OUTSIDERS NOT WELCOME

INFOSYS HAS HAD ONLY TWO EXTERNAL CEOs, THE REST BEING CO-FOUNDERS. BUT THERE HAVE BEEN SEVERAL INSTANCES OF WHISTLE-BLOWING DURING THE STINTS OF OUTSIDERS VISHAL SIKKA AND NOW SALIL PAREKH. ANALYSTS SAY IT COULD BE FRICTION CAUSED BY THE TRANSITION FROM A PROMOTER-LED MANAGEMENT TO A PROFESSIONAL LED ONE.

- DEBOJYOTIGHOSH AND ANSHUL DHAMIJA

EARLY IN NOVEMBER, McDonald’s Corp. terminated the services of its president and chief executive Steve Easterbrook, 52, because he had a consensual relationship with a colleague. The fast-food giant, in a filing to the U.S. Securities and Exchange Commission (SEC), said, “He [Easterbrook] violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee.” McDonald’s non-fraternization policy doesn’t allow employees to date subordinates, both direct, or indirect. And the chief executive is no exception. “He was a high-performing CEO and there was nothing against his performance. But he made a few transgressions and the board dispassionately fired him,” says Shriram Subramanian, founder and managing director, InGovern Research Services, a corporate governance advisory firm.

Around the same time, the board of India’s blue-chip IT-services firm Infosys was battling to solve issues regarding its senior leadership—not of sexual misconduct, but of other alleged unethical practices. Anonymous whistle-blowers’ complaints have accused the company’s CEO Salil Parekh and chief financial officer Nilanjan Roy of procedural lapses and aggressive accounting practices, among other things. According to InGovern, the whistle-blower complaints can be broadly categorized into three buckets: seemingly trivial complaints on the CEO’s travels and deductions on taxes; ones that relate to bidding for contracts with low or no margin; and of over-recognizing revenues, hiding costs, and consequently boosting margins and profits. It was also alleged that information was withheld from the auditors and the board.