The resignation of Vishal Sikka as the managing director and chief executive officer of Infosys on Friday has once again put the spotlight on the trust deficit between founders and professionally appointed boards and lack of succession planning in Indian firms. Proxy advisory firms say that shareholders need to now actively look into board composition of firms, board appointments and its succession planning as such corporate tussles will only increase as Indian firms move to professional boards. “As India Inc transitions from founder-led to professional boards, we will see more and more such strife due to mis-alignment of values. This is definitely not healthy for the shareholders and therefore now shareholders need to pay more attention to board composition of companies, board appointments, succession planning of firm,” said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services. Sikka’s resignation is the second high profile exit of a chief executive of a top business group in the last 12 months. Last year, Cyrus Mistry was removed as chairman of Tata Sons due to alleged corporate governance issues raised by Ratan Tata , chairman emeritus of Tata Sons. Sikka in his resignation letter said that his decision to leave stems from continuous “false, baseless, malicious and increasingly personal attacks” that have created “an untenable atmosphere”. The board of Infosys on Friday too supported Sikka and said that the company’s founder and shareholder Narayana Murthy “continuous assault” and “inappropriate demands” are “inconsistent with his stated desire for stronger governance”. “Mr Murthy’s campaign against the Board and the Company has had the unfortunate effect to undermine the Company’s efforts to transform itself. The Board has been engaged in a dialogue with the Founder to resolve his concerns over the course of a year, trying earnestly to find feasible solutions within the boundaries of law and without compromising its independence. These dialogues have unfortunately not been successful,” said the Infosys board in a statement to BSE. JN Gupta, co-founder and managing directors of Stakeholder Empowerment Services (SES) said while Murthy is “unfairly” attacking Sikka and the board of Infosys, the company should have put the Panaya investigation report in public to settle all doubts of the founders. “Mr Murthy is not doing the right thing. He is one of the shareholders and because of his reputation people listen to him but it is unfair, all the other shareholders too have a voice. So it would be wrong to expect that his voice is always correct. Clearly there is a trust deficit between Murthy, the board and the chief executive officer. We don’t know the reason for this trust deficit. If the promoters or founders are considered to be always right then there can be no succession planning ever,” said Gupta. Earlier, Murthy had demanded that the investigation report on Panaya acquisition should be made public. This after there were anonymous complaints alleging that there were irregularities in connection with Infosys’s acquisitions of Panaya and Skava in 2015. Murthy and his family have a 3.44 per cent stake in Infosys. Gupta also said that it is impractical for Murthy to expect that the board will function the way it used to when he was at the helm of affairs at Infosys. “Most of the board members continued even after Murthy left so it is unfair to say that the same board which functioned under him properly is not doing its job now,” said Gupta.
