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Infosys war out in open, CEO Vishal Sikka quits, board blames NR Narayana Murthy

In moves that raised issues of boardroom governance, the Infosys board of directors rallied behind Vishal Sikka and tore into chief founder N R Narayana Murthy, saying he forced the exit of the CEO with his “continuous assault”.

Written by Johnson T A | Bengaluru | Updated: August 19, 2017 1:46 pm
Vishal Sikka, Infosys, Vishal Sikka resigns, vishal sikka quits, Infosys CEO resigns, NR Narayana Murthy, infosys new ceo, pravin rao, who is vishal sikka, indian express Infosys CEO Vishal Sikka with chief founder N R Narayana Murthy. (Express archive photo).

Citing “unrelenting, baseless/malicious and increasingly personal attacks” against him, Vishal Sikka, the first professional CEO of information technology services giant Infosys Ltd since the exit of the original founders, announced his resignation from the firm Friday.

In moves that raised issues of boardroom governance, the Infosys board of directors rallied behind Sikka and tore into chief founder N R Narayana Murthy, saying he forced the exit of the CEO with his “continuous assault”.

While Sikka did not identify the specific quarters from where the “personal attacks” emanated, the board, embroiled in a battle for legitimacy with Narayana Murthy, did not mince words: “Mr Murthy preferred his diktat to prevail with no place or tolerance for the outcomes of shareholder democracy’’.

Responding to the direct attack by the Infosys board, Narayana Murthy, in a statement, said he was “extremely anguished by the allegations, tone and tenor of the statements’’.

Sikka’s resignation came a day ahead of an Infosys AGM to decide on a Rs 13,000-crore share buyback to utilize excess cash in the reserves of the company.

Vishal Sikka, Infosys, Vishal Sikka resigns, vishal sikka quits, Infosys CEO resigns, NR Narayana Murthy, infosys new ceo, pravin rao, who is vishal sikka, indian express Vishal Sikka, who quit as CEO of Infosys, speaks to journalists on Friday at the company’s headquarters in Bengaluru through video conference from California. AP photo

Sikka, 51, joined Infosys Ltd in August 2014 following the exit of the last of the founder CEO. He was credited with setting the company on a path of transformation away from the traditional IT services business through adoption of new age technology like artificial intelligence and robotics.

Sikka and the Infosys Ltd board were, however, beset over the last 18 months with countering allegations of misgovernance over several issues raised by a group of founders led by Narayana Murthy who are key shareholders in the $10-billion revenue firm.

“Over the last many months and quarters, we have been besieged by false, baseless, malicious and increasingly personal attacks. Allegations that have been repeatedly proven false and baseless by multiple, independent investigations. But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation,’’ Sikka stated in his resignation letter to the Infosys Ltd board.

“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,’’ Sikka said in a final email as CEO to over two lakh employees at Infosys Ltd.

“It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks,’’ he said.

The board of directors, in a statement, said “Mr Murthy’s continuous assault is the primary reason that the CEO, Dr Vishal Sikka, has resigned despite strong board support’’.

Narayana Murthy, on his part, said: “I voluntarily left the board in 2014 and am not seeking any money, position for children or power. My concern primarily was the deteriorating standard of corporate governance which I have repeatedly brought to the notice of the Infosys board. It is below my dignity to respond to such baseless insinuations.’’

The Infosys patriarch founded the iconic company over 30 years ago with six co-founders and established himself as a middle-class hero after changing the lives of hundreds of people with employment and good wages.

Though a popular figure among the nearly two lakh employees of Infosys for breathing freshness into the functioning of the company and for engaging employees constructively, Sikka and the chairman of Infosys Ltd board, R Sheshasayee, have been under attack from Narayana Murthy over the last 18 months over several issues like a huge pay hike for Sikka at the end of his first year in the company without setting clear goals; huge exit packages for two top executives; and for acquisitions like that of an Israeli company called Panaya involving alleged conflict of interest with Sikka’s former employers at the German firm SAP. Questions have also been raised over the US-based CEO’s extravagance and travels around the world in a company jet.

Infosys Ltd has, over the past few months, attempted to address issues raised by Narayana Murthy and others by inducting persons of the choice of the founders for the board but have not been able to fully satisfy their lingering doubts over developments inside Infosys.

Last month, Narayana Murthy demanded that the company make public the full details of a probe conducted by an independent agency into the Panaya acquisition although the company had told the board at the end of the 2017 financial year that no wrongdoing had been found by the probe.

Narayana Murthy has also repeatedly stated that he is not in favour of the top management receiving salaries that are hugely disproportionate to the salaries of the mass of employees of the company. Private discussions that he and some directors of the board have had about Sikka being a better CTO than a CEO have also very recently found their way into the public domain.

“There is no question that Vishal is a phenomenal technical guy. What is evident is also that he has blossomed into a high performance CEO if you look at the results,’’ Infosys Ltd co-chairman Ravi Venkatesan said on Friday while stating that the private discussion between Narayana Murthy and some of the directors of the board had been taken out of context.

Venkatesan identified the emergence of this private discussion in the public domain as lying at the heart of the matter of Sikka’s decision to quit the firm. “For the last year or so, the board has been in dialogue with the founders to try and find some practical and feasible solutions to the different points of view within the boundaries of law and without compromising on independence. We were making reasonable progress until quite recently. These are privileged conversations and if you take something out of context, they can appear to be quite problematic,’’ he said.

Employees within Infosys Ltd, speaking off the record, say that murmurs of mismanagement at the company at the cost of employees have been swirling around for a while. There was growing buzz that an old values based order would be re-established, sources said.

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  1. A
    Aug 21, 2017 at 7:32 pm
    Mr. NRN and co-founder board members are responsible for the downfall of Infosys. In the tenure of Sikka, infosys was running in profits. This is irony of Indian management. Since none of the co-founder couldn't become CEO, as Mr. Sikka non co-founder being CEO, this is exact the point, ego of board members including NRN got hurt and therefore this is was is infosys fiasco all about. Got save such egoistic top managements. : livemint /Companies/kh0jH09FsCQRoaYZmEnqyM/The-backstory-to-Infosys-CEO-Vishal-Sikkas-resignation
    1. S
      Sathyamoorthy Umapathy
      Aug 19, 2017 at 9:42 pm
      Let us wait till all the US Law firms come out 100 of all that they have to say and their investigations reveal in the US . Infosys in their over anxiety to do business in US, I hope , has not done anything seriously wrong during the past couple of years when Mr. Sikka headed Infosys.
      1. G
        Aug 19, 2017 at 8:56 am
        This seems to be the beginning of the end of an independent InfoSys.It wil start declining and will be acquired by a compe or Wipro, TCS or even Microsft or Oracle. Does Mr.Murthy have the courage of a say David Packard(HP) or Steve Jobs who returned to their companies in trouble and set them right?or Can InfoSys find an AI and Robotics pro to lead the company in a new era? digital equipment Corp DEC wasb a powerhouse in the 80s.But it disappeared the 90s when the mgmt.did not see the ComingbPC revolution and adopt .The next 5 years will tell.
        1. J
          Joseph Mumbai
          Aug 19, 2017 at 8:02 am
          Narayana Murthy is a loose mouth. He has passed his managerial prime. Many a times his intemperate utterances make him look petty minded. Time he steps down for real. Artificial intelligence and machine learning (AI and ML) are the way to go forward.
          1. R
            Raj V
            Aug 19, 2017 at 6:40 am
            Now it appears to be a dirty war. Where will it lead to?
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