Infosys could have done more on disclosures: Proxy advisory firms

N.R. Narayana Murthy and family did not have the requisite 10% shareholding to approach the National Company Law Tribunal (NCLT) over allegations of falling governance standards and mismanagement at Infosys Ltd. So, Murthy used his reputation to maximize the outcome, say proxy advisory firms.

In addition, they are of the opinion that the board could have ensured higher disclosures to avoid the debacle of its chief executive stepping down abruptly.

Three years after Vishal Sikka took over as the first non-founder chief executive of Infosys, the former technology chief at SAP abruptly resigned on Friday. India’s second largest software exporter has named company veteran U.B. Pravin Rao as interim CEO.

According to proxy advisory firms, the ideal candidate to head the IT firm would need to decide whether or not to pay heed to founders.

Shriram Subramanian, founder and managing director, InGovern Research Services Pvt. Ltd, said that in an ideal scenario, there would be alignment between the board’s view, founders and management. “In this case there is a definite misalignment. The board should have reached out to shareholders and founders to work amicably,” he added.

“On the one hand, there are still unanswered questions such as Rajiv Bansal’s severance package, overpaying for an acquisition which cast lingering doubts and on the other hand the founders’ need to let go—it is not easy job. The board should have ensured that there is minimum interference by founders and disclosures should have been greater. It is always negative for shareholders if the board is working at cross-purposes with founders,” Subramanian added.

Link: Mint – 18 Aug 2017