Phaneesh Murthy has a slow and measured way of speaking. He chooses his words carefully, contemplating what he is going to say and how he is going to say it. It is obvious that there is a brilliant mind at work here.
So, how did such a brilliant mind make the same mistake twice of getting into a “relationship” with a female subordinate colleague and then having to face “sexual harassment” charges and finally having to face the ignominy of being sacked for that misdemeanor.
If you look at Phaneesh Murthy’s career, it has brilliance written all over it. He did his BTech from IIT and is an MBA from IIM-Ahmedabad. He was absorbed by Infosys from the IIM-A campus itself in the year 1987. By the year 2000, Phaneesh Murthy had risen to the post of Director at Infosys and was credited with getting it big-ticket international business. He was so popular that he was being considered for the top post in Infosys. However, in 2002, he got into serious trouble after his personal secretary Reka Maximovitch accused him of sexual harassment. Infosys was compelled to pay Reka Maximovitch a whopping sum of USD million in May 2003. Of course, Phaneesh Murthy was sacked from his job.
A lesser man would have crumbled at the ignominy and embarrassment. But not Phaneesh Murthy. He rose like a phoenix from the ashes and set up a company called Quintant. This company did so well that it soon attracted the attention of iGate, a billion dollar organization. In a brilliant deal, Murthy Phaneesh Murthy sold off his stake in Quintant in return for equity in iGate and the prime position of Chief Executive Officer (CEO) and President.
At iGate, Phaneesh Murthy’s skills came to the fore and he synergized the operations of iGate, making it a lean and mean organization. Soon thereafter, he collaborated with Apax Partners, a private equity investment group, and got iGate to buy out Patni Computer Systems for USD 1.2 billion.
However, while the Patni acquisition made iGate into an I. T. powerhouse, the stock market was not very enthused at the valuations. iGate’s stock crashed over 25% in the last two years after the Patni acquisition. In January 2011 itself, when the Patni deal was announced, iGate’s stock price crashed 22%.
Phaneesh Murthy was, however, basking in the role of a “mega deal maker” but just when everything seemed to be going right for him, the curse came into play a second time. He got into a “relationship” with Araceli Roiz, the Head of Investor Relations at iGate. That relationship soured and Araceli Roiz complained against him for “sexual harassment”. Smartly, Araceli Roiz engaged the same lawyer who had appeared for Reka Maximovitch and extracted compensation of USD 3 Million from Infosys. The lawyer knows all the (dirty) secrets of Phaneesh Murthy and will use that to extract compensation from iGate.
In the wake of this sexual harassment complaint, iGate dismissed Phaneesh Murthy from service for violation of terms of employment, thereby depriving him of compensation which could have run into several millions of dollars.
However, all is not lost for Phaneesh Murthy. His cool and calculating mind saw the crises coming and he stealthily sold about 1,50,000 shares of iGate for about USD 2.7 million. Of this, 104,459 shares were sold on March 6 at a price of $18.88 and 40,000 shares were sold on April 19 at $17.1 each. The timing was impeccable because as soon as the news of the scandal broke out, iGate’s stock price crashed 10%. Phaneesh Murthy still holds 655,292 shares in iGate worth about USD 10 million.
Now, the question is what does the future hold for Phaneesh Murthy. Will he be like the cat with 9 lives and resurface again? In all probability, he will survive as have several other top-notch CEOs like Pradeep Srivastava (Chief Marketing Officer of Idea Cellular), David Davidar (Head of Penguin in Canada), C. Venkatramana (Chairman and Managing Director of Nalco), Mark Hurd (CEO of Hewlett-Packard Co) who got caught in similar “sexual harassment” charges. One only hopes that this time he is more careful and keeps his libido in check.