Infosys today appointed Independent Director Ravi Venkatesan co-Chairman amid calls from founders to diversify the board.
The board expansion comes against the backdrop of an ongoing tussle between the founders and the management over contentious issues such as CEO salary hike, severance package to former employees and corporate governance standards.
R Seshasayee, Chairman, Infosys in an interview to CNBC-TV18 said Ravi Venkatesan is a natural and appropriate choice for co-chairman.
He also clarified that there are no turf wars between Infosys Directors. The board operates on the principle of consensus, he added.
Ravi Venkatesan, Co-Chairman, Infosys said the Chairman will continue to lead and I will accompany him. The focus will be on aspects of industry transition, and on strategy and execution with Vishal Sikka.
"Seshasayee and I have talked very candidly about how we work together. We have an old and a comfortable working relationship," said Venkatesan.
Below is the transcript of the interview.
Q: In terms of what lies ahead, Ravi has just joined in as the co-chairman. How will he complement you, what led to this decision and what does this mean for Infosys board and the way forward?
Seshasayee: The last several months the board has been of the view that we need to step up even further the engagement that we have with the company. We already have phenomenal amount of engagement from each member of the board and I can say with some degree of certainty that probably we are the only board where the board members work so hard, so intensely and all with the view to support the management. We are very proud of the fact that we have an extremely cohesive board, a hard working board and very cohesive relationship with the management. However given the fact that we have many challenges in the business, in the industry and in the environment, we believe that it will be very important to improve or enhance our bandwidth to be able to cope with this and therefore the board has been of the view that let us get somebody else to share the load from Seshasayee.
In fact I had been asking for this also and the choice is very natural. Ravi has been on the board almost as long as I have been. Ravi was an unanimous and a very appropriate choice to sit along with me as a co-pilot. So, I am happy that he is with us.
Q: What is your plan as you take on as the co-chairman? As far as asserting in terms of corporate governance, board functions, tell us what do you see in terms of the value addition that can come on to the table now?
Venkatesan: I think the thing that people need to realise is that the main thing that is ahead of us is the industry transition that is happening. The business model is shifting and everything is up in the air and Infosys has to make this transformation that Vishal Sikka is driving and that is a big agenda.
My primary focus is on aspects of that. Seshasayee and I have talked very candidly about how we work together. We have an old and a comfortable working relationship and what we have decided is, on some matters, I will take the lead and he and others will support. On other matters, he will continue to lead and drive and I might accompany him. For instance, I have been leading the strategy and risk committee of the board for some years, so I will continue to focus with Vishal Sikka and the management on strategy and execution. He has been doing a lot of work with investor outreach and handling a whole bunch of governance matters. It is natural that he would continue but I might participate in that. So, it is going to be working in this sort of a seamless partnership.
Q: We have seen models in the US, in India earlier on co-chairman, co-CEO roles which haven’t really worked out. How will you streamline the decision making, how will you streamline the cohesiveness between the functions?
Venkatesan: First of all I think co-CEO is a very different game than co-chairman. We are not management, we are not running the company, we are not making operating decisions on a daily basis and so the risk of getting tangled up with each other etc are just not there.
In our case, I think there is a fairly large agenda in terms of what we need to accomplish. I think we have more and more clarity on which things Seshasayee would like me to drive and lead.
Seshasayee: In fact, the board works in a very cohesive manner and there is a very high degree of consultation with each other. In fact there have been several occasions when even without my asking, Kiran would jump into something and Ravi would jump into something and we orchestrate our efforts because we spend so much time together discussing the issues, we know each other’s mind, we come to a common conclusion, so we can act on that basis. There are no turf wars in this.
You might say that in a co-CEO situation, you need to have a very high degree of clarity in terms of who finally takes the decision. However a board does not operate like that, a board operates on the basis of consensus. The board operates on the basis of unanimous view point, which comes as a result of managing different perspectives and coming together in one shape and form. Therefore I don’t think that these two are comparable. As Ravi said, it is merely for adding on to the bandwidth and we will be very elastic in terms of how we fit with each other’s role.
Venkatesan: For all the boards that I serve on, the Infosys board is remarkably free of large egos. I think it is truly one of this very collaborative boards. So, it is going to be quite effortless.
Q: You have been very transparent from the press conference in Mumbai. You had outlined several points, how crucial have the discussions been with founders over the last few months? There have been external consultations with the founders, what role did that play in bringing on Ravi as the co-chairman?
Seshasayee: Let me say this categorically that Ravi’s name did not come from the promoters. It would be very odd to have an introduction of Ravi to the board from somebody outside the board.
Q: Was there a recommendation?
Seshasayee: There was no recommendation about Ravi. As I said very clearly, this is because I wanted the bandwidth to be increased and the board said that let us then get Ravi to take part of your load. So, there we are together. So, this should not at all be interpreted in some manner that this is in response.
If our investors are happy with the decision of the board it certainly pleases us.
Q: Will you play and it will be good if you clarify this point, will you play a peacemaker between the founders and the management?
Venkatesan: No. I don’t see the necessity for a peacemaker role in that sense. However I leave in Bangalore, most of the promoters have been long standing friends. We regularly and routinely run into each other and that sort of friendly relationship will continue. However I don’t see the need for a official peacemaker role.
Seshasayee: I would also add on to say that the peace making role arises only if there is a war. I have consistently said there is no war. There are some intense statements made, there are passionate statements made about a position, about a view point. We have consistently said and I have said this several times that we are very responsible listeners to every view point that comes from our investors, most certainly from the promoters and we will act as an independent board to the best of our ability in the larger interest of the shareholders. Therefore there is no battle on this at all. Unfortunately he will not have this role of a peacemaker because there is no war.
Q: There have been questions by the founders on corporate governance, on several parameters. I won’t go into the details, we have touched upon them but do you believe that there is a case right now to strengthen corporate governance, to expand the strategy, what is your sense on the issue?
Venkatesan: I think the core issue in front of us is the transformation of the business model of the company. That is what everybody needs to focus on. Our challenge as a board and particularly Seshasayee and I as chairman and co-chairman is to get that alignment between all the stakeholders. I really think we are missing what the real game is all about and we need to get back to focusing on that.
Q: Closing statements as far as the road ahead is concerned. There have been some questions raised by Murthy on capitalism, on perhaps aligning salaries, creating a more aligned structure. There have been several areas which I won’t go into but are you currently relooking any areas, any decisions to be able to contribute to further growth?
Seshasayee: I think one of the principle issues that have surfaced as a part of this commentary on governance is issue relating to leadership compensation – CEO, COO compensation, that has been the centre stage, right? As I said earlier perhaps we did not communicate this adequately. We put out everything that is required for the purpose of arriving at the judgement but we could have even communicated even more.
If you take the issue relating to the COO compensation, you would now realise that in fact Vishal Sikka has received this year a lower compensation than even last year and that must be set to internal credit of Vishal Sikka that he held himself responsible for a higher level of performance, an audacious target of performance which he said that this is what he would like to be judged to. In relation to that if performance did not come through for a variety of reasons including external headwinds on which nobody has a control and yet I think it has to be set to his credit that he believed that he should be judged on that basis and you would see that this is exactly what has happened.
Perhaps there was not enough understanding or confidence that when we do a rejiging of the compensation package to have higher variability linked performance or higher stock options of that variability, perhaps the communication was not adequate to make this clear that this truly meant to be driven like a performance linked variable pay should be driven in any contemporary organisation.
Q: Any more changes to the board structure?Seshasayee: We are looking for appropriate and competent people to be added on to the board and we will certainly in course of time would be expanding the board.