Infosys has lost an arbitration over severance package to its former CFO Rajiv Bansal and has been asked to pay outstanding amount of Rs 12.17 crore, with interest, the firm said Tuesday.
"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," Infosys said in a BSE filing.
As per the award, Infosys is required to pay Bansal the outstanding severance amount of Rs 12.17 crore, with interest, it added.
"While the award acknowledges that Infosys had bona fide disputes, its counter claim for refund of previously paid severance amount of Rs 5.2 crore and damages, has been rejected," the filing said, adding that the arbitral award is confidential.
Infosys said it will take legal advice for further action on the issue.
The IT firm had agreed to pay Bansal a severance amount of Rs 17.38 crore or 24 months of salary, but the company suspended payments after he got Rs 5 crore as co-founder N R Narayana Murthy and others objected to the severance package as excessive.
Murthy also said at the time that the "board was not transparent and was misleading" on the issue of Bansal's severance pay.
Industry watchers largely welcomed the decision by the tribunal.
There is unlikely to be an impact on Infosys but the tribunal's decision was a "wake up call for the founders to walk away. The company also needs to distance itself from the founders," said Sanchit Vir Gogia, CEO, Greyhound Research.
"The arbitrator would have only considered the merit of Infosys' case of holding back the severance compensation and the validity of the severance compensation," said Shriram Subramanian, managing director of InGovern, a proxy advisory and corporate governance firm. "The severance amount itself isn't huge for Infosys, but, the principles of why the severance had to be rescinded would be important," he added.
Following this, Bansal had dragged his former employer to arbitration to claim the remaining Rs 12 crore of his severance pay.
Bansal's severance payout has been one of the issues that Infosys founders had raised to allege governance lapses at the Bengaluru-based firm.
When Bansal left Infosys in 2015, Infosys had agreed to pay him Rs 17.38 crore in severance pay, equalling 24 months of pay.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
