Founders raised issue against board, not Vishal Sikka: V Balakrishnan, Former CFO
In a chat with ET Now, V Balakrishnan, Former CFO, Infosys, says the Chairman should step down and the board should engage with the larger shareholders, address the concerns in the interest of the company and move forward.
Edited excerpts:
Mr Murthy has broken his silence and spoken about the so called governance lapses at Infosys. What is your take on Vishal Sikka’s management of the internal affairs of Infosys and is Mr Murthy justified in launching the full frontal attack?
The Infosys board has been a big let down because you have large shareholders in the form of founders who are very respectable. They built the organisations from scratch and Infosys is what it is today because of what the founders did and they have raised certain concerns on corporate governance issues. It is in the interest of the board to engage with them effectively, address all the concerns and come to an amicable settlement.
When large shareholders raise certain issues, they engage with them effectively and came to some conclusions. Here the board is appointing a legal firm to collect input from the founders through an intermediary. The board has handled this whole issue in a shabby manner. The current chairman should step down and we should have interim chairman and the board should sit with founders, engage with them, understand all the concerns and address those. That is the right thing to do. The Infosys board had been a very big letdown.
Mr Gupta did mention that the target was the severance pay which as Mr Narayana Murthy has raised has been consistently increasing. In fact, he very candidly also asked if this high payment is something to be hushed up? How has it been in the past? When you say severance pay, what exactly has been the norm at Infosys?
There are several issues including the severance pay. You pay umpteen amount of money to a CFO. This is a very critical role. Without any explanation - -you had not even disclosed that in the financial statement -- you pay big money to the CFO who has quit when the company has never paid any non-compete money to any former employees and then you suddenly stop the payment without any explanation. Infosys has golden standards of corporate governance in this country. It led the governance standards and in this country. The current board has destroyed the culture of governance and the disclosures.
The founders are naturally angry and they have raised all these issues and any board will engage with the larger shareholders and address the concerns. Here, the communication channels appear to be broken and they appointed a legal firm to come in between. It is a very big letdown. The board should relook at this as this is becoming very big and it will impact all the stakeholders. It is for the board to take corrective steps. My suggestion will be that chairman should step down. They should have a interim chairman. They should engage with the larger shareholders, address the concerns in the interest of the company and move forward. That is the right thing to do.
What does this do for investors and stakeholders who are clearly looking at the second biggest software company in India reeling under this tussle? How much of an impact does is this going to have on the overall image of Infosys because it was one of the premier companies with an absolutely clean image?
Extraordinary circumstances require extraordinary actions and here you have a board which has not handled the issues well and which has not addressed the concerns well and naturally large shareholders will get agitated. The board should understand the gravity of the situation. Do not allow the matter to escalate and engage with the investors effectively. That is the right thing to do and the board is not doing that. The board should act on this fast not allow the issue to become much bigger.
Whatever Mr Murthy’s allegations are, it seems the founders have given Mr Vishal Sikka a completely free hand in running the operations at Infosys. Should the founders have taken a closer look at how he is running his day to day operations? Has Mr Vishal Sikka deviated from how Mr Murthy and the other founders actually ran operations and is that the reason why there is this difference in the way things are being run?
Please understand, it is not an issue between Vishal Sikka and founders. Founders have got in a professional CEO to run the company and they never interfered in the business or the strategy of the company. Even when Mr Narayana Murthy became a mentor after leaving the executive chairman post, he never interfered in the operations or strategies of the company. Here they are raising the governance issue. It is an issue between the board and the largest shareholders. They have raised governance issues and not the strategy issue or a growth issue or CEO issue.
Edited excerpts:
Mr Murthy has broken his silence and spoken about the so called governance lapses at Infosys. What is your take on Vishal Sikka’s management of the internal affairs of Infosys and is Mr Murthy justified in launching the full frontal attack?
The Infosys board has been a big let down because you have large shareholders in the form of founders who are very respectable. They built the organisations from scratch and Infosys is what it is today because of what the founders did and they have raised certain concerns on corporate governance issues. It is in the interest of the board to engage with them effectively, address all the concerns and come to an amicable settlement.
When large shareholders raise certain issues, they engage with them effectively and came to some conclusions. Here the board is appointing a legal firm to collect input from the founders through an intermediary. The board has handled this whole issue in a shabby manner. The current chairman should step down and we should have interim chairman and the board should sit with founders, engage with them, understand all the concerns and address those. That is the right thing to do. The Infosys board had been a very big letdown.
Mr Gupta did mention that the target was the severance pay which as Mr Narayana Murthy has raised has been consistently increasing. In fact, he very candidly also asked if this high payment is something to be hushed up? How has it been in the past? When you say severance pay, what exactly has been the norm at Infosys?
There are several issues including the severance pay. You pay umpteen amount of money to a CFO. This is a very critical role. Without any explanation - -you had not even disclosed that in the financial statement -- you pay big money to the CFO who has quit when the company has never paid any non-compete money to any former employees and then you suddenly stop the payment without any explanation. Infosys has golden standards of corporate governance in this country. It led the governance standards and in this country. The current board has destroyed the culture of governance and the disclosures.
The founders are naturally angry and they have raised all these issues and any board will engage with the larger shareholders and address the concerns. Here, the communication channels appear to be broken and they appointed a legal firm to come in between. It is a very big letdown. The board should relook at this as this is becoming very big and it will impact all the stakeholders. It is for the board to take corrective steps. My suggestion will be that chairman should step down. They should have a interim chairman. They should engage with the larger shareholders, address the concerns in the interest of the company and move forward. That is the right thing to do.
What does this do for investors and stakeholders who are clearly looking at the second biggest software company in India reeling under this tussle? How much of an impact does is this going to have on the overall image of Infosys because it was one of the premier companies with an absolutely clean image?
Extraordinary circumstances require extraordinary actions and here you have a board which has not handled the issues well and which has not addressed the concerns well and naturally large shareholders will get agitated. The board should understand the gravity of the situation. Do not allow the matter to escalate and engage with the investors effectively. That is the right thing to do and the board is not doing that. The board should act on this fast not allow the issue to become much bigger.
Whatever Mr Murthy’s allegations are, it seems the founders have given Mr Vishal Sikka a completely free hand in running the operations at Infosys. Should the founders have taken a closer look at how he is running his day to day operations? Has Mr Vishal Sikka deviated from how Mr Murthy and the other founders actually ran operations and is that the reason why there is this difference in the way things are being run?
Please understand, it is not an issue between Vishal Sikka and founders. Founders have got in a professional CEO to run the company and they never interfered in the business or the strategy of the company. Even when Mr Narayana Murthy became a mentor after leaving the executive chairman post, he never interfered in the operations or strategies of the company. Here they are raising the governance issue. It is an issue between the board and the largest shareholders. They have raised governance issues and not the strategy issue or a growth issue or CEO issue.
