IT giant Infosys CEO quits after tiff with founders, blasts ‘malicious, personal attacks’

Vishal Sikka, CEO of Infosys. Photo credit: Gregor Wolf.

Indian IT bellwether Infosys took a beating this morning. Its managing director and CEO Vishal Sikka announced his resignation with immediate effect today.

“… Despite our successes over the last three years, and the powerful seeds of innovation that we have sown, I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks,” Sikka wrote in an email to Infosys employees.

Infosys had poached Vishal Sikka from German software company SAP in June 2014 with much fanfare. He was expected to usher in a strategy overhaul to make Infosys, India’s second biggest IT services company, future-ready.

But all didn’t go as planned. Infosys founders, led by N R Narayana Murthy, and some former executives of the company have been at loggerheads with the company board on what the founders called “the current poor governance standards at Infosys.” The chief bone of contention was the pay hike granted to Vishal Sikka and the size of severance payouts given to others.

I have decided to leave because the distractions, the very public noise around us, have created an untenable atmosphere.

Sikka’s annual salary package increased from US$7.08 million in 2016 to US$11 million in 2017. It was 935 times more than the median salary drawn by Infosys employees.

Infosys founders, who still own 12.75 percent of the company and are among the country’s top billionaires, subscribe to the leadership philosophy of compassionate capitalism, which suggests the highest compensation in a company should ideally not exceed 50 to 60 times of the median pay.

Following Sikka’s resignation today, Infosys chief operating officer Pravin Rao has been named as interim managing director and chief executive.

A few months ago, Narayana Murthy criticized a proposed salary hike for Pravin Rao in an open letter to the media.

“… Giving nearly 60 percent to 70 percent increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper. This is grossly unfair to the majority of the Infosys employees including project managers, delivery managers, analysts, programmers, sales people in the field, entry level engineers, clerks and office boys who are toiling hard to make the company better. The impact of such a decision will likely erode the trust and faith of the employees in the management and the board,” he wrote.

See: What happens when a multi-billion-dollar firm’s founders lock horns with its board

In his email to employees, Sikka made references to the public nature of the spat. “… After much contemplation I have decided to leave because the distractions, the very public noise around us, have created an untenable atmosphere. I deeply believe in creating value in an atmosphere of freedom, trust and empowerment. Life is too short to engage in battles of opinions in the public, these add no value, take critical time and focus away from the business, and indeed add more to the noise, to the eardrum buzz,” he wrote.

Narayana Murthy co-founded Infosys with six friends, including S.D. Shibulal, Kris Gopalakrishnan, and Nandan Nilekani, in 1981 with a capital of US$250 pooled in. The Infosys founders made their billions in personal wealth from their shares in the company. The company has a market capitalization of around US$35 billion.