Home > companies > people > Nandan Nilekani, Sudha Murthy want Vishal Sikka to stay at Infosys helm

Bengaluru: Infosys Ltd’s co-founder Nandan Nilekani and Sudha Murthy, chairperson of the Infosys Foundation in India, were two of the five promoters who voted in favour of a resolution reappointing Vishal Sikka as the company’s managing director and CEO until 2021 even as the rest of the promoters abstained from voting.

Nilekani, his wife Rohini, daughter Janhavi and son Nihar, together hold 5,27,14,580 shares or 2.29% stake, and Sudha Murthy holds 1,80,58,640 shares or 0.79% stake in the company. Nilekani and family, and Sudha Murthy were the only promoters who voted for all the five resolutions, including reappointment of Sikka and appointment of Punita Kumar Sinha as independent director of Infosys, according to an executive familiar with the development. N.R. Narayana Murthy, S.D. Shibulal, Kris Gopalakrishnan and K. Dinesh did not vote on the resolutions that sought shareholder approval for reappointment of Sikka as CEO and appointment of Sinha as independent director.

When contacted, Infosys declined to comment.

Five of the seven original co-founders, Narayana Murthy, Nilekani, Shibulal, Gopalakrishnan and Dinesh are categorized as promoters of Infosys, and together held 13.07% stake in the company as of 31 December.

Only 23.57% of promoter votes were cast in favour of a resolution, results of which were declared earlier this month. Infosys appointed Sikka as chief executive officer in 2014 for a five-year term, but in February, Infosys board decided to extend Sikka’s contract as the first non-founder CEO even as he was rewarded with a 55% rise in compensation, to $11 million.

“Ms Murthy is heading Infosys Foundation. So this (voting for the resolutions) is understandable. It would have been very embarrassing for the company (in case of abstaining)," said one of the executives.

Interestingly, the promoters voted overwhelmingly in favour of three of the other resolutions (two dealt with a stock incentive plan and a third was on reappointment of Jeffrey Lehman as independent director).

Until Infosys appointed Sikka as CEO in 2014, the company always had one of its founders as CEO. Now, Infosys is the only Indian company which does not have any of its promoters on the board, and for this reason, some experts believe that Narayana Murthy and three other promoters staying away from voting on two resolutions approved by the board is a manifestation of the difference of opinion as Infosys moves from a promoter-driven company to a shareholder-held firm.

“This episode is more a manifestation of this transition Infosys is going through–from a promoter-driven company to one which is held largely by shareholders," said Shriram Subramanian, founder and managing director of investor proxy firm InGovern Research Services. “The promoters are no-longer on the board; so they are out of the womb and soon the umbilical cord too will be cut once more of the promoters dilute their stake in the company," he said.

To be sure, the reason why some promoters chose to abstain from voting for this resolution is not clear. None of them responded to emails seeking an explanation. However, promoters may have abstained from voting in favour of Sikka’s reappointment to indicate their displeasure at the terms, as reported by Mint in 7 April edition.

The board tied Sikka’s higher compensation to the company’s performance, as $5 million of his new compensation is to be paid in stock options, which will be paid depending on Infosys’s performance in keeping up with its stated goal of becoming a $20 billion company by calendar year 2020.

Infosys shares are up nearly 44% since the firm appointed Sikka as its first non-founder CEO with effect from 1 August 2014. The company is expected to end fiscal 2015-16 with revenue growth of at least 9% in US dollar terms, higher than the growth at Tata Consultancy Services Ltd, India’s largest software services exporter.

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