COMPANY’S SAKE

Infosys board should open a conversation with its founders, who must take a step back

THE DUST HAD barely settled over the Tata-mistry feud after Cyrus Mistry — whose family holds 18.4 per cent stake in Tata Sons Ltd — was ousted by the Tata Trusts last October, when corporate India woke up to another conflict, another unsavoury episode. The well-regarded founders of Infosys have alleged serious corporate governance lapses by the company’s present board. In an interview to The Economic Times, N.R. Narayana Murthy lashed out at the board led by industry veteran R. Seshasayee over the 2000-times salary difference between Infosys CEO Vishal Sikka and the entry-level software engineer. He also wondered if the high severance package paid to the company’s erstwhile CFO Rajiv Bansal in October 2015 constituted “hush money to hide something”. The Infosys board stood by its CEO and also its chairman, but appointed law firm Cyril Amarchand Mangaldas to formalise a process to receive inputs from the promoters and other key stakeholders.

Murthy, Nandan Nilekani, Kris Gopalakrishnan and other founders deserve all the accolades and more for turning India’s first start-up into a multi-billion dollar software company. It is a story that Indian leaders talk up at every global forum. Murthy has chaired committees on corporate governance and Nilekani has been a cabinet rank minister, having conceived and implemented the Aadhaar unique identity project. But after handing over the baton to a professional in Sikka, it is incumbent upon and expected of the founders to give him a free hand, in order to give wing to the growth ambitions he sets for the company. Times have changed since the founders were active managers. Having said that, however, the board also needs to open the doors for a conversation with the founders. For the sake of transparency and the benefit of all shareholders, the company should disclose any new material information that emerges following the queries and doubts raised by the promoters.

Today, Sikka has an enormous task at hand, that of steering a $6-billion company, and he has just had three years at the helm. The promoters hold about 12 per cent stake, and commensurate to their holding have different avenues under company laws — like the annual general meeting — to express their views and opinions on decisions taken by the Infosys board. The mounting of an attack on the company’s existing board by the promoters demoralises employees, raises red flags for clients and does no good to future growth prospects.