August 18, 2017
Chennai: It is not just in politics that one sees drama, emotion and action. In corporate affairs too all these elements play out as exemplified by the sudden resignation of Vishak Sikka, CEO and MD of iconic software major Infosys on Friday morning.
His resignation comes close on the heels of criticism of his work and style of work as also his pay and perks from Infosys founder and chairman of the board – NR Narayanmurthy. The Infosys founder also questioned whether Sikka was CEO material at all.
This criticism riled Mr Sikka to the extent that he decided to quit, but he has decided that he will continue as executive vice chairman to ensure continuity in decision making.
“It is in the interests of the company that I leave to enable the company make a fresh beginning,” Sikka said addressing media persons through teleconference. He cited personal attacks from the Narayamurthy as the reasons for his decision. “It is a sad day for me, but hope it will be good for the company,” Sikka said on a day when the company shares tanked on the stock market by some 13 per cent.
The Infosys was quoted at its lowest in 52 weeks today.
The Board has expressed regret over a letter from Mr Narayanmurthy, the founder of Infosys, that attacked the integrityof the board and management of the company and alleged falling corporate governance standards in the company.
Narayanmurthy said he was anguished by allegations by the board against him.
The board took serious umbrage of the contents of the letter and responded with an official statement saying that Sikka’s resignation was forced by Murthy’s continuous attack, including the latest letter. The Board continues to support Sikka, the statement said.
Mr. Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members, the company said in its statement released to the media.
The Board assures its shareholders, employees, customers and communities that it is committed not to be distracted by this misguided campaign by Mr. Murthy and will continue to adhere to the highest international standards of corporate governance as it executes its strategy of profitable growth for the benefit of all Infosys stakeholders.
Mr. Murthy’s campaign against the Board and the Company has had the unfortunate effect to undermine the Company’s efforts to transform itself.
The Board has been engaged in a dialogue with the Founder to resolve his concerns over the course of a year, trying earnestly to find feasible solutions within the boundaries of law and without compromising its independence. These dialogues have unfortunately not been successful.
The Board declines to speculate about Mr. Murthy’s motive for carrying out this campaign, including the latest letter. The Board believes it must set the record straight on the false and misleading charges made by Mr. Murthy because his actions and demands are damaging the Company and misrepresent its commitment to good corporate governance.
Infosys has, under the leadership of Vishal, developed and articulated a strategy to transform itself to meet the rapidly changing needs of the marketplace in the 21st century. The Company was lagging significantly behind industry in growth rates when Vishal took over and now we are in top quartile from a performance perspective.
Infosys has grown in revenues, from $2.13B in Q1FY15 to $2.65B this past Q1. This was done while keeping a strong focus on margins, closing this past quarter at 24.1% operating margin, beating some competitors for the first time in many years, and improving against nearly everyone in the industry.
The revenue per employee of the Company has grown for six quarters in a row. Attrition has fallen, from 23.4% in Q1FY15 to 16.9% this past Q1, and high performer attrition is much lower than the overall Company attrition.
The Company grew its $100M+ clients from 12 in Q1FY15, to 18 this past Q1, and increased its large deal wins from ~$1.9B in FY15 to ~$3.5B this past year. This has all been done while improving overall utilization (excluding trainees), to a 15-yr high this past quarter, and an all-time high including trainees, while improving our cash reserves, rewarding Infoscions with a new equity plan, and returning Rs. 19,000 Crores as dividend (including dividend distribution tax) over the last three years. This has all been done while improving standing with clients, to the highest ever in the 12 years with a jump of 22 points in CXO satisfaction, the company said in its press statement.