(This Aug 25 story corrects paragraph 21 to show U.S.-listed shares trade on NYSE, not Nasdaq)
MUMBAI/BENGALURU (Reuters) - The new chairman of Infosys said his priorities were to find a CEO, reconstitute the board and shape future strategy, as he sought to calm investors frazzled by the recent shock exit of the firm’s chief over a prolonged row with its founders.
Nandan Nilekani, himself one of Infosys’ seven founders and a former CEO, was named chair on Thursday in a victory for the founders, who led by Narayana Murthy have waged an acrimonious battle with the board for months over alleged corporate governance lapses.
Vishal Sikka, the first CEO of Infosys drawn from outside its founders, resigned last week blaming Murthy for creating an “untenable atmosphere”, sparking a sell-off and wiping billions of dollars off Infosys’s market value.
“I have come in to focus on the future of the company, I have come in to take the company forward and deal with its challenges,” Nilekani told investors on a call on Friday, adding he would stay with the IT firm for as long as needed.
Earlier in the day, he tweeted: “Joined @Infosys at 26, re-joined it at 62. Life does turn full circle!”
Credited for increasing Infosys’ revenue to $2 billion from $500 million during his 2002-2007 stint as CEO, Nilekani said his key task would be to assist in the search for a new leader from within the company or outside.
India’s second largest software services firm has named recruitment firm Egon Zehnder to help find a CEO who will be able to manage a large global firm, accelerate strategy execution and oversee its transformation, he said.
Nilekani, who said his inbox was already filling with names of potential applicants, stressed that not just competence, but cultural fit would be an important criteria, making internal candidates “very strong contenders.”
Chief Operating Officer Pravin Rao has been named interim CEO and will remain in the post until a replacement is found.
Disagreements between the founders, especially Murthy, and the board have centered around a rise in Sikka’s pay, the acquisition of automation firm Panaya for $200 million and a severance package offered to a former finance chief.
The Infosys board, which has denied any wrongdoing and blamed Sikka’s resignation on Murthy’s continuous assault, offered a tacit apology to the founder on Friday, terming the differences of opinion with him as “unfortunate”.
“The board wishes to express that it was not its intention to cause Mr Murthy or any other affected person any personal distress or anguish while stating its point of view,” Infosys said in a statement issued after a board meeting chaired by Nilekani.
Nilekani, who addressed the media after the meeting, dodged questions on the board’s sudden u-turn over the course of the past week and on any future exits. He instead recounted Murthy’s contribution to Infosys and said he would work to resolve differences over corporate governance.
“I personally will ensure Murthy gets the respect he deserves,” Nilekani said.
The management reboot comes at a time when the broader IT services sector has been challenged by slowing growth.
Nilekani, refrained from commenting on Infosys’ future strategy apart from saying it would be aligned with global developments and that he saw tremendous opportunity in software, data and machine learning.
He said a committee of directors has been formed to work with the interim chief executive and management to review and refresh the company’s strategy by October.
“I have a very open mind. I will request our strategy team to take a complete inventory of all things that are going on,” Nilekani said, adding the current strategy would be reviewed on the basis of market size, growth and other factors.
Nilekani, who along with his family owns about 2.3 percent of Infosys and, according to Forbes, is worth $1.72 billion, also needs to tackle retention of top level executives critical to rolling out strategy.
Infosys shares plumbed a more than three-year low on Monday but have risen since on expectations of Nilekani’s return.
Indian markets were closed for a public holiday on Friday, but Infosys shares rose nearly 1 percent in early trading on the New York Stock Exchange.
Reporting by Sankalp Phartiyal and Aby Jose Koilparambil, additional reporting by Promit Mukherjee and Arnab Paul, writing by Aditi Shah; Editing by Euan Rocha and Keith Weir
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