Three years after becoming the first non-promoter chief executive officer of Infosys Ltd, Vishal Sikka put in his papers, Friday, throwing the second largest Indian IT services company into the throes of a leadership crisis.
U.B. Pravin Rao, Infosys’ chief operating officer, has been named as the interim managing director and chief executive.
The resignation comes after months of squabbling, which saw Infosys promoters, led by co-founder NR Narayana Murthy, raising questions about Sikka’s ability to lead the company and on issues of corporate governance.
The development is reminiscent of the unceremonious ouster of Cyrus Mistry as the chairman of Tata Sons last year.
In an email sent to Infosys employees, Sikka said that he was resigning because he felt the “need to allow the company to move beyond the noise and distractions.”
“I am clear in my decision. It is clear to me that despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless, malicious and increasingly personal attacks,” he said in the email, clearly directing his ire at Murthy.
According to a Mint news report earlier in the day, Murthy had written to some of his advisors that at least three independent directors had reservations about Sikka. “All that I hear from at least three independent directors, including Mr Ravi Venkatesan (co-chairman), are complaints about Dr Sikka. They have told me umpteen times that Dr Sikka is not a CEO material but CTO material. This is the view of at least three members of the board, and not my view since I have not seen him operate from the vantage point of an Infosys board member,” Murthy said.
At the heart of the squabble were some “internal governance issues” between Infosys founders and a management “keen on charting a new path,” which first came to light in February this year.
News reports at that time had said that several reasons, including a 55% salary hike for Sikka taking his annual remunerations to $11 million, which included restricted stock options, and were subject to achieving targets.
The handsome severance package to former chief financial officer Rajiv Bansal and at least three internal investigations, including one on the valuation at which Israeli software company Panaya was acquired and whether any Infosys executive had personally benefited from the deal, had also irked the company co-founders.
Yet another point of contention was the appointment of Punita Kumar-Sinha, a former chief investment officer at Blackstone Asia Advisors, as independent director to the company’s board. Kumar-Sinha is the wife of junior civil aviation minister Jayant Sinha and daughter-in-law of former finance and foreign minister Yashwant Sinha.
At least two internal investigations were conducted by law firms Cyril Amarchand Mangaldas and Latham & Watkins in October 2015, and August 2016, to probe the payout to Bansal. A separate probe by international law firm Gibson, Dunn & Crutcher had looked at the $200-million Panaya deal and allegations of impropriety. The company has maintained that none of the probes had found any irregularities.
Interestingly though, just last month, Ritika Suri, Infosys’ large deals head, who had overseen the Panaya acquisition, had put in her papers. The Palo Alto-based Suri’s exit had followed that of the company’s Americas head Sandeep Dadlani, who was responsible for at least one-third of Infosys’ business. Sikka’s tenure has seen significant attrition at top levels, with at least 10 top executives putting in their papers since he took over in 2014.
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