Vishal Sikka has resigned as managing director and chief executive officer of Infosys with immediate effect ending one of the most tumultuous tenure at the helm of the affairs in the Bangalore based software major.
Infosys share price was down steeply at 6.84 % at Rs 951 reacting to the news of Sikka’s resignation.
UB Pravin Rao has been appointed as the Interim-Managing Director and Chief Executive Officer.
Infosys' founders, including NR Narayana Murthy, have in recent months attacked the company leadership terming lapses in corporate governance. He had also criticized the Infosys board for not upholding governance standards and for not creating "checks and balances required in any well-run company".
“This is to inform you that the Board of Directors of Infosys Limited has at its meeting today accepted the resignation of Dr. Vishal Sikka as the Managing Director and Chief Executive Officer of the Company with immediate effect. It appointed Dr Vishal Sikka as the Executive Vice-Chairman. And appointed U B Pravin as the Interim-Managing Director and Chief Executive Officer. The succession plan for appointment of a new Managing Director and Chief Executive Officer has been operationalised by the Board and a search for the same has been commenced,” the software major said in an exchange listing.
Dr Sikka is not leaving the company. He has been appointed Executive Vice Chairman effective today and will hold office until the new permanent Chief Executive Officer and Managing Director takes charge, which should be no later than March 31, 2018, the company said.
The new change of management will need shareholders’ approval as well which Infosys said will take a later date.
In the last few months, the country's second largest software firm, has seen a number of senior-level executives exiting -- Anirban Dey (Global head and chief business officer of Edge products), Yusuf Bashir (MD, Infosys Innovation Fund) and Ritika Suri (executive vice-president).
In a letter to the company employees also posted on his blog , Sikka referred to “increasingly personal attacks against him”. “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 said in the letter which he later shared on his blog.
“I now need to move forward, and return to an environment of respect, trust and empowerment, where I can take on new lofty challenges, as can each of you,” he added.
The Infosys Board has given a helping hand to Sikka on his decision and said, “The Board understands and acknowledges Dr. Sikka’s reasons for resignation, and regrets his decision. In particular, the Board is profoundly distressed by the unfounded personal attacks on the members of our management team that were made in the anonymous letters and have surfaced in recent months. As the Board has previously stated, a series of careful investigations found no merit to the unsubstantiated and anonymous allegations that had been asserted. The Board denounces the critics who have amplified and sought to further promote demonstrably false allegations which have harmed employee morale and contributed to the loss of the Company’s valued CEO. The Board thanks Dr. Sikka for his outstanding leadership of the Company, and for his extraordinary contributions during a period of rapid evolution in this industry. The Board also appreciates Dr. Sikka’s commitment to facilitate a smooth transition to new leadership fully equipped to lead Infosys forward in this new era in our industry and to ensure continuity in our service to our valued customers. Dr. Sikka will continue to focus on strategic initiatives, key customer relationships and technology development. He will report to the Company’s Board," it further said.
Dr. Sikka will receive an annual salary of $1 during his tenure as Executive Vice Chairman. Any Company equity awards held by Dr. Sikka that remain outstanding and unvested shall, during his term as Executive Vice Chairman, remain outstanding and shall continue to vest (and, in the case of stock options, become exercisable) in accordance with their terms, the company said.
The board also acknowledged Sikka’s contribution in taking Infosys out of the financial trouble during the IT slowdown time.
“When Dr Sikka took over, the Company was lagging behind industry growth. During Dr. Sikka’s tenure as CEO, Infosys revenues have grown from $2.13B in Q1FY15 to $2.65B this past Q1, with strong margin performance and cash generation, throughout his tenure. Dr. Sikka's approach to profitable growth delivered increase in liquid assets (including cash and cash equivalents) from $4.9B in June 2014 to $6.1B in June 2017, while paying dividends of over INR 19,000 Cr. (including dividend distribution tax) over these three years. Under the leadership of Dr. Sikka, Infosys launched breakthrough new programs to drive innovation, education and entrepreneurship on a large scale. Employee attrition has decreased dramatically during Dr. Sikka's tenure, particularly among high performers, utilization is at a 10-year high, and client satisfaction is at an all-time high. The Company launched more than 25 new services which rose to 8.3% of revenue last quarter, from zero percent in April 2015. Under his leadership, Infosys developed and launched its artificial intelligence platform Nia, and already has more than 160 artificial intelligence scenarios deployed with more than 70 clients. Infosys has also ventured into new horizons both with design-thinking with clients and its start-up investment fund," the company said.