The Infosys board has taken a hard stand on what it termed as repeated insinuations and malicious campaign against the company by its founders and has withdrawn the invitation to co-founder N R Narayana Murthy a representation on its board.
The board has also asked the remuneration committee to find a suitable candidate to replace Sikka who will remain the Vice-Chairman.
The committee has been given time till March 31 next year to fill up the CEO’s post. Sikka resigned from his post of CEO & MD on Friday claiming that he could no longer continue in his post because of continuous campaign against him which had turned personal.
Last week, Ravi Venkatesan, the co-Chairman of the board, had said that Infosys was willing to give Murthy a representation on its board. Murthy, did not respond to Venkatesan’s offer.
In a hurriedly convened investors’ call on Friday, Venkatesan said he was thankful to Sikka for making Infosys "relevant again''.’
“Vishal did a great deal for making the journey exciting again during the three years he was there. He has planted the seed for the transformation of the company and it will bear fruit soon,” he said.
He also made it clear that there was no going back as far as the new strategy initiated by Sikka is concerned. The board is incredibly committed to the strategy articulated by Vishal, he pointed out.
"We hope to get a new CEO before March 31, 2018. Praveen Rao, will continue to report to Sikka.''
Sikka, who received support from most of the analysts who participated in the investors' call, said he has received complete support and was thankful for the commitment by his team.
He said the industry is going through a significant shift and is driven by automation and all pervasive digitisation. “I am really proud of what we have achieved. We deliver things nobody could do to improve the productivity. I am proud of the results we have achieved,” he said.
He said since he took over the top job, the attrition rates have come down while revenues too have increased. “There has been a steadfast focus on margins. Our utilisation has been on a 10-year-high. The number of clients in the $100-million order has gone up from 12 to 19,” he said.
Sikka came down heavily on allegations made against him. “You can deal with certain issues but what has been happening since January or February, the continuous drum beats of these allegations, news stories, Rajiv (Bansal, former CFO) separation, Panaya (deal) and (all this), over and over again...it is absolutely sickening. You wake up in the morning, and it is the same regurgitation of the same nonsense. I was spending way too much time, even that is surface damage. What it does is to make it difficult to carry out the change agenda. We have been trying to provide a working culture. ...and this is a dis-service to the company, it prevents us from creating a value. It creates negativity. I have been thinking about this for sometime. I have had two long meetings with Ravi and Seshasayee was here too. I have been thinking through this and earlier today …”
Sikka said the situation had got worse and increasingly malicious and personal. This is not the end of the company. The company will live longer than all of us. The board told me that I should reconsider my decision and felt that the performance will slow down. It hurts performance. Media is nonsensical. Some of the allegations are being made again and again. It drains so much of energy…”
Praveen Rao, the current COO who has now become the interim CEO and MD, admitted there are no easy solutions and said he was very happy that Sikka will be around for the foreseeable future.
PTI reports
Vishal Sikka, the first non-founder CEO of Infosys Ltd, has abruptly resigned due to the “continuous assault” and “campaign” by the founder and ex-chairman, N R Narayana Murthy, the $10-billion firm said today.
Sikka, 50, a former German IT major SAP executive, under whose three-year tenure Infosys’ revenue rose about 25 per cent, did not himself name Murthy directly as the reason for his exit but said he faced “false, baseless, malicious and increasingly personal attacks“.
The latest provocation seems to be Murthy claiming in an e-mail, which found its way to the media, that he had been told by Infosys independent directors that Sikka was more suited as a Chief Technology Officer than Chief Executive Officer.
Board defends Sikka's performance
Infosys board came out with a strongly worded statement defending Sikka’s performance and ruled out a formal role for any of co-founders in the company’s governance. E-mails sent to Murthy seeking comments remained unanswered.
The board alleged that a letter authored by Murthy “has been released to various media houses attacking the integrity of board and management alleging falling corporate governance standards in the company“.
“Mr Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with board members,” it said.
The board said Murthy has repeatedly made “inappropriate” demands, which is inconsistent with his stated desire for stronger governance.
Share buyback
The board, which is to meet tomorrow to consider a Rs 13,000-crore share buyback — a key demand of the founders for putting cash with the company to use — argued that Murthy’s “campaign” has intensified over time.
Shares of Infosys, which like other IT companies are battling a slowdown in new deals from western clients and visa curbs in the US, fell over 13 per cent before recovering a bit. They were trading at Rs 919.70 at 2.40 pm, down 9.93 per cent over the previous day’s close.
'False, baseless, malicious attacks'
Without naming anyone, Sikka in his resignation letter to the board said that “over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks” and these allegations have been repeatedly proven false 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,” he said.
Compensation, severance package
Once a poster boy of Indian IT success story, Infosys has been battered by intense acrimony, with founders led by Murthy questioning the high compensation paid to Sikka as also severance package to certain former executives.
Besides, an anonymous letter was sent to the Securities and Exchange Board of India and the US Securities and Exchange Commission earlier this year, alleging that the Israel-based Panaya acquisition was overvalued and that some Infosys executives may have benefited from the deal.
While an independent probe absolved the board of any wrong doing, Murthy kept the pressure on making the full contents of the investigation report public.
“Over time the demands have intensified, which when declined by the Board resulted in the threats of media attacks being carried out,” said the statement issued by the board.
Infosys had refused to make public the probe report.
The board rued that its efforts to resolve the concerns of the founders over the course of a year through a dialogue has not been successful.
The statement added that the board had tried earnestly to find “feasible solutions within the boundaries of law and without compromising its independence''.
It also cautioned that Murthy’s actions and demands are damaging the company.
The board sought to assure shareholders, employees and customers that it “will not to be distracted by this misguided campaign” by Murthy and will continue to adhere to the highest international standards of corporate governance.
The Infosys board said it is “profoundly distressed” by the unfounded personal attacks on the members of the management team.
“The board denounces the critics who have amplified and sought to further promote demonstrably false allegations, which have harmed employee morale and contributed to the loss of the company’s valued CEO,” Infosys said in a statement.
Full text of Vishal Sikka's resignation letter
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— Rajalakshmi Nirmal (@rajalakshmi_ns) August 18, 2017