Following Infosys CEO Vishal Sikka’s resignation on Friday, the company has issued a letter addressed to all the stock exchanges where it is listed, giving a detailed explanation of events leading up to his exit.
The letter, signed by Company Secretary AGS Manikantha, starts by saying that it has come to the attention of the Board that a letter authored by Murthy, the Founder of Infosys, has been released to various media houses attacking the integrity of the Board and Management of the Company alleging falling corporate governance standards in the Company.
It says that the Board takes strong exception to the contents of the letter and then goes on to place on record the following:
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.
Mr. Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members.
The Board assures its shareholders, employees, customers and communities that it is committed not to be distracted by this misguided campaign by Mr. Murthy and will continue to adhere to the highest international standards of corporate governance as it executes its strategy of profitable growth for the benefit of all Infosys stakeholders.
Mr. Murthy’s campaign against the Board and the Company has had the unfortunate effect to undermine the Company’s efforts to transform itself.
The Board declines to speculate about Mr. Murthy’s motive for carrying out this campaign, including the latest letter. The Board believes it must set the record straight on the false and misleading charges made by Mr. Murthy because his actions and demands are damaging the Company and misrepresent its commitment to good corporate governance.
The letter then categorically gives out a point-by-point explanation of the facts in the matter.
Fact: Since Dr. Vishal Sikka was appointed as MD and CEO in August 2014, Infosys has delivered competitive financial performance through profitable revenue growth.
The Company was lagging significantly behind industry in growth rates when Vishal took over and now we are in top quartile from a performance perspective.
Infosys has grown in revenues, from $2.13B in Q1FY15 to $2.65B this past Q1.
The revenue per employee of the Company has grown for six quarters in a row.
Fact: Infosys has continued to maintain the highest standards of corporate governance that the Company is known for.
The Board of Infosys is carrying out its shareholder mandate to be an independent board, working towards the best interest of the stakeholders.
The Board has sought the counsel of some of the most respected governance experts and legal advisors in the world, which have thoroughly investigated all anonymous allegations and concluded that no wrongdoing occurred. For Mr. Murthy to imply – with no evidence whatsoever – that three well-respected international law firms, members of the Infosys Board and certain employees are engaged in some grand global conspiracy to conceal information is not tenable on its face. It is important to mention here that Mr. Murthy was interviewed as part of the investigation by Gibson Dunn & Crutcher LLP in pursuance of the investigation in the Panaya acquisition, and was invited and welcomed to provide any information or evidence he believed would support the allegations being investigated. He did not provide any evidence since none exists. However, he has not mentioned this in his media communication against the investigation.
Fact: Mr. Murthy’s has made repeatedly made inappropriate demands which are inconsistent with his stated desire for stronger governance.
Mr. Murthy has demanded that the Board adopt certain changes in policy, else he will attack board members in public, which threat was carried out when the Board did not acquiesce.
He has demanded operational and management changes under the threat of media attacks.
He has demanded operational and management changes under the threat of media attacks.
The Board has, in its fiduciary role to consider all shareholder inputs, treated each demand from Mr. Murthy as a suggestion and only acted on suggestions which we believed was in the best interest of the company and declined to act on others. Over time the demands have intensified, which when declined by the Board resulted in the threats of media attacks being carried out.
Fact: Mr. Murthy may be in the process of engaging in discussions with certain key stakeholders of the Company to further his criticisms of the Board and Management.
We are concerned that this type of campaign runs the risk of confusing investors and undermining the Company’s management efforts.
Fact: The Board is a fully independent Board, with professionals as its members who have been appointed by a clear majority of the shareholders.
Given the commitment of the Board to remain independent and pursue a chosen strategy, the Board currently has no intention of asking Mr. Murthy to play a formal role in the governance of the organization.
Co- Chair of the Board, Ravi Venkatesan has repeatedly over the past few weeks publicly stated his and the Boards support for Dr. Sikka. The Company categorically rejects any speculation or allegation of discord between the Infosys Board and Dr. Sikka.