 "N R Narayana Murthy")
N R Narayana Murthy says not even in his “wildest dreams” did he imagine he would come back to Infosys again. But that’s exactly what the Infosys co-founder did today, becoming the executive chairman of the information technology major for five years.
This is the first time in corporate India that a retired chairman has been called back to head the same company in an executive capacity.
That’s not the only surprise. In a move that runs counter to his often-publicly stated principle, Murthy’s son, Rohan Murty, will be executive assistant to the chairman, with a term co-terminus with that of his father. Though Murthy, at a media conference, insisted his son would have no leadership role in the company, it is the first time a second-generation family member of the company’s founders is directly involved. Murthy defended the decision, saying he was comfortable working with his son after he had retired from Infosys in 2011. (TAKING STOCK)
The reason for the sudden recall of 66-year-old Murthy seven years after he gave up his executive post and about two years after he retired as non-executive chairman is obvious: Infosys has been grappling with a string of disappointing results and loss in market share. Murthy replaces K V Kamath, who has now been named lead independent director.
Current Executive Co-chairman S Gopalakrishnan would be re-designated executive vice-chairman, while managing director and chief executive officer S D Shibulal would continue to hold the post, Infosys said in a statement. All these decisions are subject to approval by stakeholders. The board would meet on June 15 to consider the resolutions for convening an extraordinary general meeting to seek approval from shareholders.
Kamath said the step acknowledged calls from shareholders to strengthen the company’s executive leadership. “The board has taken this step keeping in mind the challenges the technology industry and the company face,” he said.
Murthy has asked for a token pay of Re 1 a year during his five-year term. His son would get the same amount, as would Shibulal and Gopalakrishnan.
Murthy, who co-founded Infosys in 1981 along with six others, had retired in August 2011, at 65. The last time Murthy chaired the Infosys board in an executive role was in 2006, after which he became non-executive chairman.
Murthy said Kamath had requested him to return. “This 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 intend to do my best to add value to the company in this challenging situation,” he said.
His appointment comes at a time when the company is lagging its peers in every respect. During the last many quarters, the company’s numbers have been way below the industry average. In fact, its latest growth forecast was much lower than industry body Nasscom’s estimate for this year. Last year, Infosys missed the lower end of its revenue forecast at least twice.
Recently, even Cognizant, a company founded much after Infosys, overtook the latter to become the second-largest offshore-centric IT services company. Company insiders who know Murthy well say though he had retired from the company, he was concerned about Infosys’s deteriorating performance and had expressed this concern at the company’s annual strategy meeting in January this year. He was invited to the meeting to give the keynote address, as chairman-emeritus.
Industry welcomed Murthy’s comeback. “Murthy is an iconic leader who has played a key role to shape the Indian technology industry and we welcome him in his new role,” said Som Mittal, president of Nasscom. Rival Wipro was also generous in its praise. “We wish Murthy and Infosys the very best. Murthy is an industry icon with a track record,” said a Wipro statement.
Murthy has come with his own terms and conditions. To function more effectively, Murthy has desired a ‘chairman’s office’ and has requested the company to allow him to create his own team that would assist him during his tenure. Son Rohan is a part of that team. Murthy said he intended to bring some key people who worked with him at his venture capital firm Catamaran Ventures.
When asked about the retirement rule of 60 years, Kamath said the board had considered the external, internal and stakeholders responses. “Our institution comes first; all these things regarding age are facilitative in a particular context. When the context changes, you need to act in the interest of the institution.”
