Infosys shifts stance on activist investors
BENGALURU:A new chairman and a new chief executive officer at Infosys Ltd have led to a shift in the way the company perceives risks to its business.
Last year, Infosys told shareholders that activist shareholders were one of the challenges: “Actions of activist shareholders may adversely affect our ability to execute our strategic priorities, and could impact the trading value of our securities.”
Now, Infosys, under new CEO Salil Parekh and non-executive chairman Nandan Nilekani, appears to have taken the responsibility, partially, on itself to face this challenge.
“Attempts to fully address concerns of activist shareholders may divert the time and attention of our management and board of directors and may impact the prices of our equity shares and ADSS (American depositary shares),” Infosys said in its 2017-18 annual report.
Infosys calling out activist shareholders as a risk last year caused much consternation among its promoters after this paper reported that it was aimed at some of its founders, including NR Narayana Murthy, who had repeatedly questioned some of the decisions made by the board.
Then, Infosys denied that the insertion of this clause was aimed at any particular group of investors, with former chairman R Seshasayee telling shareholders in the annual general meeting in June that “any inadvertent pain (to founders)” was “sincerely regretted”. But Seshasayee’s apology was too little, too late, as two months later in August, the 18-month-long feud between the then board and Murthy culminated with both CEO Vishal Sikka and Seshasayee stepping down.
Understandably, at least one proxy advisory firm believes that Infosys’s new statement underlines a more pragmatic approach under Nilekani as Infosys looks to avoid any confrontation with any group of shareholders.
“Infosys believes it is vulnerable after the Cognizant episode (In November 2016, activist shareholder Elliott Management pushed Cognizant to get rid of what it felt was an “antiquated, growth-at-all-costs” business model, and focus instead on total shareholder returns). It (Infosys) believes dealing with activist shareholders can take a lot of management bandwidth,” said Shriram Subramanian, founder and MD of proxy advisory firm Ingovern Research.