V Balakrishnan, former Infosys board member and CFO of Infosys is clear that the current chairman of the company, R Seshasayee, has to immediately step down to pave way for a reconstituted board which can set right the various corporate governance issues raised by the founders. He said any further changes in the Infosys board as sought by the founders would actually enhance its reputation and allow CEO Vishal Sikka to focus on the job. Balakrishnan spoke with with FE’s P P Thimmaya. Excerpts:
Did the Infosys Board give enough attention to the issues raised by founders?
There are genuine concerns and they have been addressed to the board but they never solved the issue. They have given some wishy-washy statements in public which carry no meaning. The board has to step up and engage with the founders on these issues. We have the founders who hold 12.75% stake in the company and are the largest block shareholders. They are not ordinary shareholders whom you can brush away. They are all iconic shareholders who built the company, The company is what it is today, because of them. The board does not know the history or geography of the company. They should engage with the founders, address their concerns and then move on. In the first place they should not have allowed the issue to come up. I think to bring in a third party law firm shows a total communication failure.
Is there a communication breakdown between the founders and the Board?
Look, there is distress between the board and the founders and the board took a wrong decision to bring in a law firm to mediate between them. When the shareholders raised the issue of governance, there was no question of any legality involved. There is trust deficit between the board and founders, and my suggestion will be that the chairman should step down, taking responsibility for all this. An interim chairman should come in and they should address all the concerns of the founders, reconstitute the board and move on.
If the chairman steps down, will the CEO follow suit?
We have got a new CEO and one has to give him space and time. I do not think founders interfered with it, whether in his strategy or vision. The founders took on the governance issue and it is different from the performance issues. In fact the CEO should be very happy, if all the distractions go away and he can focus on the company.
Will these developments not damage the reputation of Infosys?
In fact, it will be the reverse. People will have much more hope as there is a company which listens to large shareholders, address their concerns, set right the governance and get back to growth rates.
Will the institutional investors be worried about these developments?
They don’t understand the issue. The issue is not with the CEO and the founders. The founders brought in the CEO who is a professional from outside, and they fully supported him. The issue is between the board and founders. No investor, I know, will ever invest in a company where governance is bad. Governance systems and values are very important. The large institutional investors will back the founders.