InGovern Research Services, a proxy advisory firm, has raised questions over the sudden exit of Infosys' Chief Compliance Officer David Kennedy and his severance package and has asked shareholders to raise concerns and seek clarification on the incident.
On January 1, Infosys had informed stock exchanges that Kennedy has left the company after a mutual separation agreement but had not divulged any reason for the exit.
InGovern, in a corporate governance alert, noted that Kennedy's departure is "surprising" as it comes within two months of him being given a revision in pay.
It added that in case an employee resigns voluntarily, he/she has to serve a notice period and there is "no logic of paying a severance package."
"Mr Kennedy is being paid a severance pay and is also not serving any notice period in the company, which makes it clear that his service has been terminated by Infosys," it said.
According to the proxy firm, Kennedy was included in the list of Key Managerial Personnel (KMP) by the company's audit committee in October 2016 and his annual remuneration was increased to $1.03 million.
InGovern said Kennedy's position as the General Counsel and Chief Compliance Officer was an important one and that his departure "may have been triggered by an event that may have material consequences on the company."
"Hence, it is imperative for the company to provide reasons for his abrupt termination," InGovern said.
Besides, it recommended shareholders to raise concerns about the basis of calculating the severance pay amount to Kennedy, given that he has served only 2.2 years in this capacity at Infosys.
Such compensation could be indicative that Indian IT service providers want to ensure that exits from the company "do not act as an eye sore with the regulators", especially in the US, Greyhound Research Chief Analyst and CEO Sanchit Vir Gogia said.
Apart from Kennedy, Infosys' former CFO Rajiv Bansal had also received a significant severance pay when he 'resigned' from Infosys on October 12, 2015.
Bansal's total remuneration for the period of April 1 October 12, 2015 was Rs 23.02 crore, of which Rs 21.71 crore was for 'others' which included bonus, retirals and severance pay. In comparison, he had received Rs 4.72 crore for the entire FY'15, as remuneration.
InGovern recommended that Infosys and other companies should make it a policy to disclose the employment agreements of its key management personnel as well as its Managing/Executive Directors to shareholders.
The employment agreements should also contain details of severance pays, if any, it added.