1. Why Infosys board must keep founders at bay

Why Infosys board must keep founders at bay

For someone who is constantly preaching the virtues of corporate governance, NR Narayana Murthy clearly doesn’t believe it is necessary to practise some himself.

By: | Updated: August 19, 2017 2:34 PM
If it can’t do this successfully, it will be difficult for it to find, and then retain, the next chief executive. (Image: Reuters)

For someone who is constantly preaching the virtues of corporate governance, NR Narayana Murthy clearly doesn’t believe it is necessary to practise some himself. Indeed, the fact that he demanded changes in policy and appointment of certain individuals to the board and threatened to ‘attack’ members in public if they didn’t do his bidding, going by the board’s note, reveal to what levels he is willing to go to get his way. It does not behove a man of Murthy’s stature to be taking on the board and management in the media. That is not just in very poor taste, it is completely unacceptable. Indeed, the Infosys board—led by R Seshasayee and Ravi Venkatesan—has done well to back Vishal Sikka, who stepped down on Friday, and to expose Murthy’s behaviour. It must now make sure it keeps Murthy, and any other founder who may try to create trouble, at bay while it searches for another CEO and restores confidence in other investors.

That is not going to be easy given the manner in which events have unfolded over the past year, and any potential candidate would be apprehensive of taking on the job. Nevertheless, by exposing Murthy, and going to the extent of revealing that Murthy had wanted his demands to be met “without attribution to him”, the board has shown it is not going to be cowed down by anyone, not even a founder with a big stake and a big reputation. As Seshasayee said, it is important the board stands up for the values it believes in and handles the noise outside. This may or may not help assuage concerns of a prospective CEO but the board’s stance has been commendable. It has acted with great restraint in the face of some very damaging allegations.

Critically, the co-chairmen must also ensure the board takes a unified stance on any issue; they must let go of any members who are not willing to go along with the rest. The decision not to offer Murthy a position in the company is a good one. Murthy is now a shareholder, just like any other shareholder, and it must be made clear to him he cannot expect any preferential treatment. Indeed, it is a sad day when the founder of a company isn’t willing to consider the consequences of his actions on the performance of the company or the loss to other investors simply because his commands are not being obeyed. As Sikka said, the attack on him was becoming ‘malicious’ and was taking a toll on the organisation, resulting in an untenable situation. Murthy has not just done Infosys collateral damage by putting the company through this pain, he has also lost credibility by suggesting that world-renowned firms have connived with the board to sweep malpractices under the carpet. Even suggesting the board had overlooked payments of ‘hush money” was shocking. In this context, co-chairman Seshasayee has done well to point out that all the whistleblower complaints received were anonymous and that none of them produced any evidence of wrongdoing. Unfortunately, the board has not been able to hold back Sikka who has done a tremendous job at Infosys. But its members owe it to shareholders to not let Murthy demoralise and demotivate another CEO.


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  1. A
    Abhishek Jha
    Aug 19, 2017 at 3:21 pm
    It is definitely NOT shocking to find such a BULL article from Financial Times. The writer(s) alongwith this media house seem(s) to have been paid huge amounts by the current management of Infosys. The writer has FAILED at every instance to SUBSTANTIATE his views. No analysis at all. ALL, or at least a MAJORITY of demands of Mr Murthy were pro-employee, pro-industry and therefore, highly tenable. The current management of Infy are nothing but COMPLETELY CORRUPT, and devoid of any MORALITY at ALL!!! SHAME to the current management of Infosys and even more SHAME to the SHAMELESS WRITERS of this article as well as FINANCIAL EXPRESS!! Abhishek Jha, Madhubani, Bihar.
    1. T
      Test Email
      Aug 19, 2017 at 8:05 am
      I never expected this kind of an article from Financial Express. Stooping to this low by you only proves the media nexus. Hope you and everyone who reads this article knows who NRNM is and what industry he belongs ( IT and not Energy). This is definitely the face of paid media we are seeing here. I am hopeful that media houses like you will be destructed by themselves because of following these malpractices and not giving an independent and unbiased opinion. People are not fools, it might take time, but the show you guys play behind closed doors, always leaves clues about your intentions.

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