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Infosys crisis: Think about shareholders

THE ASIAN AGE.
Published : Aug 20, 2017, 12:20 am IST
Updated : Aug 20, 2017, 12:21 am IST

There is no reason why a successful business and ethics of corporate governance cannot co-exist.

Vishal Sikka (Photo: PTI)
 Vishal Sikka (Photo: PTI)

Being a bystander, watching something that you created and infused with certain so-called personal standards of ethics and corporate governance can be a difficult task. So, to that extent, Infosys co-founder N. Narayana Murthy can be forgiven for finding that his idea of corporate governance was at variance with that of Vishal Sikka, the younger, dynamic outgoing chief executive officer and managing director, with a style of his own. But for Mr Murthy to make several serious allegations without offering any proof is another thing and is puzzling coming from a man of his stature.

The larger picture however in the ongoing public spat between the co-founder and the present management reflects the hurdles faced by a company when leadership transits from a promoter to the hands of a professional chief executive officer and an outsider. Nothing would seem good enough for the promoter who sits like a wolf at the door. This was witnessed in an earlier high-profile case when the Tatas decided to appoint an “outsider” — someone not from the Tata family, to head the group. In Mr Mistry’s case his family is the largest single shareholder in the group. Ratan Tata, the patriarch of the group felt that Cyrus Mistry who he had handpicked, did not fit the Tata ethos. In both cases, the larger issue was of the old order giving place to the new and this somehow seems difficult for the original promoters to accept.

In both cases the “outsiders” performed well and in the case of Infosys, Mr Sikka did make the company that was languishing, profitable during the three years that he was at the helm. There is no reason why a successful business and ethics of corporate governance cannot co-exist.

What is ironic is that Mr Murthy who is so worried about where Infosys is going seems unaware that his public spat has caused shareholders a loss of a massive Rs 22,500 crore in their wealth. Infosys which was once a bellweather stock is in the doldrums at a time when the information technology sector is at the crossroads with automation and artificial intelligence gaining prominence. It will be interesting to see how this spat ends. There are several promoter and family-owned companies that are, or will be, transiting to be being professionally managed.

There can be no one solution or model fitting all and each company would have to find its own model of a peaceful transition. What is important is the shareholder’s interest. In this spat the shareholders have been forgotten and one wonders if the warring parties have taken this into consideration. Nothing can justify the loss of shareholder’s wealth. Will they be compensated? It is even more ironic because Infosys was one company where even the drivers of the company who had shares became crorepatis when the share was listed and this was big news. It is sad that the same company is in the news today for not-too-good reasons.

Tags: narayana murthy, vishal sikka, ratan tata