Will the long-standing feud between the Infosys co-founder, NR Narayana Murthy, and the board end with the resignation of Vishal Sikka?
The Infosys board is scheduled to meet tomorrow to discuss a share buyback. But with the current standoff (and the rapid fall in the firm’s share prices), the board will have to deliberate on various issues to tide over the crisis that has erupted now.
Sikka was appointed as managing director and chief executive officer of Infosys in June 2014, a year after NR Narayana Murthy, who retired in 2011, returned as the executive chairman and additional director to provide better stability to the software giant.
But the acrimony between Murthy and Sikka became loud and clear when the founder raised concerns about poor corporate governance, a sharp increase in Sikkha’s compensation and huge severance pay meted out to former CFO Rajiv Bansal. In the latest diatribe, Murthy claimed that some of board members also felt the same about Sikka.
“All that I hear from at least three independent directors, including Mr Ravi Venkatesan (co-chairman), are complaints about Dr Sikka. They have told me umpteen times that Dr Sikka is not a CEO material but CTO material. This is the view of at least three members of the board, and not my view as I have not seen him operate from the vantage point of an Infosys board member,” Murthy said in the email.
After his resignation on August 18, Sikka shot a letter to all the employees at Infosys saying it was difficult for him to continue with his job “while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks.”
“…after much contemplation I have decided to leave because the distractions, the very public noise around us, have created an untenable atmosphere. I deeply believe in creating value in an atmosphere of freedom, trust and empowerment,” he said.
In Sikka’s defence, the board of Infosys has issued a statement saying “Mr Murthy's continuous assault, including this latest letter, is the primary reason that the CEO, Dr Vishal Sikka, has resigned despite strong Board support”. It also said that Murthy’s allegations contained “factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members”.
“Infosys has, under the leadership of Vishal, developed and articulated a strategy to transform itself to meet the rapidly changing needs of the marketplace in the 21st century. The company was lagging significantly behind industry in growth rates when Vishal took over and now we are in top quartile from a performance perspective,” the statement said.
While some quarters have pitched for Narayana Murthy returning as the chairman emeritus of Infosys, others feel that the ego of the co-founder and his constant attachment to Infosys have left the management very little scope to function by itself. There were talks of the founders offering to sell their stake and severe ties with the company as well. Is that the way forward for Infosys then?
Shocked by the morning news of Sikka’s departure from the helm, investor sentiments were hit hard. At the time of publishing, the Infosys scrip tanked 9.68% by mid-day to trade at Rs 922.30 against its previous close of Rs 1021.15.