Is Infosys fight approaching its endgame?

Employees are asking if everything’s okay between CEO Vishal Sikka, the board and the founders, even as Murthy has clarified there’s no issue with Sikka


But despite N.R. Narayana Murthy’s clarification that all is well between him and CEO Vishal Sikka, Infosys employees are worried, especially in view of the media reports on old issues being circulated in the past three days. Photo: Hemant Mishra/Mint
But despite N.R. Narayana Murthy’s clarification that all is well between him and CEO Vishal Sikka, Infosys employees are worried, especially in view of the media reports on old issues being circulated in the past three days. Photo: Hemant Mishra/Mint

At Infosys Ltd, is it endgame in the fight between founders and the board and management?

This is the question being asked by employees, analysts and investors after the founders’ unhappiness over some decisions taken by the board over the last 10 months. The disagreement came to light when Infosys founder N.R.Narayana Murthy expressed disappointment with the current board.

“The issue is not with (chief executive officer) Vishal Sikka but with the quality of governance at the board. It has slipped,” Murthy was quoted by The Times of India in a piece published on 10 February.

“I have heard this disappointment from a host of former employees and current employees who feel let down by the management and the board,” Murthy told The Economic Times in an interview. “I have heard from former directors (executive and independent) who are amazed that such acts are taking place at Infosys. Several investors have written to me”

That things haven’t been great between Sikka and its band of founders headed by Murthy is well-known. Mint has been the only paper that has reported the issues over the last 10 months. But despite Murthy’s clarification that all is well between him and Sikka, employees are worried, especially in view of the media reports on old issues being circulated in the past three days.

“Most employees in campuses are worried and asking what is this all about,” said an employee at the Bengaluru office of the company. “The CEO has asked us all to focus and not listen to the media reports. But if the media is writing about it, then surely not everything is okay. So why will this be between founders and board, especially as most of the issues are old. So there is this fear that something may not be right between founders and CEO.”

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Infosys continues to downplay any talk of a rift between the founders and the board or the founders and Sikka.

An Infosys statement said: “The Company denies any governance lapses alleged by some sections of the media in reports that have appeared in the last few days on purported rifts among the Founders, the Board and the Management.”

“While the Board appreciates and respects inputs from the founders, it is committed to fulfilling its fiduciary responsibility to act independently and in the overall interest of the shareholders”

The issue of governance standards raised repeatedly by the founders over the last 10 months are on three main developments.

Firstly, founders are unhappy with the “non-transparent” manner in which the board decided to increase Sikka’s compensation to $11 million from $7.08 million.

Secondly, the founders believe the Infosys board has always had people not related to politicians, and the current board’s decision to appoint Punita Kumar Sinha, wife of minister of state for aviation Jayant Sinha, as an independent director was wrong. The founders expressed their unhappiness over both decisions, and some of them abstained from voting when the two resolutions were put to vote for nod from shareholders in April last year.

Thirdly, the decision by the board to give its former chief financial officer Rajiv Bansal a generous severance payment of Rs17.38 crore in October 2015 rankled many of the founders. Infosys later stopped the remaining instalments of the severance payment after some of the founders expressed their unhappiness with the decision.

Also Read: What’s going on at Infosys?

In an email response dated 23 January, in response to a detailed questionnaire from Mint dated 17 January, Murthy clarified that none of the founders have discussed with Sikka his strategy or its execution.

“Right from the day the founders voluntarily left the company in October 2014 to give a totally free hand to Vishal to craft and execute his own strategy, none of the founders has discussed with him either his strategy or its execution,” said Murthy. “When Vishal is in India and is free he requests for my time. We only meet for a meal in my house or on rare occasions on campus.”

“Vishal is a rare technocrat with whom I can discuss topics as diverse as quantum mechanics and B-star trees. Therefore, the only topics of our conversation during our meetings are physics, mathematics and computer science. Neither has he asked my opinion on any aspect of his strategy or its execution nor have I offered any advice on these issues. This has ensured that Vishal has had maximum freedom to pursue any strategy and any execution method of his choice.”

“At Infosys, the culture has always been for all predecessors to only wish the best for the succeeding CEO and his management whether it is Vishal now or Shibu (S.D. Shibulal), Kris (Kris Gopalakrishnan), or Nandan (Nilekani) in the past. Therefore, it is in the same spirit that I continue to wish Vishal, the management, and every employee the best of everything in the coming year like I have done in the past,” he added.

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