Infosys shares on Friday plunged by over seven per cent after the tech star’s chief executive (CEO) Vishal Sikka quit following a welter of charges and denials between him and the company’s founders led by former Chairman NR Narayana Murthy. Sikka’s exit comes a day after an email by Murthy to some of his advisers that he had been told by at least three independent directors of the company that Sikka was more chief technology officer (CTO) material than chief executive officer (CEO) material, was published by the newspaper Mint. Infosys shares were quoted at Rs 946.55, down 7.31 per cent, at 11.50 am. The Sensex also fell 240 points to 31,555 intra-day.
This is the second high profile exit of a well-known CEO of a top business group in the last 12 months. The sacking of Cyrus Mistry as Tata Sons Chairman last year had also raised corporate issues with Ratan Tata questioning many decisions of Mistry. Sikka’s resignation came through even before the dust had settled on Mistry’s sacking.
The Infosys saga started in February 2017 when Murthy and former Infosys directors TV Mohandas Pai and V Balakrishnan demanded that Chairman R Seshasayee step down over alleged governance and disclosure issues. The founders of Infy who hold over 12.75 per cent stake in the company had then sent a letter to the board raising several concerns. Later both Sikka and Seshasayee clarified their position. However, Murthy was yet to withdraw his February statement on concerns over governance and disclosure issues.
Infosys then conducted an investigation with the help of external agencies which included Gibson Dunn & Crutcher, Control Risks and Khaitan & Company. As disclosed in June 2017, the summary of the report had said, “We found no evidence whatsoever to support any of the new allegations in the complaints regarding wrongdoing by the company or its directors and employees, and those allegations were rebutted by substantial and credible evidence.”
Despite charges that founders were interfering in its affairs, Murthy came down heavily on the decision of the Infosys management to offer a big salary hike to CEO Pravin Rao — who is now the interim CEO — indicating his continuing rift between the management led by Seshsayee and Sikka.
This was followed by anonymous complaints which alleged that there were irregularities in connection with company’s acquisitions of Panaya and Skava in 2015. It had also alleged that the mergers and acquisitions team had acted without securing proper approvals. There were also allegations that Sikka had received inappropriate compensation and incurred excessive expenses relating to travel, security and the Palo Alto office.
Sikka refuted all these allegations. “… 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 wrote in the letter on Friday in a veiled reference to Murthy’s charges.
Murthy had also asked the company’s board to make public, the contents of the report that probed into alleged irregularities involving certain key acquisitions. Infosys, however, refused, stating that the company does not want to do the same.
Corporate observers say the final act of the Infosys saga is yet to come. There’s already a demand to make Murthy Chairman Emeritus of the company a la Ratan Tata as Tata Sons Chairman Emeritus. The selection of the next MD and CEO of Infosys will also be keenly watched.