Sikka logs out of Infy over ‘malicious’ campaign

Our Bureau Bengaluru, August 18 In a stunning move, Infosys CEO and MD Vishal Sikka on Friday resigned from his posts, accusing co-founder and former chairman NR Narayana Murthy of carrying out a “malicious” campaign against the board.

In an email to Infosys employees early on Friday, Sikka said: “After much reflection, I have concluded that it is indeed time for me to leave my current positions.” He, however, pledged to ensure a smooth transition to “protect” the company, its employees, clients and the interests of shareholders.

Sikka’s resignation came within hours of a media report quoting an August 9 e-mail from Narayana Murthy to his advisers in which he said the Infosys board had failed to ensure proper governance.

Signalling an open war, the Infosys board wrote to the stock exchanges to say that it was Murthy’s “continuous assault” that had led Sikka to resign “despite strong Board support.”

The board further alleged that Murthy had repeatedly made “inappropriate demands” that are “inconsistent with” his claimed desire for stronger corporate governance.

Rebutting the charge, Murthy said he was “extremely anguished by the allegations, tone and tenor of the statements (made by the Board).”

“It is below my dignity to respond to such baseless insinuations,” a statement from Murthy said, and added that he would reply to the allegations “in the right manner and in the right forum and at an appropriate time.”

Murthy said he is “not seeking any money, position for children or power. My concern primarily was the deteriorating standard of corporate governance which I have repeatedly brought to the notice of the Infosys board.”

Sikka in turn told a hurriedly convened investors’ call on Friday that he was pained by Murthy’s allegations.

“You can deal with certain issues, but what has been happening since January or February, the continuous drumbeats of these allegations, news stories, Rajiv (Bansal, former CFO) separation, Panaya (deal) and (all this), over and over again...it is absolutely sickening.

“You wake up in the morning, and it is the same regurgitation of the same nonsense. I was spending way too much time, (but) even that is surface damage. What it does is to make it difficult to carry out the change agenda,” he said.

The board meanwhile has made the chief operating officer, UB Pravin Rao the interim CEO and MD. Sikka has been made the vice-chairman, a newly created post. A nomination committee has also been set up and tasked with selecting a new CEO before March next.

In another development, former CFO of Infosys, TV Mohandas Pai, called for the resignation of the entire board and wanted institutional investors and the founders to put together a new board.

The Infosys management and the co-founders led by Murthy have been trading charges against each other over several issues, including the payout given to a former CFO, Rajiv Bansal, when he quit.

The current chairman, R Seshasayee, had later said that such payouts would not happen again. Later, a whistleblower had alleged in an email that Panaya, an Israeli company which was acquired for $200 million, was highly overvalued.

Following the allegation, Infosys set up an independent probe panel, which cleared Sikka and the others involved of any wrongdoings.

Sikka’s resignation and the management tussle saw Infosys shares tumble as much as 9.3 per cent on Friday, its steepest fall in the last 13 months, wiping out ₹20,000 crore in market capitalisation. The stocks closed at ₹923.15, down 9.51 per cent.

VK Sharma, an analyst with HDFC Securities, said Sikka’s exit brings a closure to the boardroom battle. Sikka’s allegation that he was continuously being distracted does not wash as he had a long enough honeymoon period to make his mark, Sharma added.

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