Seshasayee to retire as Infy chairman next year
Plays down conflict with founders; IT giant looks at era of transformations
Infosys Chairman R Seshasayee will retire from the board of India’s second largest software exporter in May 2018 when he turns 70. He announced this at the company’s annual general meeting (AGM) on Saturday.
He also played down reports of a rift with founders and said the company took promoters’ suggestions “seriously” and would continue to engage with co-founders, including N RN a ray an aM ur thy. The board was a trustee of the organisation, he said.
Over the past few months, the Ben ga lu ruheadquartered tech giant had received flak from some of the founders and former employees over alleged governance lapses and high compensation doled out to key executives. They have also exhorted the management to return surplus cash on the company’s books to shareholders through buyback or liberal dividends.
Murthy and co-founders Nandan Nilekani, Kris Gopalakrishnan, SD Shibulal and K Dinesh were absent from the 36th AGM of the company. Former board member TV Mohandas Pai and VB ala krishn an, long-term aides of Murthy, were also conspicuous by their absence.
Several minority shareholders present at the meeting requested the board to sort out differences with the founders. “Unless there is fire, there is no smoke. There is infighting,” said Sadananda Shastri, a shareholder.
Seshasayee admitted the board and the management was under criticism but said effort were being made to resolve matters. “When comments are made by the founders, we consider them even more seriously and respectfully, as we all recognise that we are but trustees of an extraordinary institution that has been the result of the labour, foresight and genius of an extraordinary group of founders.”
Since Murthy’s first public compliant against the board, the Infosys management has made overtures to mollify him. D N Prahlad, recommended by him has been brought on the board, and Ravi Venkatesan, a board member has been elevated as cochairman. Infosys also updated its code of conduct to exclude personal expenses from being billed to the company and pointed out potential conflicts of interest.
At the AGM, Seshasayee said Infosys was undertaking three transformations simultaneously. “The first is from being a traditional IT-services company to an innovation-led one. Secondly, the cultural transformation that comes with the induction of global leadership. The last is abrupt transition from a promoter-led board and management to an independent one.
The company was also responding to other changes, such as the goods and services tax that would be rolled out from July 1.
Infosys Chief Executive Officer Vishal Sikka said the GST Network the company had helped build was the largest tax project in the world.
“It can handle 60,000 transactions per second. We are hugely excited and hugely nervous at the same time,” he said. “In such a complex project, can things go wrong? Yes, absolutely. But do we have our very best team on it? Yes, we do.”
The management accepted that it needed to revise its targets
Seshasayee said the $20billion revenue by 2020 target set by Sikka could not be achieved within the time frame. As a result, compensation packages for executives would be revised to reflect the new target.
The chairman also said the company was in the process of finalising a suitable “distribution mechanism” for its ~13,000-crore capital allocation plan to shareholders for this fiscal year. As the company had a large shareholder base and was listed in multiple countries, the manner of distribution to shareholders requires compliance under laws of several jurisdictions.
Infosys also said more than 11,000 jobs had been released due to automation. Revenue per full-tie employee (FTE) increased by 1.2 per cent as a result of automation, utilisation and productivity improvements.
That the company was serious about cleaning up its image was evident in other actions as well.
On Friday night, Infosys released the findings of an independent probe by US law firm Gibson, Dunn & Crutcher that gave a clean chit to Sikka over allegations of personal gains made by an anonymous whistleblower in the acquisition of Israeli software firm Panaya.