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Infosys Predicament: Vishal Sikka Vs Narayana Murthy

20 August 2017

In a scathing attack on N R Narayana Murthy, Infosys Board on Friday blamed his "continuous assault" as the primary reason for CEO Vishal Sikka quitting the company and ruled out a formal role for the co-founder in the company's governance.

Sikka's resignation spooked investors in India's second-biggest IT services company and sent its shares down almost 10 percent, wiping $3.45 billion off its market value.

Noting that a letter authored by Murthy attacking the integrity of the Board and the management for alleged falling corporate governance standards was doing the rounds in various media houses across the country, the company said the Board took umbrage at the contents of the founder's purported letter.

Sikka, who had joined Infosys in August 2014, said these distractions were preventing the management's ability to accelerate the company's transformation. "It is a bit sad, but I hope this will help the company improve and move on", Sikka told reporters via a video call from the U.S., along with Board chairman R Seshasayee.

Pomerantz says on its website that on news of Sikka's resignation, Infosys's American Depositary Receipt price has fallen as much as $1.43, or almost 9%, during intraday trading on August 18, 2017.

The board of Bengaluru-headquartered Infosys approved the repurchase of 113 million shares at 1,150 rupees apiece, the company said in a stock exchange filing, returning cash to investors at a substantial premium to Friday's closing price of 923.25 rupees.

HDFC Securities analyst Apurva Prasad said: "There is some level of uncertainty as we wait till the new CEO and managing director comes in, and it does put the company in some form of uncertainty in terms of strategy".

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Vishal had recently completed three years at Infosys.

In his resignation letter, Mr Sikka said: "Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks".

Sikka will remain as executive vice chairman and will hold office until a new permanent CEO and managing replaces him. He will receive an annual salary of $1 during his tenure as executive vice chairman.

Infosys shares closed down 9.6 percent, their biggest daily fall in more than four years.

Aug 2017: Sikka resigns as CEO, citing a stream of distractions and disruptions.

"I think the question is whether the board enjoys the support of the investors and shareholders", Vazirani said on an investor call on Friday.

Infosys Predicament: Vishal Sikka Vs Narayana Murthy