Infosys announces performance-linked stock issue

IT major Infosys has announced a unique performance-linked stock ownership programme, which people see as a bid to prevent attrition rates from further escalating.

The board of the company, in its meeting on Thursday, announced Infosys Expanded Stock Ownership Program 2019 that links long term employee incentives with shareholder value creation.

Subject to shareholder approval, the company proposed to allocate 50 million shares equating 1.15% of the company’s equity shares to a broad base of employees, which will vest on challenging performance criteria.

Many analysts tracking the sector, attribute this move as a bid to stop the rising attrition level in the company. The company, in its recent earnings call, said that it will be rolling out more employee-centric programmes as it witnessed its attrition level go up by 50 basis points to 18.3% from 17.8% in the previous quarter.

This program builds on the strong legacy of meritocracy that was established by the founders, and strengthens the company’s efforts towards wealth creation for employees, enhanced shareholder returns and delight for customers, the company said in a statement.

The company has been a pioneer in India, rewarding its employees through stock ownership programs starting in 1994, including the 2015 Incentive Compensation Plan.

The grants allocated to employees over a period of seven years will vest based on three performance criteria -- relative Total Shareholder Return (TSR) against an industry peer group, relative TSR against domestic and global indices and operating lead performance metrics such as total revenue and digital revenue growth, and operating margins.

"Our employees are our biggest asset, and through this program we aim to recognise and reward individuals who are committed to driving value creation for all stakeholders through their continued and consistent performance," Salil Parekh, Chief Executive Officer and Managing Director, Infosys.