After months of squabbling between the founders and the board of IT major Infosys, the company's MD and CEO Vishal Sikka has resigned citing that the continuous drumbeat of allegations was affecting the company’s transformational journey.
The issue started early in 2017 when founders of Infosys expressed their unhappiness with R Seshasayee, non-executive chairman of Infosys over some decisions taken by the board.
Unhappy founders
There were media reports that founders including NR Narayana Murthy, SD Shibulal and Kris Gopalakrishnan met Seshasayee and Sikka and expressed their unhappiness citing corporate governance issues.
They even asked Seshasayee to consider stepping down.
There were a number of issues the founders had with the current leadership.
Pay hikes of top executives
The founders were unhappy with the increase in Sikka’s compensation from $7.08 million to $11 million, saying that it was done in a ‘non-transparent’ manner.
Issue with former CFO’s severance package
There were issues also raised over the severance package of Rs 17.38 crore given to former CFO Rajiv Bansal in October 2015 . The board then stopped the remaining instalments of the package after some of the founders expressed their unhappiness.
Shortly after these issues surfaced, in February, there was a whistleblower letter that blamed Sikka and the board for not adhering to best corporate governance practices.
Apart from reiterating issues over the severance package, there were issues raised over the acquisition of Israeli firm Panaya. There was suspicion over the lack of due diligence followed before finalizing the acquisition.
Infosys clarifies
Following all these allegations, the board of Infosys called a press conference in the same month to clarify all media reports doing the rounds.
Claiming that there was no conflict of interest, Seshasayee said that there were mere differences in views and perceptions and business judgements.
They also clarified Sikka’s compensation and said they did what they thought was in the best interests of the company.
There were also reports of hush money involved to which the board said that there was a detailed investigation done by an independent global law firm, shadowed by our audit firm and overseen by global law firm and there was no intention to silence anyone. This was made public in October 2016.
Regarding the Panaya acquisition too, the company clarified that it followed the due process and that Rajiv (Former CFO) was the certifying authority and he signed on it.
Later in April, Murthy write a detailed letter expressing his unhappiness over the hike given to then COO UB Pravin Rao.
“..Giving nearly 60% to 70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper. This is grossly unfair to the majority of the Infosys employees…” he wrote.
Appointment of Ravi Venkatesan as co-chairman
Following the heated spat with founders, Infosys appointed Board member and former chairman of Microsoft India Ravi Venkatesan as the co-chairman of the Infosys board alongside Seshasayee, a move that was seen as a way to defuse the heat between the board and founders.
In June, there were media reports that the founders were exploring options to sell their stake in the company. However, both the founders and the company denied these reports that there were no such plans.
All the founders of Infosys collectively own 12.7% of the company.
Following these reports, Murthy in July says that he regretted quitting as the chairman of Infosys in 2014 saying that he should have listening to other co-founders and stayed on.
And this was not the end.
Making Panaya investigation public
Towards the end of July, Narayana Murthy again raised objections on the $200 million acquisition of Panaya and demanded that the audit report of the acquisition be made public.
This was despite internal audit giving it a clean chit. The audit report confirmed that no conflicts of interest was apparent.
However, Ravi Venkatesan said that the investigation report contained a lot of detail and making it publicly accessible was not appropriate.
The final nail in the coffin, however, seems to be Murthy’s latest comments on Sikka
In a letter to his advisors, Murthy said that Sikka is not a CEO material but CTO material and that this is the view of at least three members of the board.
Hardly hours after these comment came out, Vishal Sikka put in his resignation.