Infosys will deal with corporate governance issues, says Narayana Murthy

Narayana Murthy says he does not want criticism of Infosys over corporate governance issues to snowball

Saritha Rai
Updated13 Feb 2017, 06:41 PM IST
Narayana Murthy led the battle between the founders and the board, raising several matters including a spike in compensation for chief executive officer Vishal Sikka. Photo: Bloomberg
Narayana Murthy led the battle between the founders and the board, raising several matters including a spike in compensation for chief executive officer Vishal Sikka. Photo: Bloomberg

Bengaluru: Billionaire N.R. Narayana Murthy is calling off his fight with the board of Infosys Ltd, saying he’s confident the IT giant he co-founded will deal with the concerns raised about corporate governance.

The conciliatory comments came after an intense confrontation that pitted the board, chairman R. Seshasayee and chief executive officer Vishal Sikka against a clutch of high-profile co-founders led by Murthy. Their apprehensions about management of Asia’s second-largest IT services company emerged last week, and included concerns over a spike in the CEO’s compensation and large severance packages for two departing executives.

The criticism from Murthy and fellow billionaires Nandan Nilekani and Kris Gopalakrishnan burgeoned into a public confrontation over governance at Infosys, which works for many of the world’s biggest corporations, including Goldman Sachs Group Inc. and Toshiba Corp. At one point, Murthy called for a board shuffle. On Monday, the entrepreneur softened his tone, calling Seshasayee a man of “highest integrity.”

“Let me stop. I have made a point, paying such large sums of money is confusing. Now they have to sort it out,” Murthy said in an interview. “I felt that I don’t want it to snowball. I don’t have the time. Neither should the board and the management be spending time on it.”

Also read: Why Vishal Sikka and Narayana Murthy need corporate governance lessons

On Friday, an Infosys director said the company had appointed a law firm to handle all communications with Murthy and the other co-founders, stressing the need for transparency in dealings. But Murthy said Monday it was time for him to call a truce.

Infosys’ shares were up 1.3% at 1:06 pm in Mumbai, outperforming a slight fall on the benchmark Sensex. A cease-fire allows management to focus on addressing that business-model disruption and deal with the changing US regulatory environment, said Ajay Bagga, executive chairman at OPC Asset Solutions Pvt. Ltd. “Anything other than these is a needless distraction that consumes valuable bandwidth and resources,” Bagga said.

The tussle threatened to distract executives and hurt the brand image of a company grappling with slowing growth, fast-paced technological changes, an unfavourable outsourcing climate and potentially damaging moves on US immigration. President Donald Trump could throttle the flow of H-1B visas that are key to serving American customers.

“The company and sector is at a critical point with all the external challenges,” said Vikas Gupta, chief investment strategist at OmniScience Capital. “The founders can have a different point of view than the current management but if they have given the current management an objective they have to let them drive it their way and not impose old-school thoughts, whether right or not.”

Sikka is pushing Infosys deeper into automation and artificial intelligence as clients tighten spending in an uncertain environment and begin to shift IT into the cloud. The chief executive later told an investor conference in Mumbai that his relationship with the company co-founders “is wonderful.”

“I would like to assure every single shareholder that corporate governance and values were, are and will be the core foundation of this company,” Sikka said in a text message sent by Infosys. “I will not let that standard slip even an iota under my watch.”

Infosys has scheduled a media conference for Monday evening in Mumbai. Asked if the row was over, Murthy said, “Yes, I think so. The reality is that these things happen. It is a good idea not to unnecessarily muddy it up further.”Bloomberg

Santanu Chakraborty also contributed to this story.

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First Published:13 Feb 2017, 06:41 PM IST
HomeCompaniesNewsInfosys will deal with corporate governance issues, says Narayana Murthy

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