New Delhi: Vishal Sikka, the first non- founder CEO of Infosys Ltd, has abruptly resigned due to the “continuous assault” and “campaign” by founder and ex-chairman NR Narayana Murthy, the USD 10 billion firm said today.
Sikka, 50, a former German IT major SAP executive under whose three year tenure Infosys’ revenue rose by about 25 per cent, did not himself name Murthy directly as the reason for his exit but said he faced “false, baseless, malicious and increasingly personal attacks”.
Murthy said he was anguished by the allegations, tone and tenor of statements made by the Infosys board and it is “below my dignity to respond to baseless insinuations”.
He said he will reply to the board’s allegations in the right manner, right forum and at an appropriate time.
The resignation follows a year-long acrimony between the board the high-profile founders led by Murthy, who raised issues of “poor corporate governance” and executive pay as well as doubts over acquisitions.
Founders still hold 12.75 per cent in Infosys.
While Pravin Rao, currently chief operating officer, has been named interim CEO, Sikka will become executive vice- chairman for USD 1 annual salary to help find new MD and CEO latest by March 31, 2018.
The latest provocation seems to be Murthy claiming in an email, which found its way to the media, that he had been told by Infosys independent directors that Sikka was more suited as a Chief Technology Officer than Chief Executive Officer.
Infosys Board came out with a strongly worded statement defending Sikka’s performance and ruled out a formal role for any of co-founders in the company’s governance.
The company board alleged that a letter authored by Murthy “has been released to various media houses attacking the integrity of Board and management alleging falling corporate governance standards in the company”.
“Mr Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members,” it said.
The Board said Murthy has repeatedly made “inappropriate” demands, which is inconsistent with his stated desire for stronger governance.
The Board, which is to meet tomorrow to consider a Rs 13,000 crore share buyback – a key demand of the founders for putting cash with the company to use – argued that Murthy’s “campaign” has intensified over time.
Shares of Infosys, which like other IT companies are battling a slowdown in new deals from western clients and visa curbs in the US, fell about 12 per cent before recovering a bit. They were trading at Rs 919.70 at 1440 hours, down 9.93 per cent over the previous day’s close.
Without naming anyone, Sikka in his resignation letter to the Board said that “over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks” and these allegations have been repeatedly proven false by multiple independent investigations.
“But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation,” he said.
Once a poster boy of Indian IT success story, Infosys has been battered by intense acrimony, with founders led by Murthy questioning the high compensation paid to Sikka as also severance package to certain former executives.
Besides, an anonymous letter was sent to the Securities and Exchange Board of India and the US Securities and Exchange Commission earlier this year, alleging that the Israel-based Panaya acquisition was overvalued and that some Infosys executives may have benefited from the deal.
While an independent probe absolved the board of any wrong doing, Murthy kept the pressure on making the full contents of the investigation report public.
“Over time the demands have intensified, which when declined by the Board resulted in the threats of media attacks being carried out,” said the statement issued by the Board.
Infosys had refused to make public the probe report.
The Board rued that its efforts to resolve the concerns of the founders over the course of a year through a dialogue has not been successful.
The statement added that the Board had tried earnestly to find “feasible solutions within the boundaries of law and without compromising its independence”.
It also cautioned that Murthy’s actions and demands are damaging the company.
The Board sought to assure shareholders, employees and customers that it “will not to be distracted by this misguided campaign” by Murthy and will continue to adhere to the highest international standards of corporate governance.
During an investor call, Sikka said the “continued drumbeat” about former CFO Rajiv Bansal’s severance package and Panaya deal in the last 4-5 quarters have been “sickening”.
Infosys co-chairman Ravi Venkatesan said the management is highly distressed by the continuing allegations against Sikka and Board members.
Sikka said that addressing this “noise” has consumed hundreds of hours of his time in recent times and therefore, he came to the decision to quit.
The Infosys board said it is “profoundly distressed” by the unfounded personal attacks on the members of the management team.
“The board denounces the critics who have amplified and sought to further promote demonstrably false allegations, which have harmed employee morale and contributed to the loss of the company’s valued CEO,” Infosys said in a statement.