Vishal Sikka resigned as the managing director and chief executive officer of Infosys Ltd. on Friday, after months of bickering between the board of India’s second largest software services provider and co-founder NR Narayana Murthy. Sikka will serve as executive vice-chairman until the company finds a replacement.
Murthy had questioned the board’s governance standards, especially over Sikka’s compensation, acquisition of Israeli firm Panaya and severance pay to former Chief Financial Officer Rajiv Bansal. Acrimonious exchanges continued after Sikka’s resignation.
The announcement was followed by a series of public statements by the company’s management, its board members, and Murthy, whom the board blamed for Sikka’s exit. Former board members and executives weighed in, as did large investors in Infosys, and investment and shareholder advisory firms.
A day later, on Saturday, Infosys also announced its first ever share buyback.
Here’s BloombergQuint’s complete coverage of the events as they unfolded, and the impact on each stakeholder.
The Infosys board said it “is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months.”
In his resignation, Sikka said the constant drumbeat of the same issues over and over again, while ignoring and undermining the good work, took the excitement and passion out of “this amazing journey”. “This continuous drumbeat of distractions and negativity over the last several months/quarters, inhibits our ability to make positive change and stay focused on creation.”
“I cannot carry out my job as CEO and continue to create , while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks,” wrote Vishal Sikka on his personal blog.
Within hours of Sikka’s resignation, the Infosys board released a media statement that put the blame of Sikka’s resignation squarely on Murthy’s “continuous assault” and “campaign against the board and the company”.
Narayana Murthy responded to the board statement by saying it was below his “dignity to respond to such baseless insinuations”.
Mohandas Pai, former chief financial officer of Infosys, told BloombergQuint that the tussle between the company’s board and Murthy should not have been allowed to ‘blow up in the media’ and that the fault doesn’t lie with the founders alone.
One former Infosys board member, who spoke to BloombergQuint on condition of anonymity, described Sikka's exit as “more than a Machiavellian plot”. “Murthy has been the chief orchestrator along with his two henchmen Bala and Mohan,” said this board member while adding that the story doesn’t end here.
Shares of Infosys Ltd. plunged 9.56 percent on Friday, the most in over four years, wiping out more than Rs 22,400 crore in market , according to Bloomberg data.
Murthy owns close to 3.44 percent stake along with his family in the company he co-founded in 1981. The of their combined holding fell by more than Rs 770 crore, or 10 percent, in a day.
Responding to Murthy’s latest set of allegations, Infosys Chairman R Seshasayee said that the board and the investigating authorities found no wrongdoing within the company after three investigations were completed.
Narayana Murthy released a second letter the day Vishal Sikka resigned, in which he said “I never imagined that governance levels would stoop down to such a low level in a company that was the most respected company till 2014.”
BloombergQuint looks back at the performance of the company and its shares since Sikka took over on August 1, 2014.
Brokerages, and at least one big investor, termed Vishal Sikka’s exit as a negative. “Losing Vishal Sikka is strategically a big loss,” a fund manager at a domestic insurance firm which holds Infosys stock told BloombergQuint.
Independent advisory and research firm Offshore Insights will advise clients against giving additional business to Infosys. With Sikka’s exit, the board, the management and the delivery heads will be busy with internal issues, and that’s bound to make clients nervous, said Offshore Insights’ Principal Analyst and CEO Sudin Apte.
The board of directors of Infosys must persuade Nilekani to join as the non-executive chairman, proxy advisory firm IiAS said in a note, stressing that he is possibly the best candidate who can be found globally.
Sikka was eligible for $2 million in fair worth of restricted stock units annually. As on March 31 this year, Sikka had 3.08 lakh such options worth close to Rs 30 crore.
Whose fault is it that the dice rolled the way it did? Does it matter really? What matters is the damage to the stock and the potential damage to the company, writes BloombergQuint’s Markets Editor Niraj Shah.
Sikka’s resignation is part of a much-needed cultural reboot at the Indian software exporter. But the process won't be complete as long as the current board hangs around to sing dirges of victimhood, writes Andy Mukherjee.
Was Vishal Sikka sacrificed at the altar of founder ego or did he take the fall for an incompetent board? Or did Sikka pay for inadequate disclosures regarding the Panaya acquisition, one that he led?
A discussion with corporate commentators Anil Singhvi and Prabal Basu Roy.
A day after Vishal Sikka resigned as managing director and chief executive officer, the Infosys board voted to buy back as many as 11.3 crore shares, or 4.92 percent equity, at Rs 1,150 each. The buyback price implies a premium of 24.5 percent to Friday’s closing price.
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