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Infosys Co-Chairman: Feud With Company's Founder Will Make It More Challenging To Find Next CEO

Michael Novinson
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Infosys Co-chairman Ravi Venkatesan said the public spat between the company's founder, board and former CEO over governance issues would complicate the search for the next leader.

"There is no doubt that, under the circumstances, it will be a non-trivial task to find a great successor. We're mindful of that," Venkatesan (pictured) told investors Friday morning. "Given the events of yesterday and today, we expect new candidates would be a little circumspect."

The search for a new chief executive follows the shocking resignation of Vishal Sikka due to a long-running feud with Infosys founder Narayana Murthy, who claimed in recent emails that Infosys's independent directors felt that Sikka was more CTO material than CEO material, according to media reports. Sikka joined Infosys three years ago after serving as SAP's CTO.

[Related: Infosys CEO Pens Shocking Resignation Letter, Blasts 'Continuous Drumbeat Of Distractions' From Company Founder]

"I cannot carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks," Sikka wrote in a letter to Infosys employees, which he shared in a blog Thursday.

Infosys's stock is down $1.30 (8.13%) to $14.64 per share, the company's lowest trading price since early May. Sikka was supposed to join Venkatesan and interim CEO Pravin Rao on the investor call but was a no-show, with Venkatesan indicating that Sikka had probably been awake for the past 36 hours.

Venkatesan said Infosys's board continuously affirmed to Sikka and the management team to try and ignore the noise and stay focused on Infosys's clients, business and employees. In fact, Venkatesan said he went as far as publicly signaling his support for Sikka as well as Infosys's strategy and direction, but ultimately to no avail.

"Vishal decided that getting up every morning and having to defend himself was too much of a distraction to focus on the transformation, and this is not how he chooses to spend the best years of his life," Venkatesan said during the call.

Going forward, Venkatesan said Infosys's board plans to engage more with investors and provide more air cover to the company's management team and next CEO so that they can stay focused on what they need to do. Murthy still owns a 12.75 percent stake of Infosys and has in the past questioned pay raises given to Sikka and Rao, and well as the size of severance payments given to others.

Infosys's board has engaged Murthy in dialogue for the past year to understand his concerns and try and find solutions within the company's operating framework without compromising the company's independence. However, Venkatesan said the events of the past 48 hours would make it somewhat more difficult for Infosys to provide Murthy with a mentorship or informal role within the company.

The issues began when a whistleblower raised concerns about falling standards of governance at Infosys, Venkatesan said. The company responded by bringing in independent investigators, who went through one million documents and were given unfettered access to all of Infosys's employees but didn't find any shred of evidence whatsoever, according to Venkatesan.

"Many people thought this would be the end of the matter, but a small number of people did not believe the disclosure went far enough, or the independence of the investigation went far enough," Venkatesan said. "It caused a lot of personal distress and anguish for the CEO, which is why he decided to call it a day."

In a statement following Sikka's resignation letter but before the investors call, Murthy continued to question the credibility of the investigation. Murthy said he voluntarily left Infosys's board in 2014 and is not seeking any money, power or positions for his children.

"Several shareholders who have read the whistleblower report have told me that it is hard to believe a report produced by a set of accused, giving a clean chit to the accused, and the accused refusing to disclose why they got a clean chit!" Murthy said in the statement. "They say that this is not the way an impartial and objective investigation should be held."

Although the board remains respectful of Murthy's views and admires the company he built, Venkatesan said Infosys needs to focus on the way forward.

"Despite all the turbulence around, the management team has been able to deliver a very, very credible operating and financial performance for the last several quarters," Venkatesan said. "We hope that some of the noise will dissipate as the performance speaks louder and louder for itself."

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