- We've been hearing about internal rifts at Infosys.
- Founders led by Narayana Murthy are miffed with the poor governance by the board.
- Vishal Sikka has written to employees asking them to steer away from media gossip.
Narayan Murthy has always maintained that the issue isn't with Vishal Sikka, but the quality of governance by the board. He didn't mince words has he spoke about how unhappy he is with the poor governance at Infosys. In an interview with ET he said that other investors are also miffed with certain decisions taken by the board.
So, what was Infosys founder Narayan Murthy miffed about?
Talking about how good governance is all about transparency and being fair, Murthy had pointed out displeasure towards the huge severance package (with 100 percent variable) given to Rajiv Bansal. He felt it should have been discussed rather than wading away from policy.
In the past, according to him, there have many others with company 'secrets' but weren't offered a severance package. Such payments raise doubts whether the company is using the payment as hush money to hide something, he said. Also, it is unfair to other hard working employees and many (former and current employees) have written to Murthy.
Other issue has been Vishal Sikka's annual compensation. Infosys’ board has given Sikka a higher compensation of $11 million a year, up from the earlier $7.08 million. $8 million of Sikka’s pay is based on Infosys’s performance this year.
The board linked this higher annual compensation to the progress Infosys makes in achieving the target of becoming a $20 billion firm by March 2021. The founders had previously abstained from voting on giving Sikka an extension.
He spoke about a drop in governance since June 2015, and losing the edge over others for best governance as seen in the past. The responsibility of the financial decision has to be taken by the chair of the board, according to him, who should have revised the suggestions of the nomination and remuneration committee which looks into the senior management compensation and severance pay.
The acquisition-based business growth instead of innovation of the existing slowing business and appointment of Punita Sinha, who is the wife of Jayant Sinha, Minister of State for Finance are some other matters of concern.
Vishal Sikka's response to anxious employees
Sikka wrote a letter to calm down anxious Infy employees who were worried about what exactly is going on in the company. In the letter, which was well over 1000 words, he spoke about all the advancements and achievements of the company. Finally, he ended it by saying how employees must not be distracted by media gossip.
"Let us not get distracted by media speculation that is designed to stir up gossip or rehash old rumours or speculate on the unknowns, around visas, or anything that questions our commitment to governance, integrity and values, in order to generate headlines and create, in the words of The Wire, Eardrum Buzz," Sikka wrote.
You can read the complete letter here.
Why both need to bury the hatchet as soon as possible
As 13 percent stake holders, founders have the right to demand transparency and question certain decisions. These rights shouldn't be come across in the form of misplaced concern for 'changing values'.
Sikka, who was appointed in 2014, is well-versed and quite a fit for navigating the company through complexities that come with changing US policies and newer technologies like cloud, AI, and so on, believe many experts. It's more about shareholder values that are probably missing; 'core values' of the company can arguably change in the modern times.
Murthy calling off the battle means a great relief as the focus will again move on to the growth of the company as Sikka addresses investors in Mumbai today. And, unlike the clash of cultures at Tata, it is a relief that there is no washing of dirty linen in the public that can harm the company image, which is already facing some major changes in the Indian IT services sector. Its a boardroom drama can be handled well within closed doors. The positive effects have begun showing as Infosys stock is said to have jumped more than 1 percent in morning trade to Rs 977.80.
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Last Updated Mar 31, 2018, 7:06 PM IST