Infosys' Rs 5.9 cr severance pay to Kennedy bid to play safe with Trump

IT major Infosys’ Rs. 5.9 crore ($868,250) severance pay offer to outgoing General Counsel David D Kennedy is a move to play safe with Donald Trump administration in the US, say experts.

Even though Infosys cited "normal payroll practices" as a reason to this compensation to Kennedy, experts say technically none of the company’s employees are eligible for a severance pay, except for chief executive Vishal Sikka.

Such a big compensation to Kennedy, who joined the company two years ago, is being viewed as a step to ensure nothing goes wrong with the new administration in the US.

"There is some kind of an abruptness in terms of reasons behind Kennedy’s severance pay. If there is a change at David Kennedy's level, then Infosys probably wants to play it safe in the US. While investors may be wary of this, the company has to ensure nothing wrong happens at this point of time with the Trump administration,” said Sanchit Vir Gogia, chief executive, Greyhound Research.

The software major said in a regulatory filing that both Kennedy and the company mutually agreed on a separation agreement, which was announced on December 23. "Under his Separation Agreement, and in line with the employment agreement that it supersedes, Kennedy will receive aggregate severance payments of $868,250 plus reimbursements for COBRA (insurance) continuation coverage over a period of twelve months,” said the company in the filing.

Kennedy was hired by the first non-founder chief executive officer of Infosys, Sikka, in November 2014.

The company’s Deputy General Counsel, Gopi Krishnan, will take over the responsibilities as acting General Counsel, while it looks for a replacement.

This is the second such large severance pay package offered by Infosys in little more than a year’s time. The first instance was its agreement with former chief financial officer Rajiv Bansal to pay Rs. 17.38 crore. Infosys had signed a separation agreement in October last year, when it replaced Bansal with MD Ranganath as chief financial officer, with a severance pay of Rs 17.38 crore. Since then, there have been speculations that Infosys was buying Bansal's silence with the huge severance pay.

The company then said that the agreement, which included non-compete obligations, had also explicitly enabled Bansal to report to regulators in future if there was any impropriety during his tenure.

"Reasons are not clear in both the cases. End of the day, they should be more transparent about why such severance packages are announced,” said Shriram Subramanian, founder and managing director, InGovern Research.