Friday, February 10, 2017

NRN vs Vishal Sikka: Possessive promoter vs Pragmatic professional?

Corporate Boardroom battles are becoming more common these days in India too. Ratan Tata has succeeded in ejecting Cyrus Mistry from all Tata companies with a speed atypical of sedate Tatas. The Parsi community is no doubt aghast. But Ratan Tata is unable to let the Tata companies get on with their job without singing his glory at frequent intervals. Simply stated, he continues to be possessive about what he considers to be his legacy.

N.R.Narayana Murthy is playing Ratan Tata in Infosys. When Cyrus Mistry was anointed chief of Tata Sons, Ratan Tata was effusive in his praise for the former's sagacity. Similarly, NRN was unabashed in showering encomium on Vishal Sikka when the latter took over the reins at Infosys. The lovefest has proved to be short-lived. NRN is upset over Sikka's disregard for Infosys' penchant for 'corporate governance' just like Ratan Tata was angered by Mistry's unconcern for 'Tata culture.'

NRN has told The Economic Times that large severance payments to departing employees (particularly ex-CFO Rajiv Bansal) perhaps constitute 'hush money'. He wonders if the company is suppressing some information harmful to the company. He also doubts the Board's compliance with its fiduciary responsibility. Pretty strong words indeed.

Murthy has sought some changes in the Board. He wants the Chairman, Seshasayee to admit his and Board's mistake in allowing large severance payments, to 'show contrition' for the same and get back to the straight and narrow path of corporate governance. He has once again expressed his oft-stated corporate governance mantra: "When in doubt, disclose. Let good news take the stairs and bad news the escalator."

He has also bemoaned the disparity (2000 : 1) in remuneration to CEO and entry-level software engineer in Infosys. It is anybody's guess how long Vishal Sikka will stick to Infosys. The company has issued a statement confirming the Board's full confidence in the leadership of Seshasayee and Sikka. Employees of Infosys are overwhelmingly supportive of Murthy just as the Tata employees are in favour of Ratan Tata.

It now appears that the promoters are more against Seshasayee than Sikka. What could be the reason? Sikka bows down to NRN and touches his feet in typical north Indian style. Seshasayee does not do this.

Mohandas Pai says there must be a TV channel discussion between NRN and Seshasayee where NRN will raise questions to be answered by Seshasayee. According to Pai, this is what transparency is about. He has mistaken public trial for transparency.

Balakrishnan , another promoter, wants Seshasayee to resign forthwith. Pai regrets that neither he nor Balakrishnan was paid severance payment when they resigned as CFO and therefore where is the need to pay Rajiv Bansal ? (In other words, the promoters expect the professionals to continue to do what the promoters did. Where then is the need for professionalisation?) He has criticised Seshasayee's argument that the severance money is a protection against Bansal exploiting the information about Infosys by joining competitors.(Seshasayee should have been more diplomatic and obfuscatory.)

There is a risk that overly possessive promoters may end up as demoters of their own creation. NRN cannot simultaneously claim credit for 'walking away' from his company and still keep frustrating his successor. He cannot have the cake and eat it too.

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