Vishal Sikka, appointed as MD and CEO of Infosys in June 2014, quit on August 18, 2017 citing “malicious personal attacks”, triggering a sharp fall in the share price of the company. The Infosys stock hit a three-year low of Rs 895.75 before recovering to close at Rs 923, a loss of 9.60 percent, on Friday, a day ahead of the company’s board meeting to consider share buyback.
The share price had closed 4.5 percent higher the previous day at Rs 1,021 in response to the company announcing board meeting on August 19 to consider share buyback.
In a regulatory filing to the Bombay Stock Exchange (BSE), the company said it has accepted the resignation of Sikka and went on to describe the context, albeit briefly.
“The Board understands and acknowledges Dr. Sikka’s reasons for resignation, and regrets his decision. In particular, the Board is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months. As the Board has previously stated, a series of careful investigations found no merit to the unsubstantiated and anonymous allegations that had been asserted. The Board denounces the critics who have amplified and sought to further promote demonstrably false allegations which have harmed employee morale and contributed to the loss of the Company’s valued CEO,” Infosys said.
During a program on business news channel CNBC-TV18 to discuss the fallout of Sikka’s resignation and the ideal way forward, Mohandas Pai, former CFO of Infosys and Amit Tandon, founder and MD of proxy advisory firm Institutional Investor Advisory Services (IiAS), said it’s time for Infosys to bring back Nandan Nilekani, one of the co-founders and former CEO of the company (2002-2007). Both Nilekani and Pai, like many of the other co-founders, are prolific venture capital investors.
Sikka’s appointment had marked the end of founder-led era in Infosys; the earlier CEOs were founders of the company – N R Narayana Murthy, Nandan Nilekani, S Gopalakrishnan and S D Shibulal.
In his letter addressed to the board members, Sikka said: “We have achieved much in the last 3+ years, and for sure we can all be proud of the powerful seeds of transformation that have already been sowed. No one anticipated the additional headwinds like the geo-political disruptions (Brexit, Trump, visa, etc.) that made this transformation even more challenging, but also rewarding. But the distractions that we have seen, the constant drumbeat of the same issues over and over again, while ignoring and undermining the good work that has been done, take the excitement and passion out of this amazing journey.”
“After much reflection, I have concluded that it is indeed time for me to leave my current positions as MD and CEO, and I have communicated my resignation to Sesh (R Seshasayee, chairman of the company),” he further said.
Ironically, in February this year, Sikka had told CNBC-TV18 that he was not the one to withdraw from a battle. “I am a kshatriya warrior. I am here to stay and fight,” he said.
Sikka’s exit does not affect the fundamentals of the company though it is a setback, according to a note by an analyst at brokerage Angel Broking. “While in near term it’s a setback for the company; but given the strength of the board of the company, we believe that the company will be overcome the setback. Given the valuations we maintain our BUY rating with a price target of Rs 1,179,” Sarabjit Kour Nangra, VP Research- IT, Angel Broking, said.
The BSE Sensex closed 271 points lower at 31,524.
