Vishal Sikka quits as Infosys boss: Board blames Narayana Murthy, shares tank
UB Pravin Rao has been appointed as interim-managing director and chief executive of Infosys. Vishal Sikka’s surprise move sent Infosys share prices plummeting.business Updated: Aug 18, 2017 18:06 IST
Vishal Sikka resigned as Infosys CEO on Friday, blaming a “continuous drumbeat of distractions” and triggering a war of words between founder NR Narayana Murthy and the board of the software giant.
Sikka’s surprise move sent Infosys shares plummeting, which closed down 9.6%, the biggest daily fall in more than four years.
The company’s board came out in support of Sikka, 50, and said in a statement that founder and former-chairman Murthy’s continuous assault was the main reason for Sikka’s resignation.
Murthy shot back saying he was “extremely anguished by the allegations, tone and tenor of the statements” and that his main concern was the deteriorating standard of corporate governance.
“It is below my dignity to respond to such baseless insinuations...I will reply to these allegations in the right manner and in the right forum and at the appropriate time,” he said in a statement.
UB Pravin Rao, Infosys’ chief operating officer, was named interim chief executive. Sikka will take the executive vice chairman role until a permanent CEO takes charge, which should be no later than end-March 2018, Infosys said in a statement.
The resignation came a day after it emerged that Murthy had expressed doubts over Sikka’s ability to lead the company, India’s number 2 software services exporter.
In an email to some of his advisers, Murthy said he had been told by at least three independent directors of the company that Sikka was more chief technology officer (CTO) material than chief executive officer (CEO) material.
Murthy had also publicly lambasted Infosys in the past six to seven months for alleged lapses in corporate governance, allegations the company has denied repeatedly.
Sikka, known for his black T-shirts in contrast to his suit-clad peers, suceeded Murthy as Infosys head three years ago, the first non-founder to head the software giant.
“...I have decided to leave because the distractions, the very public noise around us, have created an untenable atmosphere. I deeply believe in creating value in an atmosphere of freedom, trust and empowerment,” Sikka said in a letter to employees which he later posted on his blog.
“...I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks,” added Sikka, a former member of the executive board at German software firm SAP.
In a press conference later with members of the board, he said, “In many ways it is a sad day, but in many ways it might help things”.
In a scathing six-page letter to stock exchanges, the Infosys board referred to Murthy’s “latest letter” and said his “campaign against the board and the company has had the unfortunate effect to undermine the company’s efforts to transform itself”.
The board believed it should set the record straight on the false and misleading charges made by Murthy because the founder’s actions and demands are damaging the company, it added.
The shake-up came amid a protracted war of words between the company and its founders and some former executives, who were unhappy with various decisions taken by the board.
The founders, who still own 12.75 percent of the firm, had questioned a pay rise granted to Sikka and the size of severance payouts given to others, including its former finance head Rajiv Bansal.
Sikka had set an ambitious 2020 revenue target of $20 billion for Infosys.
But it is likely to struggle to reach this goal as the $150-billion Indian IT services industry battles a slowdown in new deals from western clients, and braces for changes to work visa rules in the United States.
Sikka’s resignation is the second major instance in the past year where Indian promoters have wielded control over the company after handing over the reigns.
In November, Cyrus Mistry, the then top boss of Tata Group, India’s biggest conglomerate with businesses ranging from cars to steel mills and salt pans, was unceremoniously ousted in a boardroom coup over differences between him and the Tata family patriarch Ratan Tata.
Corporate honchos did not miss the similarities between the two instances.
Harsh Goenka, chairman of the $3.1 billion (revenue) RPG Group, tweeted: “To run an organisation effectively you need to humour and understand the axis of power. PM knows its the public and RSS. Cyrus, Sikka didn’t.”
“Post demonetisation, old ‘sikkas’ not working. ‘Vishal’ change in Infosys. Old guard wins,” Goenka added in another tweet.
Anand Mahindra, executive chairman of the Mahindra Group who tweets frequently and is followed by five million people, posted: “Crises are like a furnace that forges more durable steel. Infy is iconic & will always have people cheering for it. I certainly will..”
(With agency inputs)
First Published: Aug 18, 2017 16:58 IST