N.R. Narayana Murthy's fight is to retain the corporate integrity of Infosys
Infosys Ltd today is a maelstrom of polyphonies.
Investors have lost billions in just a few trading sessions. A high-profile CEO hiring has ended up in a mess. An entire professional board has taken a beating. Reputations, built over years, are being trashed. And that’s just a part of it.
No surprise then that a culprit has to be found. And who better than the man who started it all—N.R. Narayana Murthy, the man who’s been asking all the uncomfortable questions, poking around corners best avoided and in general making a nuisance of himself. At 71, six years after hanging up his boots at the company he co-founded over three decades ago, he was expected to switch off from Infosys and spend his days doing all the things septuagenarians do, tending to their plants or reading to their grand children. Oh and be happy with his multi-billion dollar holding that others were helping grow for him.
The narrative never worked quite that way and those who expected it would probably didn’t know the man well enough. Murthy was always different from your average food-and-travel entrepreneur softened on a liberal diet of easy money from VCs. This is the man who sired Infosys and then built it code by bloody code.
A little history lesson is in order. In 1981, Murthy was 35 years old, well into a successful career in the nascent IT industry. Nothing about his middle class background suggested an entrepreneurial DNA nor was there anything in his training to prepare him for it. What he had learnt from a school teacher father was the importance of integrity, a lesson that became almost an obsession when he co-founded Infosys.
Over the next 25 years, Infosys topped numerous polls on best practices in corporate governance, repeatedly listed among companies displaying corporate integrity as in 2003 when a Financial Times-PwC survey listed Infosys among 50 companies that demonstrate the most integrity. In others like Asiamoney’s poll of companies in terms of corporate governance it has been ranked number one on parameters like ‘disclosure and transparency, responsibilities of management and the board of directors, and shareholders’ rights and equitable treatment’.
Indeed as much as for its business efforts, the company built its reputation and won universal admiration for these issues. It paid off too as clients chose to do business with a company that could be trusted. Transparency was built into the DNA of the company, the one value which all its top officers, whether as part of the executive leadership team or as part of the board, were expected to uphold.
Cut to more recent times. With the original promoters having ceded management to a professional brought in from outside, a series of charges emerged against the storied company. A whistleblower’s letter, for instance, alleging that the Panaya deal (Infosys acquired the Israeli software company in 2015) benefitted Hasso Plattner, the co-founder of SAP, who had 8.33% stake in the start-up. Not that Plattner, one of Germany’s great entrepreneurs and a philanthropist, needed benefitting. But the fact is Sikka was the chief technology officer of SAP before joining Infosys in 2014. Read in conjunction with differences over the deal which led to the exit of former chief financial officer Rajiv Bansal, and his subsequent Rs17 crore severance package, it did lend itself to doubts. In a squeaky clean company like Infosys, even the raising of one suspicious eyebrow needed to be taken with utmost seriousness.
And that wasn’t all. There were other issues, related to salaries and privileges of top managers. There were salary hikes of 50-60% for top managers at a time when the average increment in the company over the previous three years had hovered around 6%. In most companies, these are accepted as a given, a wink here, a wink there and no questions asked.
But Infosys was different. It had created grassroots millionaires from within its ranks because the promoters always believed in an egalitarian distribution of the company’s good fortunes.
When Murthy brought up the issues, he invited the wrath of the board for his “continuous assault". It is the fate of men like him, for their refusal to go along when the party is in full swing, for their refusal to turn a blind eye to what are after all minor transgressions.
After Sikka accepted the position of executive vice chairman at a token salary of one dollar, the company’s chairman R. Seshasayee said most graciously: “Vishal was never in this for the money."
But N.R. Narayana Murthy has always been in it for the money. Only it has never been for himself.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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