Bengaluru: Large institutional investors, proxy advisory firms, brokerages, top executives at the company and some of the company’s 200,000-odd employees have the same question: why did the board of Infosys decide to release the now infamous, six-page note blaming co-founder N.R. Narayana Murthy for chief executive officer Vishal Sikka’s resignation?

After the initial days spent digesting news of the CEO’s abrupt decision to quit, the events in the run-up, and the consequent Rs33,074 crore loss in market value since Friday, these stakeholders are now asking why the board lashed out at Murthy. Questions are being asked about whether R. Seshasayee should continue to remain chairman of the board. And several investors have written or are in the process of writing to the board asking it to sort things out with Murthy.

“(This is) the biggest mismanagement by any board of a large listed company in India," a former executive vice president of Infosys said on condition of anonymity. “As a shareholder, I would say the chairman let me down by not performing his fiduciary duties. He could not retain his CEO; nor could he work with an influential group of minority shareholders. To make matters worse, the board went ahead and released a letter blaming someone else for its own mistakes."

There’s also the real fear that Infosys’s proposed Rs13,000 crore share buyback could be derailed if the five founders, who collectively own a 12.75% stake in the company, vote against the resolution.

The buyback is a so-called special resolution which needs approval from two-thirds of shareholders. Historically, not more than 70% of shareholders vote for any proposal, and if the founders vote against the resolution (and the overall vote remains at around 60%), the share buyback could fall apart.

To be sure, the company’s five founders have not yet decided if they will participate in the share buyback. But the board’s six-page note blaming Murthy has upset them.

“It was pathetic. It was offensive and not befitting the board of a company like Infosys," said one of the founders on condition of anonymity. “If the board had so much confidence in Vishal, why has it been constantly talking to others, including Mr Murthy, and complaining about Vishal’s performance as a CEO?"

Murthy wrote in a letter dated 9 August to some advisers that Infosys co-chairman Ravi Venkatesan and two other independent directors had told him that Sikka was not CEO, but CTO material.

The board’s six-page release on Friday blaming Murthy, who has often referred to Infosys as his “middle child", for his “continuous assault and misguided campaign" against Sikka has caused heartburn among the five founders.

Co-founders Murthy, Nandan Nilekani, S.D. Shibulal and K. Dinesh did not respond to emails seeking comment. Kris Gopalakrishnan, another co-founder, declined to comment. “The resolution for the share buyback should get 75% favourable votes of the total votes polled," said an Infosys spokesperson, who declined to comment on other issues raised in this story.

“Until now, the promoters only stayed away from voting over some of the resolutions that came for voting. I won’t be surprised if, at some time the promoters also decide to vote against the board’s decision because they have lost their trust in the board," said another senior Infosys executive who spoke on condition of anonymity.

Murthy has been meeting heads of large institutional investors, mutual funds and a few brokerages over the past month in an effort to build pressure on the board, the second Infosys executive added. He met representatives from Oppenheimer Developing Markets Fund, the third largest institutional investor in Infosys, in July, this person said. Oppenheimer trimmed its holding in Infosys to 2.16% at the end of June compared to 2.36% at the end of March.

An Oppenheimer spokesperson did not offer any comment on the meeting with Murthy in July or the reason behind the fund trimming its holdings in the past. “The investment team’s thesis on Infosys has not been materially affected by the CEO resignation," the spokesperson said.

On Wednesday, Murthy will be speaking to investors at a conference hosted by Investec India.

In February, when Murthy publicly lambasted the board over alleged poor governance issues, both large investors and company employees questioned Murthy’s move. At that time, the board was led by Seshasayee, who completely backed Sikka.

Now, co-chairman Venkatesan is the face of board, and according to at least four executives at Infosys, including those mentioned above, he and Sikka have had a tough working relationship. Mint reported on 21 August that Sikka told some executives close to him that he wanted to resign when Venkatesan was appointed co-chairman in April.

A number of executives and employees, including senior leaders at the company, have reached out to the Infosys board over the past two days, pressing the board for an early resolution to the ongoing tussle and expressing unhappiness over the board’s decision to issue the six-page statement against Murthy.

Moreover, the timing of this tussle between the board and the founders could not have come at a worse time, as the Infosys board is yet to officially start the process of finding a successor. Privately, Venkatesan and other board members have agreed that the spat between the board and the founders needs to be resolved before the CEO search can begin in earnest, according to three of the four Infosys executives mentioned above.

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