‘Reconstitute the nomination and remuneration committee’

If I were to trace the genesis of this problem, the two factors that pop out are loss of trust and ego! Massive efforts were made to assure all parties involved that the focus of the company is right and that the sensitivity to governance issue is high! Alas, to no avail! In a very insightful resignation letter clear reasons were adduced by Sikka. Even the board of Infosys came out solidly and unequivocally in his favour. This, after fully respecting the stature of Murthy, through privileged conversations and other processes to assure the system that no wrong was done. Despite all this bilateral effort, the stand-off persisted.

This is clearly a unique situation and is by no means a reflection on the competence of the Indian governance system to handle succession issues. In fact, through this entire episode, we saw many examples of new practices being experimented with. I, therefore, cannot reach the conclusion that the board blamed Murthy.

Three economic interests are affected here: Customers, employees and shareholders. With the known execution skills and depth of domain knowledge that Infosys has, customers will certainly continue to be delighted. The interim transitional arrangements will be sufficient to maintain employee morale. The solution lies in bringing shareholder democracy to the fore and in using the general meeting of shareholders as the only forum to permanently address this issue. If quickly deployed this process may preserve the forward march of this great company. The actions by Sikka and the board are already in public domain. Discussion and criticism of these are not solution sets. The crying need is for stability to be re- established.

The course I might suggest is a simple four part action plan: (i) Reconsider the constitution of the Nomination and Remuneration Committee (NRC) of the board, to ensure it fully reflects the entire spectrum of interests involved. (ii) Let the NRC recommend a comprehensive slate of directors on whom the entire shareholder base can place their faith and trust. (iii) Let the process for selection of the successor to Sikka be articulated. (iv) Let the democratic forum of a general meeting drive all these proposals to an agreed consensus.