Vishal Sikka gets the backing of OppenheimerFunds: report2 min read . Updated: 10 Feb 2017, 11:17 AM IST
Infosys CEO Vishal Sikka gets the support of Oppenheimer Fundsthe IT major's third-largest institutional investor
New Delhi: Amid reports of tension between Infosys Ltd founders and its management, chief executive officer (CEO) Vishal Sikka has got the backing from OppenheimerFunds, which controls about 2.7% of the information technology (IT) company’s shares, according to an Economic Times report published on Friday. The disagreement came to light when Infosys founder N.R.Narayana Murthy expressed disappointment with the current board.
Infosys Ltd’s founders, led by Murthy, are unhappy with the board’s willingness to be flexible and generous with the variable pay of Sikka’s $11 million compensation, adding to their long list of grievances.
According to the Economic Times report, this is a rare case when an institutional investor has come out openly in support of a CEO. The institutional investor has reportedly said the “founders needed to accept that the technology firm was publicly listed and no longer ‘their’ company".
“As large, long-term investors in Infosys, we want to express our support for the management team of Dr. Vishal Sikka. There have been loud, cancerous rumours of intervention by non-executive founders in the management team," the Economic Times report quoted Justin Leverenz, portfolio manager at Oppenheimer Developing Markets Fund in an open letter to Infosys’ board.
“The bottom line is that, in our opinion, Dr. Sikka has achieved much in his tenure as the first nonfounder Chief Executive Officer. After many years of internal volatility and competitive underperformance, it is encouraging to see that Vishal has stabilised the core and articulated a clear—and appropriate—long-term strategy to help Infosys thrive amidst industry disruption," the Economic Times quoted Leverenz from a copy of letter Oppenheimer sent it.
Valued at over $900 million, OppenheimerFunds, which acts as an investment adviser to certain investment funds and accounts, collectively own about 2.7% of Infosys, according to the Economic Times.
“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," the Economic Times quotes from the letter.
“With all deference to their enormous contributions, we also believe that non-executive founders need to come to grips with the reality that this is a public company. It is no longer their firm…. The Board needs to clarify the appropriate role of non-executive founders of the Company," the Economic Times quotes from Leverenz’s letter to the board seeking greater clarification on the role of the non-executive founders.
As of 31 December 2016, the nonexecutive founders (promoter and promoter group) owned 12.8% of the Infosys’ outstanding shares.
“We have been significant investors in Infosys for more than a decade. During this period, we have witnessed patches of unusual turmoil in management and vision at Infosys, with share price performance signalling shareholder exhaustion with internal dissonance, management volatility and internal intrigue," Leverenz added, as the Economic Times reports.