authorities than the indian authorities. in india sebi is the biggest culprit along with sfio rbi and bankers. rbi itself is facilitator for fema violations. they issue a circular after 5 years that third party import of gold is violation but does not initiate action even after complaint. they even do not help the auditor who reported these violations and who was harassed by the banks executives who are responsible for this. and the karnatak highcourt also support the bank saying the stickler for rules can be eased out by the employer. the meaning of golden hand shake is not something extra than what is eligible.in such a country such things will continue to happen.

sreenath

4 years ago

sathyacumaran dhandapani
its waste in reporting to sebi or sfio as they are all hand in glow with bankrupcy company and the accounts of most of the IT companies expect Infosys all the companies accounts are fudged hence this problem which sebi is well aware they blindly close their eyes

VIJAY SHAH

4 years ago

PLEASE CORRECT THIRD LAST PARA SECOND LINE FOURTH LAST WORD AS PRITHVI

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