Decision to appoint Ravi Venkatesan as co-chair to Infosys board unnecessary: IiAS

Infosys decision to appoint Ravi Venkatesan  as  Co-Chairman  is a move in the wrong direction, feels IiAS. In fact, the Bangalore-based software major has been using up its energy in responding to questions raised on its governance. Infosys is fighting the wrong battle, IiAS said in its note.

While promoters of Infosys, most notably Narayana Murthy, have voiced concerns over the above-normal payout given to its top executives, Infosys’ performance in Q4 of last fiscal year was uninspiring.

The software services exporter reported a 2.8 percent quarter-on-quarter (QoQ) fall, but 6.4 percent year-on-year growth in consolidated net profit of profit to Rs 3,603 crore for January-March quarter, which was higher than CNBC-TV18 estimates of Rs 3,570 crore.

The IiAS report further goes on to add that with  increasing  criticism  from  Narayana Murthy on Seshayee’s ability to lead the board, Infosys’ board seems to have caved in and added another layer of leadership at the board level. While this may have been done to appease Narayana Murthy,  IiAS believes this decision was unnecessary.

The appointment of a Co-Chairman also changes the power balance at the board. While it may not undermine Vishal Sikka’s position – it will, in effect, add a layer of complexity to his influencing ability. Functioning could be eased if the Board clearly articulates the roles and responsibilities of the Co-Chairs.

Infosys’ transparency and disclosure levels for long have been  better than most but current lapses in disclosures relating to Vishal Sikka’s remuneration and his contract have given detractors a reason for outcry.