Infy board focussing on the wrong problem: IiAS

By appointing Ravi Ventakesan as Co-Chairman on Infosys’ board, the software major is fighting the wrong battles, according to proxy advisor firm Institutional Investor Advisory Services (IiAS).

“Infosys board is focussing on the wrong problem,” IiAS said. “It is fighting for credibility against Narayana Murthy’s stature, rather than fighting the more immediate market-driven battles. And it is these market-driven challenges that should drive its internal restructurings, and capital allocation decisions.”

With increasing criticism from Narayana Murthy on Seshayee’s ability to lead the board, Infosys’ board seems to have caved in and added another layer of leadership at the board level. While this may have been done to appease Narayana Murthy, IiAS believes this decision was unnecessary. “Co-Chairmen positions are rarely seen in corporate India and having more than one person leading the board is more likely to create factions,” IiAS said.

“The appointment of a Co-Chairman also changes the power balance at the board. While it may not undermine Vishal Sikka’s position – it will, in effect, add a layer of complexity to his influencing ability.”

While the levels of transparency are much higher at Infosys than at most other Indian corporates, recent lapses in disclosures relating to Sikka’s remuneration and his contract have given detractors a reason for outcry.

In addition, the company’s decision to change its dividend policy and return ₹13,000 crore to shareholders (in dividends or buybacks) in the current year is well-placed. “One may debate whether this has been done to appease investors, or is a re-ordering of the company’s capital allocation strategy. But it comes after much goading, and is too little too late,” the advisor added.

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