Infosys co-founder N R Narayana Murthy on Tuesday defended his actions against the company’s board over the Panaya deal probe and other corporate governance-related issues, and hoped the new non-executive chairman, Nandan Nilekani, would bring back “acche din” to the information techonology major.
“Businesses will always have ups and downs. Business decisions are sometimes taken as bold bets that may not pan out as expected. That is par for the course in any company. However, when there is a cloud around how the organisation is being governed, we must speak up,” Murthy told analysts, according to a transcript shared by him. “This is the key ingredient to keep an institution healthy in the long run and hold it accountable to all stakeholders.”
Nilekani, co-founder and former chief executive of Infosys, returned as non-executive chairman last Thursday after chairman R Seshasayee, two independent directors — Jeffrey Lehman and John Etchemendy — and former CEO Vishal Sikka exited India’s second-largest software exporter. Nilekani’s return was triggered by a months-long public spat between Murthy and the Infosys board, which had also led to Sikka’s resignation as CEO. Murthy had threatened to reach out to investors lastWednesday against the company, but he put it off citing illhealth. This indicated that there was a compromise being arrived at Infosys, which saw the exit of four directors and the return of Nilekani.
Since then, Nilekani has outlined measures, including looking into
BUSINESSES WILL ALWAYS HAVE UPS AND DOWNS. BUSINESS DECISIONS ARE SOMETIMES TAKEN AS BOLD BETS THAT MAY NOT PAN OUT AS EXPECTED. THAT IS PAR FOR THE COURSE IN ANY COMPANY”
WHILE KEEPING QUIET MAY MAKE ME SEEM GENTLE AND “GOOD”, IT HAD THE POTENTIAL TO MORTALLY WOUND THE COMPANY IN THE LONG TERM. THEREFORE, I CHOSE TO SPEAK UP AND QUESTION” N R NARAYANA MURTHY CO-FOUNDER, INFOSYS
Infosys’ $200-million acquisition of Israeli firm Panaya and the severance pay given to former chief financial officer Rajiv Bansal, which first sparked concerns among founders of failure in disclosures by the company.
He also has engaged human resources firm Egon Zehnder and tasked independent directors Ravi Venkatesan and D N Prahlad to help prepare a strategy for the way ahead to be presented to the board in October.
Murthy, in his call with analysts, also indicated that all the founders, including Nilekani had raised the red flag against governance failure at Infosys.
“Nandan, the other co-founders and I askedMr. Seshasayee on June 28, 2016 how the board arrived at this strange decision to pay such a large sum as severance. Seshasayee told us that the decision was taken by David Kennedy, the former General Counsel. When we probed further whether the remunerations committee, the audit committee, and the board applied their mind to this issue, there was silence from Seshasayee,” said Murthy.
“On July 15, 2016, when I asked the board members, in the presence of Nandan and Dinesh, why they agreed to pay such a huge severance amount, Jeff Lehman said it was confidential and could not be disclosed to us. Roopa Kudva said we had to sign an NDA if we wanted to know the reason. So much for shareholder transparency and democracy! On October 14, 2016, Seshasayee told us that the Board agreed to pay this sum because they felt generous,” he said.
“Folks, it is not lost on me that the choice I have faced was to keep quiet, not raise these questions, and let the company suffer, or to stand up and ask questions. While keeping quiet may make me seem gentle and good, it had the potential to mortally wound the company in the long term,” said Murthy. “Therefore, I chose to speak up and question because, like every one of you on this call, I wish to see this company flourish as an institution”
“I wish Nandan the best of everything in his effort to bring back Acche Din to Infosys,” he added.
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