Promoters rooting for Change of Infosys Chair~Seshasayee to Subrahmanyam?

The Infosys Situation is getting as explosive as the Tata Group’s did with  Promoters rooting for Change of Infosys Chair~Seshasayee to Subrahmanyam?

Corporate (Mis)Governance Issues~First Tatas & now Infosys !~Chairman & Board under Attack by Promoters

It’s been disruptive global times in many ways with Trump now US President and India re-gearing up Post Demonetisation & the Indian Corporate Big League crying out “Me Too” .

Headlines were hogged for months as first Promoter Family’s Ratan Tata led the unusually aggressive initiative  in the illustrious Tata Group to fire it’s Chairman, Cyrus Mistry & now Promoter N R Narayana Murthy has called to replace Infosys Chairman with Prof Marti Subrahmanyam .Ex Directors T V Mohandas Pai & V Balakrishnan support Murthy on this  & are calling for the Chairman’s resignation for serious misgovernance on issues of High Severance Packages,Hike in CEO Package ,Director Appointments,Inducements to bag Contracts,non disclosures among others that strike at the very core values Infosys was build on

Narayan Murthy has just asserted in an interview that the unusually high severance package to the ex CFO was just hush money cloaked & that he was concerned about falling standards in corporate governance

Whoa ! That’s a criminal charge in my view !

N R Narayana Murthy is rooting to replace Seshasayee with Prof Marti Subrahmanyam,Charles E Merrill Professor of Finance at the New York University Stern School of Business.The Professor has already served as an independent director on the Infosys Board for thirteen years till 2011

Four Years ago in January 2013 I had an opportunity to interact with Prof Marti Subrahmanyam when he delivered a paper at BSE on the  manipulation of Libor Rates.I had blogged on this then.I had asked him if the  Banks simply had to rig the rates to survive & if this was the case then the orders had to come from the top.Prof was taken aback a bit by the query & clearly reluctant to confirm this.Expected truthful answer should have been “Yes” as the question was rhetoric.Instead he had brushed it off abruptly & I got the impression of an intellectual arrogance at display.That view has stayed as I’ve not got another opportunity to interact to be able to change this view …He’s quickly thrown in the hat to become Infosys Chairman.Clearly Narayan Murthy has been in touch with him on this before putting up his name to replace Seshasayee,Murthy has always been straightforward and blunt like in yesterday’s interview calling the severance pay as hush money !.Can’t imagine Subrahmanyam to be as straightforward & I daresay will be Murthy’s ‘Voice’ just as Ratan Tata,in my arguable view,wanted a ‘Yes’ Man Chairman to head Tata & which Cyrus Mistry turned out to be not

At US $ 33 b , Infosys is nearly 2% on BSE’s Market Cap of US $ 1.74 Trillion.The Tata group Market Cap should be @ US $ 120 b with TCS itself @ US $ 70 b.Thus @ US $ 100 b of BSE Market Cap in the two leading IT Majors, Infosys & TCS is at stake with such serious disruptions ,the last of which we have surely not heard of….Just a thought that if  such leading corporates cannot lead from the front on corporate governance,imagine the mis-governance cesspool that lies in the rest of the market cap of over U S $ 1.7 Trillion in over 3000 traded companies,especially the micro,small & mid cap scrips !

There’s Operational Disruption in the IT Sector causing uncertainty and nervousness due to Trump’s ‘No Trespassing’ through H1B Visa Stance .IT Majors are also being heavily challenged (as were complacent with body shopping rather than upgrading & re-skilling in AI etc) by niche startup models in AI & other disruptive digital technologies that are re-shaping the world

IT seems like a ‘No No’ for Now

Will Marti get a Hearty Welcome on the Board,if he does come back ,& now as Chair or Co-Chair?

Don’t see this happening as the current Board stands united but with Dr Punita Kumar Sinha (wife of MOS Civil Aviation & earlier Finance, Jayant Sinha and appointed a year ago in January 2016 as Independent Director)) & Prof Jeffery Lehman in the eye of the storm.Biocon’s Kiran Mazumdar-Shaw,an Infosys Independent director backs the Board and views the difference of opinion between Founders & the Board as an issue of ‘perception’ rather than ‘governance’…now that’s her ‘perception’!

If Seshasayee’s head rolls expect some on the Board to be forced to resign as well

Dr Vishal Sikka,CEO & MD who’s the relatively new recent face of Infosys appointed to lead Infosys to regain some glory has this new challenge to face ~ Top Employee vs Promoter Shareholders who collectively own 13% of the Infosys Equity

Top Solicitors have been roped in to intermediate between the Founders & the Board & a prominent Shareholder Baburaj Pillai has been trying to reconcile N R Narayana Murthy & Dr Sikka for some time .Sikka’s got support from Oppenheimer.With high stakes and, I daresay,intolerance levels too,it’s like a Third Umpire is being called into play ! ~ Corporate Boardrooms & Cricket Fields ~ No Gentlemen in either !

Awaiting the next big bust up in Corporate India !  The Recent Trend is Bullishy ,or should I say Bearishly !, Inevitable for this !

Gloves are off & No Holds Barred as Accusations fly swiftly and Aging (semi) retired Promoters try staging Corporate Chairman Coups on their Own Promoted Companies !

The Battleground is set….Founders Old School Core Values pitched against Evolving Business Pragmatism….& I’m Old School just for the record !

Oh ! just announced yesterday that SEBI too’s getting a new Chairman from March 1,2017 ~ Ajay Tyagi will replace U K Sinha & his plate is already being served and overfull already

For Now IN-FO-SYS  has become OUT-FO-SYS

Tata Group,Infosys…next?

3 thoughts on “Promoters rooting for Change of Infosys Chair~Seshasayee to Subrahmanyam?

  1. Thanks Gaurav for the excellent write up!! Its real sad that these issues crop up during difficult times for the overall industry.. Your views on Mr.Seshasayee’s role in this issue would have given the right perspective.

  2. Gaurav whats your take on Subex after the latest results. The company seems to have made an operational turn around. Plus some purchasing by funds means consolidation of shares is happening.

  3. Infosys’ downfall started when NRN asked Nilekani to step down in favor of other founders taking turns as CEOs. His hubris “Infosys is so good, anybody can run it….” attitude along with seeking attention to himself and to be in the limelight all the time, and arrogance, may explain the present crisis.

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