Did All Founders Share Murthy’s View On Infosys Board?
Not all promoters may have shared Narayana Murthy’s concerns.
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NR Narayana Murthy’s concerns on governance standards of Infosys Ltd.’s board eventually led to the exit of Managing Director and Chief Executive Officer Vishal Sikka. Yet, all fellow co-founders may not have shared his view.
At least that’s what the voting pattern of promoters’ shares over the last three years suggests, according to proxy firm Institutional Investor Advisory Services.
The company’s voting data, compiled by IiAS, shows the founders never voted against any resolution. “In case they do not acquiesce with what the management proposes, they express their unhappiness by abstaining,” the IiAS report said.
Not all founders voted on all resolutions suggesting that they were not always in sync with each other, the advisory firm said. So, it could be concluded that “not all promoters share Narayana Murthy’s concerns or even support his public criticism of the company and its board”, according to the report. It’s an “unmistakable evidence of an internal difference of opinion”.
Murthy and the board have seen multiple acrimonious exchanges over the past few months over issues ranging from Sikka’s compensation, acquisition of Israeli firm Panaya and severance pay to former Chief Financial Officer Rajiv Bansal. The public bickering continued even after Sikka’s resignation. The board blamed Murthy for the surprise exit and the co-founder said he would respond in an appropriate manner.
According to IiAS, among the major issues that Murthy initially raised were the appointment of Punita Sinha, wife of Union Minister Jayant Sinha, on the Infosys board, Sikka’s re-appointment as MD and CEO and revision of compensation paid to interim CEO UB Pravin Rao.
In all these instances, roughly 75 percent of the promoter votes were not cast at all, IiAS said. Only one-fourth of the promoters’ collective holding supported these resolutions. That contrasts with other resolutions throughout this period that found favour with the co-founders with 84.5 percent to 100 percent ‘for’ votes.
Voting pattern changed by the June 2017 annual general meeting as there was frostiness over the handling of Bansal’s severance pay and the allegations regarding the Panaya acquisition.
Some founders held back from supporting the management even on routine matters as 42.5 percent of them abstained. Yet, the remaining 57.5 percent of the founders’ votes were cast in favour of the resolutions, which were:
- The approval of accounts.
- Payment of dividend.
- Reappointment of UB Pravin Rao.
- Appointment of Deloitte as auditors.
- To give power to the board to appoint branch auditors.
Away from the public debate over Sikka and the board’s behaviour, the promoters were waging a battle of their own, IiAS said. “And just like there have been strong but opposing views regarding all decisions in public, the founders too have been at odds.”
