Mr Murthy suspects Governance in Infosys getting Sikka. Vishal Changes. Narayana!


Murthy not very happy with Governance at Infosys

Infosys Founder Mr Narayana Murthy is not very happy with Governance at Infosys these days. He suspects that the His middle child as he prefers to call the company seems to have lost way. Not in terms of business direction or performance as such, but in the way to do it.

Infosys and the Tatas as leaders in Corporate Governance

Infosys, for the major part of its existence over the past 2/3 decades, had not only been a bellwether of India & IT sector, but also led a strong corporate governance/citizenship philosophy to Business.

The Tatas has long been known to adhere to the highest values in Business. But not much of their values really rubbed off on the other players of Corporate India. The Congress led post Independence era also did not exactly foster much transparency and integrity in public life. The few stories of ethics and transparency that came out of those decades may have actually had little to do with either Mr Nehru or his daughter Mrs Indira Gandhi.

Ethics, IT Sticks! The Business of Being Good

But the 1990s and 2000s saw Indian Industry (especially those that served America and Europe) slowly understand that businesses that adhered to Corporate Ethics won (more) Business. Tata Consulting Services and Infosys were already well placed to leverage this development.

The Old gives way to the New. Governance is a matter of View.

The Infosys founding team members were till recently very much at the helm of affairs in Infosys. But slowly they retired/gave way to fresh blood. Lateral recruitments from the market place maybe carried with it, the risk of dilution in the values that the founders had aspired to maintain.

Mr Murthy’s expectations of Corporate Dharma belied (of late) at Infosys?

Mr Murthy has long espoused certain standards of moral/ethical  behaviour. Integrity in all dealings, Transparency, CEO/ CXO Salaries (at not more than 25 times the lowest Salary in the organization) to name a few. In Infosys, currently that ratio at upwards of 2200, alarmed Mr Murthy!

One understands that typically Infosys gives employees severance packages of three months (salary). However in a few CXO severance cases, they were given many times that. In the case of Mr Ravi Bansal (ex-CFO), he was paid 30 months’ salary as severance. Mr Murthy has questioned the need and suspects hush money payments. If so, he wonders, what dark matters did Mr Ravi not open his mouth on?

Also the average employee has got only 80% of his variable pay. But Infosys paid these ex-employees as above at 100% over all the months of severance pay. These things have got Mr Murthy’s goat.

Other Stakeholders’ Support for Sikka and the Infosys Board

Some stakeholders including Foreign Institutional Investors like OppenheimerFunds, have supported the current Leadership and Board of Infosys. They believe Infosys continues to be managed well and that the Board/Leadership out to be left to manage the show without interference.

Cool Chilli’s Comments

Cutting the Umbilical Cord- The Vanapratha Ashrama way

On one hand stands our belief that senior stakeholders like Mr Murthy should cut the umbilical cord and let the company be managed by the ones holding the baton. This would be as per the ancient Indian ideals of Vanaprastha Ashrama, we have referred to earlier in this site. (As mentioned earlier, the founders had also largely worked towards that, is our view, with Mr Murthy’s interventions now and then as an exception.)

Mr Murthy may fear governance issues scuppering the Infosys Boat unless the Board and the Skipper Sikka address them.

Instances Reek of Inequity

On the other hand, the few examples that Mr Murthy quoted as above, definitely raise one’s eyebrows!. If these things can happen in Infosys, many such could be happening across Corporate India. Mind you, these instances are not illegal. But surely unethical. Any Board/its remuneration team can decide to pay any CXO/ critical employee, a fair compensation. However Infosys and other such Corporate Citizens typically don’t pander to one off expectations like the one made by Ravi Bansal. It reeks of inequity from a distance.

In Ending

In the Indian context (mirroring global trends), we have corporates that are becoming economic giants. The financial clout of these behemoths rival/ exceed that of some countries put together. By virtue of their structure and the engagement that employment engenders on individuals, the companies also play a role in moulding socio-politico-economic thought processes of employees. For eg. a senior stakeholder in a firm speaking openly on socio-political issues, encourages the employees to also discuss the same openly. A Senior stakeholder setting a personal example of cleanliness (both physical and fiscal) encourages all employees to follow suit in their personal lives as well.

It is therefore important that Infosys as a key player and corporate thought leader continues as a beacon. The revered Tata name has already lost some of its sheen due to the events of the past few months. Imperative that Infosys keep all of its!

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