Why NRN has to let go

NS Vageesh | Updated on March 09, 2018

Step back The times have changed. - BOBBY YIP

At this rate, he could lose his status as a middle class icon who set the gold standard for ethics and governance in business

Letting go and moving on; whether from a relationship, a job, or an enterprise you have built is the hardest thing in the world. It’s the stuff that keeps agony aunt columns going.

NR Narayana Murthy (NRN), iconic founder of Infosys is perhaps in need of the same advice now.

For some time, he has appeared in the news headlines for what you can term as the wrong reasons. It may be a matter of perception, of course, but his public pronouncements against the board and the management of Infosys in the matter of executive compensation are beginning to sound a trifle bitter.

Right steps

Make no mistake. There is much to admire in him. He has many achievements as an institution builder and has set an example with his personal qualities that have inspired many. But his actions of the past year are certainly deserving of criticism. In the manner in which he has raised public objections to the increase in the COO’s pay, and earlier to the severance package paid to the erstwhile CFO, Rajiv Bansal, as well as the pay hike for its CEO, he has somehow slipped from the high standards of decorum that one associated with him.

Having decided to step back from the active running of the company and from the company’s board; twice, NRN was expected to fade quietly into the sunset and give the new management the time and space to run the show. Further, NRN and his co-promoters have earlier asked to be reclassified as public shareholders.

So, it is all the more surprising that NRN should raise a hue and cry about executive pay packets and draw some unfair comparisons with his own pay. As he himself will acknowledge, that was in a different era. Secondly, he was a promoter with a sizeable stake and who didn’t need to collect his rewards only through salaries. Thirdly, he has the forum of the AGM or EGM to register his protest and vote against salary increases if they are undeserved, as he has indeed done. Beyond all this, he has the stature to call the remuneration committee members and have a quiet chat with them.

Surely, no one will refuse a meeting or not hear the arguments of a man who was not only a company founder but also someone who set standards of corporate governance and disclosure. If they have heard him and his objections and still chose the route of higher pay, then, as a good democrat, he must accept their judgement, even if he may not agree with it.

To be sure, rising executive pay in top corporates has been a matter of much debate over the years across all major economies and now in India too. JK Galbraith’s pithy comment that top executive pay is not a market reward for performance, but often a warm personal gesture by an individual to himself, rings increasingly true.

Therefore, NRN’s concerns that executive pay should be related to performance, and that there should not be too much gap between salaries at the entry level and top level are valid and deserve serious consideration. These are points that could have been made without drama and with discretion.

Goodwill damage

NRN is too smart a man to not realise the embarrassment he is causing the board and the management and the damage he is wreaking on the brand, the company’s stock and the morale of the company staff. One has to then wonder, why is he doing it?

For a man who has the reputation of having led a principled life, he must know his recent actions are the equivalent of scoring a self-goal. He certainly runs the risk of losing the halo that surrounds him now as a man who built a meritocracy, turned many middle-class Indians into dollar millionaires in a legitimate business and made compassionate capitalism respectable.

NRN mustn’t soil his copybook. He deserves better. Which is why one is tempted to cite the agony aunt’s timeless advice — Let go.

Published on April 09, 2017

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