On Friday, Infosys announced it would start a hunt for a CEO after incumbent SD Shibulal expressed his desire to step down earlier than his scheduled retirement in March 2015.
In a release, India's second-largest software services exporter said Shibulal would retire as CEO, MD and board member "either on the date of the last board meeting before his superannuation -- January 9, 2015 -- or when his successor is ready to assume office, whichever date is earlier."
Also read: Infosys starts search for new chief executive
The development assumes significance in the backdrop of nine top-management exits that have taken place since founder Narayana Murthy re-joined the firm in July last year as executive chairman and as, at a recent analyst call, he said he was "not happy" with Infosys' performance in the past few years.
"This is how successions happen," Infosys' lead independent director KV Kamath said in an interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar. "There is a date which has been put in, which is very clear but if you have completed all [replacement search] processes earlier than that, what Shibulal has done is offered to step down from that date."
"No CEO [search] process takes less than six months or so. We should not read anything into the statement that Shibulal would step down on that date or earlier. It is part of a routine process."
Below is the edited transcript of Kamath's interview with CNBC-TV18
Latha: After the announcement that the retirement of CEO Shibulal will be little earlier than we were given to understand and that the board is searching for a CEO the shares of Infosys just fell a bit. Worries of top level exits and trouble with top level personnel continues, your comments?
A: This is a planned exit. Shibulal was to retire in early March and the last board meeting is the January board meeting so that is just it and nothing more should be read into that. I don't think this is anything else than what we have said in the press release.
Reema: The statement is that he will look to resign on the date of the last board meeting before his superannuation that is January or when his successor is ready to resume office whichever date is earlier. So if the nomination committee finds a candidate, you decide on a CEO then perhaps Shibulal is ready to resign earlier than even the January and much ahead of his planned exit in March. So should that in anyway be read as possible tensions at the highest levels?
A: Not at all, this is how successions happen. There is a date which has been put in which is very clear but if you have completed all processes sometime earlier than that, then what Shibulal has done is offered to step down from that date.
No CEO [search] process takes less than six months or so. We should not read anything into the statement that Shibulal would step down on that date or earlier. It is part of a routine process.
Latha: What is not routine definitely is eight-nine exits at such a high level in such a star company. Is that over and done with -- the changes at the top level?
A: I have always maintained that in a company with a talent pipeline, there will always be exits and we have to take it as it comes. What is more important to me is: do you have a pipeline, which is strong enough to actually deliver on whatever agenda has been set at the top. That clearly is there. So this will happen and particularly when there is a transition, these are to be expected.
Reema: Is the first preference for the next CEO to be internal, you will look more at the candidates that you already have internally in Infosys?
A: We will look at both the internal as well as the external slate and then decide whatever is best in the interest of all stakeholders of the company. So there is clear articulation that we will look very hard at an internal slate and equally we will look very diligently at an external slate and then take a call.
Infosys stock price
On April 11, 2014, Infosys closed at Rs 3235.85, up Rs 29.25, or 0.91 percent. The 52-week high of the share was Rs 3847.20 and the 52-week low was Rs 2190.00.
The company's trailing 12-month (TTM) EPS was at Rs 142.80 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 22.66. The latest book value of the company is Rs 627.95 per share. At current value, the price-to-book value of the company is 5.15.
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