Infosys needs to take cue from Cognizant Technology Solutions (CTS) and announce a share buyback programme, according to Mohandas Pai, former CFO of Infosys and former board member. The Infosys stock was up 1.39 percent at Rs 949 at around 3.22 pm on the BSE.
"Cognizant To Appoint 3 Directors, Return $3.4 Billion To Shareholders When will Indian IT follow?," Pai tweeted on Wednesday.
Read: Infosys CEO Vishal Sikka, HR head Shankar make tough comments on jobs, hiring
"The boards have to be more accountable to shareholders. Founders of Infosys have raised this question. Why cannot the board have a buyback, it must be proper capital allocation. Infosys should look at a buyback," the Business Standard quoted him as saying.
CTS, in its post-earnings conference call with analysts, had announced to buy back shares worth $2.7 billion starting from the current quarter (Q1, CT 2017), brokerage Nirmal Bang Institutional Equities said in a note on Thursday.
"CTS has, for the first time, acknowledged that it has aged. It has instituted a robust capital return programme ($3.4bn over the next two years of which $2.7bn will be spent on share buybacks starting 1QCY17) and for the first time in its history dividend payouts on a quarterly basis. It plans to fund this by existing US cash, future US free cash flows and if need be with incremental debt," Girish Pai, head of research at the brokerage, wrote in his note.
As of December 31, 2016, Infosys had 2,29,26,57,424 shares of Rs 5 face value, aggregating to Rs 1,146.32 crore. Promoters and promoter groups hold 12.75 percent stake in the company while the rest is with the public.
Pai also raised the issue of excessive severance pay (Rs 17.38 crore, equalling 24 months of pay), to former CFO Rajiv Bansal. "The founders who have built the company and created a value system have raised serious issues. As far as I know, no CFO in India has got a 24-month separation. There is no case for a special treatment for anybody. And the management cannot be generous with shareholder money because it's not their money. It's a serious lapse which should be looked into by the board," the Economic Times quoted him as saying.
Promoters and promoter groups include Nandan Nilekani, Rohini Nilekani, Jahnavi Nilekani, Nihar Nilekani, N R Narayana Murthy, Sudha Murthy, S Gopalakrishnan, Akshata Murthy, Dinesh Krishnaswamy, Divya Dinesh, Shreyas Shibulal and Meghna Shibulal.
Meanwhile, the BSE has issued a notice to the company seeking response to a media report that founders of Infosys had raised governance isssues in a letter.
Infosys is India's second-largest IT services exporter headed by Vishal Sikka, MD and CEO. The founders are also said to have raised issues pertaining to Sikka's remuneration.
