Nandan Nilekani, the 62-year-old co-founder of India’s second-largest software services exporter, returned to the Infosys board after an 8-year hiatus on Thursday as the firm’s chairman, a move that investors expect would help end a bitter stand-off between founder N. R. Narayana Murthy and the company’s board.
In an announcement, the Bengaluru-based company said that the board had unanimously approved Mr. Nilekani’s appointment as the non-executive chairman of the board “effective immediately.”
Seshasayee exits
R. Seshasayee, chairman of the board, along with former CEO and managing director Vishal Sikka, Jeffrey Lehman and John Etchemendy had stepped down from the board, Infosys said in a statement.
Mr. Nilekani’s return was welcomed by the outgoing chairman Mr. Seshasayee, who said, “Under Nandan, Infosys will build a cohesive management team...I believe these changes will infuse further confidence to the stakeholders in executing the transition plan and in reinforcing the strategy for the future.”
Mr. Nilekani’s appointment also saw Ravi Venkatesan step down as co-chairman, while staying on as an independent director.
An electrical engineer from IIT Bombay, Mr. Nilekani was the CEO at Infosys from 2002 to 2007 and also served as co-chairman of the board before his departure in 2009 to head the Aadhaar project.
Mr. Nilekani’s return was precipitated by Mr. Sikka’s abrupt resignation as CEO on August 18 amid a bitter and public row between the board and Mr. Murthy, with both sides trading a volley of charges and counter charges.
Several institutional investors had urgently called for Mr. Nilekani’s return to help restore investor and customer confidence in the company.
Mr. Nilekani’s appointment is “confirmation of the fact that there was a split down the line; within the board and also between the board and the founders,” said Arun Kejriwal of Kejriwal Research & Investment Services, an investment advisory firm.
“Bringing someone back who has a clean image is to set things right and restore some sort of credibility for the beleaguered company,” said Mr. Kejriwal. He added that there could be some positive movement in the stock, though, largely, the development had already been priced in.
The board would actively consider a broad-based shareholder consultation as a key part of its overall engagement initiatives with stakeholders, Mr. Nilekani said in the statement.
V. Balakrishnan, a former CFO said prior to Mr. Nilekani’s appointment, “We need a global face to pull the company up and restore confidence of investors and shareholders.”
Infosys shares fell almost 10% on August 18 and lost more than 5% in the next trading session on August 21.
