India’s second largest IT major Infosys witnessed an unprecedented turn of events as the sudden departure of CEO and Managing Director Vishal Sikka has created ripples in the firm while the powerful Board blamed it on the founder N.R. Narayana Murthy for forcing Sikka to leave the office….reports Asian Lite News
In a dramatic development, high-profile technocrat Vishal Sikka resigned as CEO and Managing Director of global software major Infosys blaming “unrelenting” and “malicious” attacks, for which its Board blamed founder N.R. Narayana Murthy. The open spat led to its stock plunging 10 per cent.
The Board accepted Sikka’s resignation and appointed him as Executive Vice-Chairman till the new Chief Executive Officer and Managing Director takes over by March 2018.
It elevated Chief Operating Officer U.B. Pravin Rao as the interim CEO and MD, reporting to Sikka under its overall supervision and control.
Giving reasons for his sudden resignation three years after he joined the IT major as its first non-founder executive, Sikka said he could not do his job with unrelenting, baseless, malicious and personal attacks on him.
“For days, indeed weeks, this decision (to resign) has weighed on me. I have wrestled the pros and cons, the issues and the counterbalancing arguments. But now, after much thought, and considering the environment of the last few quarters, I am clear in my decision,” said Sikka in an e-mail to his nearly 2-lakh employees.
Admitting that it was difficult to deal with continuous allegations and noise, Sikka told reporters here from California via video-conferencing that the personal and negative remarks were taking a heavy toll on him as well as the company.
“As you know I started three years ago on this journey. Infosys is more than a company, it is an iconic institution. It is a sad day for me though in many ways my resignation will help things to improve,” noted Sikka.
Observing that the personal attacks had hit the employees’ morale, he said that for the last many months, the company had been besieged by false, baseless and malicious charges.
Co-Chairman Ravi Venkatesan said the Board had accepted Sikka’s reasons for stepping down as the CEO.
“But the Board is committed to the strategic direction set by Sikka, who is a phenomenal guy, the world knows it. He has blossomed as a leader,” he said at the press meet in the company’s campus here.
Venkatesan also said the events that transpired in the last 48 hours have made it difficult for the Board to consider a permanent position for Murthy.
“Succession planning is the top priority for the Board, as it is crucial that the next CEO buys into the company’s vision, culture and is people-oriented,” added Venkatesan.
Board Chairman R. Seshasayee, who was with Sikka at Palo Alto in California, said he was not in contention for the role of Infosys CEO even in 2014, and he had no interest now.
Rallying behind Sikka, the company’s powerful Board blamed Murthy’s continuous assault, including his latest (Friday’s) letter to the media as the primary reason for his resignation.
“Murthy’s letter contains factual inaccuracies, already-disproved rumours and statements extracted out of context from his conversations with Board members,” it said, adding that Murthy’s campaign against the board and the company had the unfortunate effect to undermine its efforts to transform itself.
Expressing himself “anguished by the allegations, tone and tenor” of the Board’s statement against him, Murthy said it was below his dignity to respond to such “baseless insinuations”.
In a an e-mail to the media hours after the Board blamed him for Sikka quitting, he reiterated that he voluntarily left the Board in 2014 and was not seeking money, position for (his) children or power, but was concerned over the deteriorating standard of corporate governance, which he had brought to the notice of the Board.
Asserting that he would reply to the Board’s allegations in the right manner, in the right forum and at the appropriate time, Murthy quoted investors saying that the auditors’ probe into the Panaya deal was not the way an impartial and objective investigation should be held.
Sikka’s resignation spooked investors and dragged the company’s scrip lower by almost 10 per cent on the BSE.
The massive slide and the subsequent fall in its stock prices eroded over Rs 22,400 crore in the firm’s market capitalisation (m-cap) at the end of the day’s trade.
On the BSE, the company’s scrip fell 9.60 per cent or Rs 98.05 to close at Rs 923.10 from its previous close at Rs 1,021.15.
Analysts pointed out that the fall in the company’s scrip was the biggest since early 2013.
“Infosys shares fell as much as 13 per cent, on way to their steepest intra-day percentage loss since April 2013,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, said.