Vishal Sikka, the CEO & MD of Infosys, has resigned last week and the board has blamed the co-founder of the company N R Narayana Murthy for forcing the first non-promoter top executive to quit. The board said that Sikka resigned despite its strong support and hold Murthy solely responsible for the departure of the CEO and harming employee morale.
The reaction was sharp and instant - the Infy stock tanked over 10% and investors lost £2.25 billion.
In a letter to the staff, Sikka said, “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....After much contemplation I have decided to leave because the distractions have created an untenable atmosphere.” UB Pravin Rao, COO and a veteran with the company, has been appointed interim chief executive officer and managing director reporting to Sikka. In an unexpected turn, Sikka is staying as executive vice chairman till a new, permanent CEO takes over, not later than March 31, 2018.
In another surprise move, the company's co-chair Ravi Venkatesan said that given the current environment at Infosys, it might be difficult to get a good outside candidate. He said: “The challenge for anybody coming from outside, as Vishal experienced, is to manage the cultural adaptation, and then transform it.
The board has also ruled out Murthy playing a formal role in the governance of the company. Murthy, on his part, said that while he was “extremely anguished by the allegation, tone and tenor of the statements,” it was “below his dignity to respond to such baseless insinuations.” He said he would reply to “these allegations at the appropriate time.”
The simmering tension between Sikka and the board on one hand and the founders, led by Murthy, on the other, came out in the open early this year. Murthy has led a campaign against what he termed as deteriorating “corporate governance” at Infosys. It first came to light when he and a couple of other promoters voted against the salary hike given to Sikka and the appointment of Punita Sinha to the board in April 2016.
Later, he questioned the severance payout to the then CFO Rajiv Bansal and the amount given to departing legal counsel David Kennedy. After a sustained campaign by Murthy, the board was forced to acknowledge that in paying out such large sums there had been an error in judgement and the bulk of the money due to Bansal was held back.
Another bone of contention was the acquisition of Israeli cloud company Panaya for $200 million in Feb 2015. The company, on the basis of whistleblower complaints, held independent investigations and concluded that there was no wrongdoing. Murthy has not subscribed to this and has continued to raise the issue.
