Rao's compensation in line with global standards: Infy

As Narayana Murthy continued his verbal tirade against the current management, Infosys on Monday issued a statement, saying the company revised Chief Operating Officer Pravin Rao’s compensation in line with global standards and aimed at making the firm more competitive.

In a statement issued to Deccan Herald, the company stated that Infosys has the responsibility to attract and retain top quality talent to be effective in the transformation journey that the company has embarked upon. “The compensation structure revised thereafter reduces the proportion of cash component in the total compensation and has introduced higher stock incentives; it was rolled out for the entire senior leadership including COO,” states the company.

Infosys also stated that the revision of COO salary details was disclosed in the stock exchange filings on October 14, 2016. The company’s Board got 67% of shareholders’ approval during the voting which was disclosed to the stock exchanges on Saturday.

“The cash component of his compensation has decreased from Rs 5.2 crore (including annual cash bonus) to Rs 4.6 crore, a decrease of 10.6%. Given the four-year vesting period of stock, the net increase in Rao’s compensation for FY18 will be 1.4%. This could go up to 33.4% in the fourth year, assuming similar grants are made in subsequent years based on company and individual performance,” states the company.

Murthy on Sunday sent a mail to DH accusing the company of poor governance standards and expressed unhappiness over the compensation hike to COO. “Giving nearly 60-70% increase in compensation for a top-level person when the compensation for most of the employees in the company was increased by just 6-8% is, in my opinion, not proper,” he had stated.

Commenting on the development, Infosys Chief Executive Officer Vishal Sikka said that Rao’s commitment and contribution to the company has been immense, and his partnership over the last three years has been critical to the successes and growth of the company. “It is essential for us to see that this revision in his compensation, as with several of our senior leadership team, is focused on making Infosys more competitive, and is benchmarked against peers, and it is critical for us to retain key talent and align the long-term interests of our leadership team with that of our shareholders,” said Sikka.

The company also stated that the Infosys Board would like to acknowledge the sentiments of shareholders who have not voted in favour of the resolution, and has also taken careful note of the statements expressed by the company’s promoters.

“This board views this as important feedback as it continues to work with all stakeholders to ensure the long-term interests of the company.” According to analysts, IT companies are forced to raise the emoluments at the higher level to retain the priced executives who have the potential to boost business.

“While the top-level hike is depended on the company’s performance, the bottom level is not like that. Also, the top-five IT services companies hired around 60,000 engineers from campuses this fiscal, as against little more than 100,000 last year,” said an analyst. Markets on Monday saw Infosys stock slip by 1.11% to Rs 1,009.45.