Nasdaq-listed IT company iGate's share price surged 6.5% to a 13-year high on Tuesday, seemingly in reaction to the imminent announcement of Vemuri as the company's CEO.
With this, Vemuri has already had a 20% impact on iGate's share price. The shares rose by 8.5% on August 28, the day Vemuri announced his resignation from Infosys and speculation started about his moving to iGate. They rose by another 4.4% the following day, and remained sluggish thereafter, till it received the latest boost on Tuesday.
The St Stephens, Delhi, and IIM-Ahmedabad alumnus has been Infosys's head of America operations and its global head of the manufacturing and engineering services vertical. Vemuri, who joined Infosys in 1999, was also a board member and one of the company's highest paid executives.
Sources told TOI that Vemuri would receive a compensation package of about $3 million (Rs 19 crore), in addition to stock options and performance-linked bonuses. In Infosys, he received Rs 4.91 crore as cash compensation in 2012-13.
iGate declined to comment on its next CEO. The position became vacant in May when the company fired incumbent Phaneesh Murthy for not reporting to the company his relationship with a subordinate.
In July, iGate co-founder and co-chairman Sunil Wadhwani, had said, "Our CEO search is proceeding well, and we believe this is a very sought-after position, given iGate's opportunities for growth, given our leadership in the business outcomes space, given our culture of innovation, our service excellence and our status as a leading employer. Our goal remains to have a new CEO on board in the fall." The fall season has just begun, so an announcement looks imminent.
iGate's share price touched $25.89 on Tuesday. The last time it touched these levels was in 1999 and 2000, during the internet boom. On March 8, 2000, it touched its peak of $65.17. It slumped to less than $2 following the bust in 2000-01 and rose steadily to about $10 in 2007-08. It slumped again during the recession, and then rose to a high of $24.86 in November 2010.
In the immediate aftermath of Murthy's exit, the share price fell by 13.5%, to a low of $14.18 on May 22. But following the announcement of better-than-expected results for the company's June quarter, the price recovered its losses and rose rapidly.
In the first three trading days after the results were announced in early July, the share price rose by 17%. The share price continued its uptick through July, but remained sluggish through most of August. It resumed its rise from the day Vemuri resigned from Infosys, and now it is 83% higher compared to the lows following Murthy's exit.
Phil Fersht, CEO of US-based IT advisory firm HfS Research, told TOI a few weeks ago that iGate has been demonstrating strong focus on outcomes and aggressive sales performance against tough competition, especially in financial services. "Also, their impressive marketing push in the last year is bearing fruit, with investor confidence rising. iGate is in the safe hands of Gerhard Watzinger (interim CEO) and Sujit Sircar.(CFO). While Phaneesh was a good cheerleader, the company will move on quickly with its competent leadership," he said.
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