Infosys co-founder Narayana Murthy has been accused on several fronts since Vishal Sikka resigned from his position citing baseless, malicious and increasingly personal attacks.
An ex-board member has now written an open letter to Murthy accusing him of hurting Infosys' morale with his constant attacks.
Here is the full text of the letter:
Dear Mr Murthy,
I have known and admired you for over two decades, been an independent director of Infosys for 15 years, and still serve as a board member of Infosys BPO. Unfortunately, I am obliged to write this formal and public letter to you.
Formal, because the events that have occurred involving you, your supporters and Infosys — starting from November 2016 and culminating in Vishal Sikka's resignation on August 18 — need a formal response. And public, because it is no longer a private matter between you and the board of the company.
I, and each ex-independent director that I've known, held you in high regard when you invited us to join in your vision of reinventing India's boardrooms and building a thriving institution that would survive us all. Today, each of us is deeply upset by your public conduct, and of your two ex-Infoscion supporters.
Your actions have de facto created a crisis that has forced the exit of a CEO, led to a stupendous 9.6 per cent drop in the share price, and a loss in market capitalisation of over Rs 22,600 crore in one trading day, and initiated the process of class-action suits in the US. Despite my friendship with you and the tradition that most directors strive to follow where board matters remain within the board, I have finally decided to come out in the open.
Let me broadly recapitulate the events. In October-November 2016, you and some other ex-directors of Infosys, including I, were disturbed by the board agreeing to a huge severance pay to its ex-CFO, Rajiv Bansal. This had never occurred before, not even to executive directors who left the company. You sent a letter to the Infosys board to that effect — one where I played a minor role in redrafting.
The board responded, admittedly belatedly, by freezing Bansal's remuneration to what was actually paid out, which was 70 per cent less than what it had agreed to. It also asked David Kennedy, the legal counsel, to resign at his pre-contracted, pre-joining severance pay.
You also wanted the chairman and two other directors to quit, and the board to induct another independent director from your list. After discussions with you, the board appointed an ex-Infoscion, D N Prahlad. For the record, I sit with Prahlad on the Infosys BPO board and respect his fiduciary qualities.
It didn't end there. Following a whistle-blower complaint in February, you started publicly pressurising the company's board to conduct a legal-cum-forensic investigation on the $200 million acquisition of the Israeli software firm, Panaya, and then to disclose the entire report on the company's website. An investigation was done by Gibson Dunn & Crutcher LLP, a reputed US law firm, for which you, too, were interviewed.
The Panaya report absolved the management of wrongdoings, and its basic conclusions were disseminated to the public. My first question: would you have posted the full report if you were running Infosys? You wouldn't, as you didn't in instances that needed detailed investigation.
You then wanted a co-chairman who met with your approval. Here, too, the board complied by elevating Ravi Venkatesan. By accommodating you, it created a fiduciary eccentricity of three different people at the top: a chair, a co-chair and a managing director and CEO.
Why did the board agree to so many of your demands, all played out in public fora? A generous interpretation is that it respected you and wanted to arrive at a middle ground. But it appears that you have not played your part, and have publicly leveraged your lionised position to constantly shift that middle ground for extracting more concessions.
Truth be told, the board was collectively timid. So, here's my next question: if you were at the helm, and a person representing a small proportion of Infosys' share capital did what you have done, how would you have reacted? You would have blasted him out of the water with no quarters given.
It didn't end there. You and your two colleagues in this war complained about Sikka's pay, though it was performance-linked and backloaded.
You praised U B Pravin Rao, but criticised his pay as well. The list is too long to accommodate here.
What does this mean for Infosys? The company was lagging behind industry when Vishal took over. It is now in the top quartile. Per-capita revenue has grown for six successive quarters. In an extremely difficult competitive milieu, Infosys had started increasing its margins while undertaking a profound change in business from leveraging labour costs to offering all-inclusive solutions to clients. Vishal's task was far from complete when you entered the fray. And now, thanks to you, he is leaving.
How can Infosys strengthen employee morale under these circumstances? How can it find a worthwhile replacement for Vishal with you sniping at the wings? How can it get away from this sapping, deleterious war that has got it lower valuation and titters from the competition? How can it focus on doing business if you are readying to rearm your weapons?
You will claim that it is all for corporate governance. But why don't I, your corporate governance disciple, believe this anymore? Nor does any other ex-independent director that I have spoken to, each of whom you respect.
Enough is enough. You have drawn first blood. Do not mortally wound the organisation by persisting in your actions. Let Infosys get on with its business, heal itself from the injuries that you have inflicted and again grow shareholder value. Learn to walk away, as you had promised when handing the reins to Vishal. The corporate governance halo that was conferred upon you is shrinking. Let it not disappear.
I have respected you more than many others in the corporate world. So, pardon me for this missive. How I wish it weren't needed.
