Analysts believe Infosys founders' discontent with matters of governance at the company could prompt changes in the board. Founders of the company who own 12.75 per cent stakes, remain particularly critical of the £1.7 million severance payment to former CFO Rajiv Bansal and the alleged absence of proper disclosure of why the payout was made when senior executives who had left before Bansal, did not receive any such payment. They blamed the board chairman and head of remunerations committee for not going through due process.
Promoters sought the appointment of a co-chair and replacement of the head of the nominations and remunerations committee. Co-founder NR Narayana Murthy has proposed NYU Stern School of Business professor Marti Subrahmanyam as co-chair, and has also suggested that board member DN Prahlad should replace Prof Jeffrey Lehman as the head of the remuneration committee. Phil Fersht, CEO of IT consulting firm HfS Research, is among those who expect there will be new faces and replacements over the next few weeks. He thinks Subrahmanyam will come back. "The battle between the legacy founders and the new blood to pivot the Infosys strategy is reaching boiling point. The firm has to start focusing 100 per cent on shareholder value and dictating new governance policies to make this happen. Until they get the governance set right and all the key stakeholders aligned, they will keep struggling on a go-forward strategy. Changing the roster at the top is inevitable and necessary," he said.
CEO of Everest Group, Peter Bendor-Samuel said the struggle to determine the board make-up is clearly playing out. "The outcome will determine if the current management team and digital-first strategy will continue. The board must decide which strategy to back and then move forward with a board which reflects this strategy. If major board changes are made, we can expect it is a vote for a different path forward for Infosys. One way or the other, the board needs to decide on its path forward as a protracted debate will start to affect Infosys' morale and performance," he said.
A lot rides upon the decision of other major shareholders in the company. Keeping in mind the relatively good performance of Infosys under CEO Vishal Sikka, it remains highly unlikely of them to favour any dramatic changes. One of the major shareholders, Oppenheimer Developing Markets Fund has already written a letter in support of Sikka and the board. "The bottom line is that, in our opinion, Dr Sikka has achieved much in his tenure as the first non-founder CEO. After many years of internal volatility and competitive under-performance, it is encouraging to see that Vishal has stabilised the core and articulated a clear and appropriate, long-term strategy to help Infosys thrive amid industry disruption," said Justin Leverenz, portfolio manager of the fund.
"We would strongly encourage the board of directors to restrain divisions in the firm and contain inappropriate interventions by non-executive founders. Let Vishal do what he was hired to do, without distractions. And appraise him on his efforts."
