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The embattled chairman of Infosys, R Seshasayee, has stated his intention to see out his term, despite pressure from the company’s founders and a falling share price.
Mr Seshasayee told the Infosys annual meeting on Saturday that he would step down from the board of the Indian IT group when he turns 70 next year, as per the rules of the company. His decision comes as a fight between Infosys’s board and founders has helped erase 22 per cent of the group’s market capitalisation over the past year.
In recent months, founding chairman Narayana Murthy has issued a string of statements criticising a supposed shift in Infosys’s culture during Mr Seshasayee’s chairmanship. Urging a return to values of “compassionate capitalism”, Mr Murthy has attacked the rising pay of senior executives, which he says risks damaging employee morale. Chief executive Vishal Sikka’s total remuneration hit $7.5m in the 2016 financial year.
Mr Murthy also attacked a $2.6m payout offered to departing chief financial officer Rajiv Bansal in 2015, suggesting this might be “hush money” related to an unspecified internal matter. Infosys has strongly denied this allegation, noting that less than a third of the money was ultimately paid, and that a thorough investigation into the matter found no evidence of wrongdoing.
People with direct knowledge of the founders’ views say that several, if not all, share Mr Murthy’s concerns about developments under Mr Seshasayee. One founder’s key concerns, these people say, is that Mr Seshasayee has been a weak chairman who failed to scrutinise sufficiently Mr Sikka’s management decisions.
“This has become more of a personal issue between Mr Seshasayee and Mr Murthy and I think that Mr Murthy was categorical that he wanted Mr Seshasayee to step down. What this basically tells you is that he’s not doing it . . . he’s basically putting his foot down and saying that ‘I go the way I’m supposed to go’,” said one Mumbai-based analyst on condition of anonymity.
Mr Seshasayee’s decision comes two months after Infosys appointed former Microsoft India head Ravi Venkatesan as co-chairman, an unorthodox move widely viewed by independent observers as an olive branch to the founders.
But tensions escalated this month after Infosys warned in a regulatory filing of the risk of disruption by activist shareholders. While Infosys subsequently said that this was not a reference to any specific investors, people close to the founders say that they took it as a clear reference to them.
Mr Murthy and the six other engineers who founded Infosys in 1981 hold a combined 12.8 per cent stake in the company.
In an interview with the Financial Times this month, Mr Seshasayee said he agreed that Infosys’s culture was changing. He said this was necessary as the company realigned its strategy to focus on fast-developing new technologies in data analytics and artificial intelligence, rather than its traditional strengths in more basic software development and maintenance.
“There is a generational change, not in the context of age, but in terms of generations of technology. We’re going to have a set of people reacting to the demands of new technologies, which will be very different to the earlier business models,” he said.
“What we’re experiencing is a process that a lot of companies in India will go through in the next decade or so,” Mr Seshasayee added, referring to an evolution away from a paradigm in which founders or their families exerted dominant control over Indian businesses.