Mumbai: NR Narayana Murthy may be back at the helm of Infosys, but this has not gone down well with investors and industry observers. Institutional Investor Advisory Services (IIAS), an investor advisory firm, believes that by reappointing Murthy, Infosys has compromised on the very principles it so strongly advocated during its rise to the top.
The argument is that Murthy's appointment has led to amendments to at least three key principles of Infosys:
- the retirement age for executives and non-executives.
- that founder children do not take up executive roles.
- bringing back the post of executive chairman, which had been done away with at Murthy's retirement.
The sudden manner in which Murthy was reinstated through a board meeting called on the basis of a shareholder notice too has raised eyebrows.
"Why didn't Infosys inform stock exchanges that they have received a notice from a shareholder and they are likely to take it to the board on June 1, because then they had the knowledge? They can't say this board meeting was convened all of a sudden on June 1. I don't think these two things are going together, it can't be sudden," said Anil Singhvi, founder director of IiAS.
The other issue IiAS has raised has to do with the re-appointment of two independent directors - Omkar Goswami and DM Satwalekar.
IiAS argues that Goswami has been on the Infosys board for 13 years and Satwalekar for 16 years - more than the maximum nine years allowed by the company. So if the two can no longer be counted as independent directors, only 44 per cent of the Infosys board is independent whereas it should be 56 per cent.
"Their AGM resolutions talk about appointing two independent directors who have been on the board for more than 15-16 years whereas a paragraph on the company's corporate governance in the annual report of 2012-13 talks about three terms of three years each. That means every independent director shall retire after nine years," said Singhvi.
IiAS is also opposed to the re-appointment of BSR & Co as auditors of the company as they have been auditors for 15 years and no auditor rotation has happened in seven years. IiAS, however, supports proposals to re-appoint SD Shibulal, R Seshasayee and Srinath Batni as directors and the appointment of Leo Puri to replace Sridhar Iyengar.
Infosys has refused to comment on this report. All eyes are on the company's AGM on Saturday - if Murthy's reappointment as a director is approved, a meeting will be called to appoint him executive chairman for a five-year term.