Image: Amit Verma
Infosys, beleagured IT giant
in Bengaluru, has brought co-founder Nandan Nilekani back as non-executive chairman with immediate effect, moving swiftly in an attempt to bring stability back after Vishal Sikka resigned as CEO last week.Sikka, who resigned on Aug. 18
, but had been named executive chairman until March 31, 2018, will now step down immediately, along with current chairman R Seshasayee. The two will be giving up their positions as directors on the board. Ravi Venkatesan will be stepping down as co-chairman, but will remain a director on Nilekani’s board.
Nilekani’s appointment has the attraction of bringing back both a co-founder, and a charismatic leader who commanded just about as much respect among staff as founder NR Narayana Murthy in the golden years of the company and Indian IT, a decade ago. Nilekani voluntarily left the company to pursue a career as a technocrat with the government. He is widely seen as the architect of India’s Aadhaar unique ID program, which he helmed as chairman, with the rank of a minister of the union cabinet.
“I am happy to return to Infosys, now in the role of non-executive chairman, and look forward to working with my colleagues on the board and in executive management on the business opportunities we see before us and delivering benefits to our clients, shareholders, employees and communities. I thank Vishal for his service as the CEO of Infosys over the last 3 years and wish him well in his future endeavors,” the 62-year-old Nilekani said in a company statement on Thursday.
UB Pravin Rao, a long-time Infoscion, who had been named interim CEO and MD, will retain that position, and the new board under Nilekani will push ahead with the previous board’s decision to find a more permanent chief executive by the end of the current fiscal year.
“Appointing Nilekani as non-executive chairman and the resignation of the other Sikka board members does not of itself resolve the underlying issues which caused this split,” Peter Bendor-Samuel, CEO of Everest Group, a consultancy and tech advisory, told Forbes India in an email.
Bendor-Samuel added: “At the center of this problem is a strategic dilemma that Infosys faces, and opposing views on how Infosys should move forward. Infosys faces a market which is changing from one based on labor arbitrage to one which is driven by digital technologies.”
Infosys’s latest crisis came to a head after Sikka resigned, citing increasingly personal attacks in a widening year-long rift between the company’s board and its founders, led by Murthy, who had questioned the board repeatedly in newspaper and television interviews on what he said were serious governance lapses. On Aug. 18, Infosys had issued a statement blaming Murthy directly for Sikka’s decision to quit.
Given that the executive vice chairman’s employment agreement with Sikka had not yet been executed, the board, prior to the induction of Nilekani, decided that the company will complete all resignation formalities as per Sikka’s employment contract as MD and CEO as executed on April 1, 2016 and approved by the shareholders, Infosys said in its statement.
Accordingly Sikka will receive 90 days’ base pay in lieu of notice of $246,575, a variable pay of $205,572 and company-paid employee benefits for 90 days. All equity awards outstanding as on separation date to the extent such awards are unvested will terminate on the date of separation. All equity awards that vested during his employment with the company will remain as vested as per the terms of the equity plan and award agreement, according to the statement.
“Nandan is the ideal leader for Infosys at this stage in the Company’s development,” Seshasayee, said in the company’s statement. “His appointment will allow Infosys to focus on the strategic changes it needs to make in order to capitalize on the attractive opportunities in the years ahead.”
Nilekani also stated that the board will actively consider a broad based shareholder consultation process as a critical part of its overall engagement initiatives with all the stakeholders of the company that are being taken up on a priority basis, according to Infosys’s statement.ALSO READ:
- Nandan Nilekani returns to Infosys as non-executive chairman
- Murthy is a hero. Yet, he faltered