Learn to walk away, senior Infosys official tells Narayana Murthy
22 Aug 2017
''Learn to walk away, as you had promised when handing the reins to Vishal,'' says an open letter to Infosys founder N R Narayana Murthy from Omkar Goswami, a former Infosys board member and currently a member of its business process outsourcing (BPO) unit.
''Your actions have de-facto created a crisis that has forced the exit of a CEO, led to a stupendous 9.6 percent drop in the share price, and a loss in market capitalisation of over Rs22,600 crore in one trading day, and initiated the process of class-action suits in the US. Despite my friendship with you and the tradition that most directors strive to follow where board matters remain within the board, I have finally decided to come out in the open," says the letter published in The Economic Times.
Goswami, an Infosys board member from 2000-2015, then goes on to briefly explain the events that led to the resignation of chief executive Vishal Sikka last week.
He also takes digs at former chief financial officer V Balakrishnan and former heard of human resources Mohandas Pai, saying that every former independent director was ''deeply upset'' by their and Murthy's public conduct.
In a letter filed to the exchanges on the day of Sikka's resignation, the board had blamed Murthy's ''continuous assault'' as the primary reason for the resignation of Infosys' first non-founding CEO in its history. The letter also said that Sikka had the board's full support.
Goswami says the board agreed to most of Murthy's demands over the last year - freezing former chief financial officer Rajiv Bansal's severance pay at 30 per cent of the agreed amount, appointing D N Prahlad, an ex-Infoscian and a relative of Murthy, to the board, investigating the $200 million acquisition of Israeli software firm Panaya, and appointing Ravi Venkatesan as co-chairman.
''The Panaya report absolved the management of wrongdoings, and its basic conclusions were disseminated to the public. My first question: would you have posted the full report if you were running Infosys? You wouldn't, as you didn't in instances that needed detailed investigation.
''You then wanted a co-chairman who met with your approval. Here, too, the board complied by elevating Ravi Venkatesan. By accommodating you, it created a fiduciary eccentricity of three different people at the top: a chair, a co-chair and a managing director and CEO,'' Goswami says.
He further says that all these actions will affect the high regard for the governance standards of Infosys, and that Murthy would lose respect of the board members and former board directors.
''Enough is enough. You have drawn first blood. Do not mortally wound the organisation by persisting in your actions. Let Infosys get on with its business, heal itself from the injuries that you have inflicted, and again grow shareholder value. Learn to walk away, as you had promised when handing the reins to Vishal. The corporate governance halo that was conferred upon you is shrinking. Let it not disappear,'' he added.
According to a separate ET report, at the core of Murthy's differences with the board were three issues - a major compensation hike to the former CFO that he believes was too disproportionate with the pay hike given to the average employee; terms and rewards of a severance package given to a general counsel, and what he feels were inadequate disclosures regarding the acquisition of Israeli SaaS (software as a service) company Panaya.
Of these, the question mark over the Panaya deal looks valid and the Infosys board has indeed failed to maintain the transparency standards for which the IT major has been known, the report cites corporate veterans as saying.
''Murthy has long been stressing on transparency on the Panaya deal. The management might be hiding something, which is irritating Murthy. These are past promoters and hold minority stakes and things should have been clarified to them across the table. They are like insiders,'' an unnamed business analyst told ET.
Former Infosys CFO V Balakrishnan told the paper Murthy was not the only one unhappy about the goings-on in Infosys, though he was the most vocal one.
The Infosys board got all the allegations probed by an independent panel, which gave it a clean chit. But Murthy has been demanding more details of the probe and insists that investors have the right to know the ultimate beneficial ownership details of the fund that owned Panaya.
''Shareholders have the right to know when you spend Rs10 crore of their money in doing an investigation ... what the investigators have looked at, what is the conclusion and what is the process they have gone through,'' Balakrishnan said.
