Heeding calls for market analysts and other observers for reversing Infosys’ weak performance over the last several quarters, Infosys founder NR Narayana Murthy has been re-appointed Executive Chairman of the company – and unusual recall in the Indian context.
The Infosys board announced the appointment after a meeting today. Murthy, under whom Infosys rose to great heights, has been appointed additional director of the board with immediate effect.
Murthy’s elevation will be seen as a vote of no-confidence in the current CEO SD Shibulal, whose term ends only in March 2015.
However, in what can only mean another signal to the same effect, ET Now reported yesterday that the board has begun its hunt for a new CEO already, and the search could, for the first time, look at people outside the company, too. Thus far, only the founders have been asked to run the company, and Shibulal was the last of the founding members of the company.
Under Shibulal, the company has lost zing, and his elevation also cost the company the loss of Director Mohandas Pai, who was another candidate considered a potential successor to Kris Gopalakrishnan as CEO.
Infosys 3.0, an attempt by the company to focus away from traditions commoditised business, has so far failed to deliver, with the company losing momentum and also share value.
According to a company press release, Murthy’s election as director will be put up before shareholders at the shareholder AGM scheduled for 15 June.It said: “Subject to his election as a director at the AGM, the board will take up in its meeting on 15 June 2013, the resolutions for convening an extraordinary general meeting within the requisite period, in order to seek approval from the shareholders for appointing him as the Executive Chairman and Whole-time Director for a period of five years commencing on 1 June 2013.”
In the process, current Chairman KV Kamath will step down as Chairman of the Board and become an independent director.
The press release quotes KV Kamath as saying that “the board has taken this step keeping in mind the challenges that the technology industry and the company faces and in the interest of all stakeholders, particularly shareholders large and small, who have asked for strengthening of the executive leadership during this challenging time. Murthy’s entrepreneurial and leadership record and the long experience he has had as a technology pioneer makes him eminently qualified to lead the company and provide strategic direction at this point in time.”
Murthy himself was surprised with his recall. He said: “This calling was sudden, unexpected, and most unusual. But, then, Infosys is my middle child. Therefore, I have put aside my plans-in-progress and accepted this responsibility. I am grateful to KV Kamath – the Chairman, the Board, and every Infoscion for giving me this opportunity. I intend to do my best to add value to the Company in this challenging situation.”
During his five year term, Murthy will draw a token compensation of Re 1 per year.
The release says that Kris Gopalakrishnan would be re-designated Executive Vice Chairman from 1 June, and would “focus on key client relationships and broader industry issues. SD Shibulal would continue to be the Managing Director and CEO.”
Gopalakrishnan and Shibulal have also requested “that they draw a compensation of Re 1 per year. The board has accepted their requests, subject to necessary shareholder and government approvals.”
“In order to function more effectively, Narayana Murthy intends to create the Chairman’s office to assist him during his tenure and has requested the board to permit him to put together a team for this function. The team will include his son, Dr Rohan Murty, as Mr Narayana Murthy’s executive assistant.”
“Rohan Murty is a Junior Fellow in the Society of Fellows at Harvard University. He has a PhD in Computer Science from Harvard University and a Bachelor’s degree in Computer Science from Cornell University and has held fellowships at MIT, Caltech, and Microsoft Research. He has authored several papers and patents as part of his research on wireless and mobile computing. If appointed, Rohan Murty’s term as Executive Assistant to the Chairman would be co-terminus with that of Narayana Murthy. Rohan Murty has requested that he should also be paid only a token compensation of Re 1 per year.”
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