Infosys Ltd Chief Executive Vishal Sikka attempted on Monday to allay concerns over a corporate governance row between the software services firm and its founders, saying his relations with N.R. Narayana Murthy and co-founders were excellent.
India's No.2 IT services company, based in the southern tech hub of Bengaluru, has been locked in an escalating public war of words with its founders and former executives, who, led by Murthy, have accused its board of lapses in corporate governance.
Infosys' founders, who own 12.75 percent of the firm, have questioned the pay of Sikka and severance payouts given to others, including its former finance head Rajiv Bansal. According to local media reports, the founders have also questioned the appointment of an independent director.
Vishal Sikka's Salary: The Controversy Behind Infosys CEO's Rs. 73.4-Crore Pay Package
Addressing an investor conference in Mumbai on Monday, Sikka called Murthy an "incredible man". He dubbed issues raised in the media around corporate governance lapses at the firm as "distracting".
"My relation with the founders is wonderful," Sikka said at the event hosted by brokerage firm Kotak.
"All this drama that's been going on in the media, it's very distracting, it takes away attention, but underneath that there is a very strong fabric that this company is based on and it is a real privilege for me to be its leader."
The row comes at a time when the more $150 billion (roughly Rs. 10,05,186 crores) Indian IT services sector has seen a slowdown in deal wins from Western clients, and is bracing for changes in visa rules in its biggest market, the United States, that could increase costs significantly and dent profits.
Infosys, founded in 1981 when seven engineers, including Murthy, pooled $250 that was mostly borrowed from their wives, is expected to address the governance concerns at a separate news conference at 12:30 GMT (6:00pm IST) on Monday.
Sikka, a former member of the executive board at German software firm SAP, took the top job at Infosys in 2014, becoming its first non-founder CEO. Later that year, Murthy voluntarily gave up his board position.
One of the sore points between the board and the founders has been the salary of Sikka - who is due to get as much as $11 million (roughly Rs. 73.7 crores) based on Infosys' performance.
Murthy also questioned in a recent media interview Infosys' agreed severance payment of about Rs. 17.4 crores ($2.6 million) to former finance chief Rajiv Bansal. Large severance pays are rare in India.
The board has backed Sikka and has brushed aside concerns over CEO compensation, appointment of independent directors and severance pay relating to former employees, saying those were old issues and that full disclosures had been made.
Investors have worried that the dispute over alleged corporate governance lapses at Infosys will turn as ugly as it has at the Tatas, India's top conglomerate, where the ousted former chairman has waged a legal battle against the company.
Sikka's comments on Monday and Infosys's upcoming news conference seemed to soothe investors, with a fund manager calling it a "confidence building" measure. Infosys shares rose 1.7 percent after Sikka's comments to their highest level in a month.
"Probably this is not going to precipitate into something like the Tatas," said R.K. Gupta, managing director at Taurus Asset Management, which owns Infosys shares.
Responding to a query on a potential share buyback, another concern raised by former some executives, Sikka said Infosys would weigh buybacks against the company's business needs and the use of capital toward potential acquisitions. The company is sitting on a cash pile of more than $5 billion, as of December 31.
© Thomson Reuters 2017