The Board of directors of Infosys Ltd has squarely blamed founder N R Narayana Murthy for forcing the exit of MD and CEO Vishal Sikka from his post, a little over three years after he assumed the role. The Board, which has been at the centre of criticism for non-governance by Narayana Murthy, in a statement on Friday said that “Mr. Murthy’s continuous assault is the primary reason that the CEO, Dr. Vishal Sikka, has resigned despite strong Board support’’. Sikka, after his resignation, is now on the Board as the executive vice-chairman to oversee the transition.
The Board of directors, headed by Chairman R Seshasayee, has been criticised by a group of founders of the company led by Murthy, who are key shareholders, for not reining in Sikka, for according the CEO a huge salary hike in 2015 and for not being vigilant enough to suspected wrong-doing in the course of acquisitions.
A war to gain control of the Infosys Ltd Board has been on for several months with persons of Murthy’s preferences being accommodated in recent months in key positions, including Bank of Baroda chairman Ravi Venkatesan as co-chairman, in an effort to reduce a skew perceived to be in existence in favour of the CEO. Vishal Sikka resigns as MD and CEO of Infosys
Surprisingly, Sikka’s appointment as the executive vice-chairman on the Board is being seen by analysts as a curious development.
“The Board assures its shareholders, employees, customers and communities that it is committed not to be distracted by this misguided campaign by Mr. Murthy and will continue to adhere to the highest international standards of corporate governance as it executes its strategy of profitable growth for the benefit of all Infosys stakeholders,” it said in a statement on Friday.
“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,’’ it added.
The Board claimed that Murthy has been insinuating corruption in the acquisition of the Israeli firm Panaya without providing any evidence. Beyond the News: Vishal Sikka had been losing ground in Infosys for a while
“For Mr. Murthy to imply – with no evidence whatsoever – that three well-respected international law firms, members of the Infosys Board and certain employees are engaged in some grand global conspiracy to conceal information is not tenable on its face,’’ the Board said.
“Mr. Murthy was interviewed as part of the investigation by Gibson Dunn & Crutcher LLP in pursuance of the investigation in the Panaya acquisition, and was invited and welcomed to provide any information or evidence he believed would support the allegations being investigated. He did not provide any evidence since none exists,’’ it stated.
To a recent demand by Murthy for full disclosure of the report into the investigation into the Panaya deal, the Infosys Ltd Board has said that full disclosure is not possible since this “would compromise the confidence of employees that they could report honestly, openly, and candidly to the company in any future investigation or legal matter’’. Sikka exits amid corporate governance issues, stock falls seven per cent
The Board further said Murthy ‘preferred his diktat to prevail with no place or tolerance for the outcomes of shareholder democracy.’
“Mr Murthy has demanded that the Board adopt certain changes in policy else he will attack Board members in the public, which threat was carried out when the Board did not acquiesce. He has demanded operational and management changes under the threat of media attacks. Mr Murthy preferred his diktat to prevail with no place or tolerance for the outcomes of shareholder democracy. Mr Murthy wanted the demands to be adhered to without attribution to him,’’ the Board has stated. “Given the commitment of the Board to remain independent and pursue a chosen strategy, the Board currently has no intention of asking Mr Murthy to play a formal role in the governance of the organization,’’ it said.