Before the market could open on 18 August, news wires went buzzing about the abrupt yet foreseeable resignation from Infosys CEO & MD Vishal Sikka. The former SAP executive was at the helm of the IT giant for less than four years but his exit has caused much ripples as shares of the company fell more than 13% to a three-year low of Rs 884.20 at market close.
Board vs Promoters
Being the first non-founder CEO of the company came with its own set of challenges for Sikka who was constantly reviewed by those who have been with Infosys since the beginning. The resignation comes a day after business daily Mint reported that Infosys founder NR Narayana Murthy had received complaints against Sikka from at least three independent directors
“They have told me umpteen times that Dr Sikka is not a CEO material but CTO material. This is not my, but the view of three board members. I have not seen him operate from vantage point of an Infosys board member,” said Murthy in the piece.
The board however, came forward with a sharp reply this morning in a concall saying, “ Mr Murthy's continuous assault, including this latest letter, is the primary reason that the CEO, Dr Vishal Sikka, has resigned despite strong Board support."
What were the disagreements
It seems there were quite a few tussles between the promoters and the board pertaining to Sikka and the strategies he adopted for the company. The most highlighted of this has been the controversy surrounding several internal investigations related to the company’s acquisition of Panaya, and a large severance payout to former chief financial officer Rajiv Bansal.
Some reports mention the founders were also not too happy about the board’s decision to grant Sikka a 55% pay hike to $11 million last February. On surface it seems Sikka lost the confidence of the promoters and some old time members of the board, but there could be issues which have not been made public yet.
While no core reason has been stated clearly for his resignation, Sikka said he had been thinking about it for a while, and until lately became sick of waking up to the same nonsense every morning.
“Responding to the noise and chaos becomes difficult as you cannot focus on actual work. Felt like it was a disservice to the company, he said in the concall this morning.
Post his resignation, he also sent a lengthy e-mail to his employees which he shared on his blog.
“Your time is limited, don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living the result of other people’s thinking. Don’t let the noise of other opinions drown your own inner voice. And most important, have the courage to follow your heart and intuition, they somehow already know what you truly want to become. I now need to move forward, and return to an environment of respect, trust and empowerment, where I can take on new lofty challenges, as can each of you,” read an excerpt from the blog.
Another Tata-Mistry episode
Similarities are eerie between the latest episode and what happened between Rata Tata and Cyrus Mistry related to the Tata Sons. A somewhat similar episode panned put when Mitsry made his feelings public about the non-willingness to change and innovate which Tata nor many of the comapny's old-standing members took well. Post the board and Sikka's public resignation letter, Murthy also expressed displeasure over the way Sikka's exit panned out.
"I am extremely anguished by the allegations, tone and tenor of the statement. I voluntarily left the board in 2014 and am not seeking any money, position for children or power. My concern primarily was the deteriorating standard of corporate governance which I have repeatedly brought to the notice of the Infosys board," Murthy said in a statement.
What next for Infosys
The IT giant addressed sadness over Sikka’s exit but assured that he will be around till the 31st of March 2018 in the role of Executive VP of the company. The same deadline will also be followed for finding a replacement for him.
Not commenting on whether the company already had any name in mind for the position, Ravi Venkatesan, Co-Chairman of Infosys, did say that the “right person would be someone who understands the culture of Infosys.”
Sikka's resignation also comes a day ahead of a board meeting that could see approval of a share buyback of INR 13,000 crores.