Large fund houses have come out in the support of Infosys CEO Vishal Sikka, citing material improvements in the company’s financial metrics under his leadership and also saying that it is the responsibility of the board to resolve the various corporate governance issues raised by the firm’s founders a few days back.
Oppenheimer Developing Markets Fund, which holds a 2.13% stake in the company and has been a long-term investor said, “We have been enormously pleased to see the stabilising hands of Dr Vishal Sikka, who has improved underlying operating performance and begun to articulate a coherent strategy to a firm beset by a host of structural challenges to the ageing offshore IT service industry.”
Since February 6, the Infosys stock price has risen 3.11%, and closed Friday’s session at R968.05 on the BSE , a gain of 2.10%.
The support from investors should come as boost for Sikka, who has been caught in the crossfire between board chairman V Seshasayee and Infosys founders led by NR Narayana Murthy. The founders have remained consistent in their view that they do not have any issues with the performance of the CEO and only with the governance standards followed by the board.
Investors would not be pleased with another leadership change. Talking to FE, V Balakrishnan, the former Infosys board member said the founders had brought in the CEO, a professional they fully supported. “There is no disconnect between the founders and CEO. The issue is between the board and founders. I do not think the institutional investors understand the issue, they have to do more diligence and look at this issue in a different way.”
According to people familiar with the developments, the 40-50% increase in the compensation of Sikka effective from January 2017 has been a sore point for the founders, who felt that it was not justified.
“It is responsibility of the board to rein in or control some of the demands made by the management.
I think they gave into the demands without studying their merits,” one of the sources said.
Besides, the founders have also raised the points of exit compensation given to two key former executives, chief financial officer Rajiv Bansal and chief compliance officer David Kennedy.
Bansal, who left the company in October 2015, was paid a compensation of Rs 23 crore that was later scaled down to Rs 17.4 crore following certain shareholder queries.
Similarly, eyebrows were raised when Kennedy was paid $868,250 as exit compensation when he resigned in January this year.
In fact, Murthy has gone to extent of stating these payments could possibly be certain hush money and blamed the board chairman for allowing the situation to come to such a pass. In the light of these developments, Infosys in a statement said, “The Board is fully aligned with the
strategic direction of Dr Vishal Sikka and is very appreciative of the initiatives taken by him in pursuance of this transformation.”