Pai backs Murthy; says Rao's pay spectacular, not performance

Backing Infosys co-founder N R Narayana Murthy's view that pay hike to COO U B Pravin Rao was "not proper," the company's ex-director T V Mohandas Pai today said the salary in this case is "spectacular" but performance is not.

Alleging that Infosys' board was "misguided", Pai said the ""fundamental problem" was the pay hike given earlier to CEO Vishal Sikka "without any justification", because of which other executives were also expecting higher pay.

He said salary levels in India cannot be compared with that in the US. "I totally agree with Murthy that it was not proper. We should have Indian norm for compensation; we can't follow American norm, we (Infosys) are not an American company," Pai, who was also formerly Chief Finance Officer of Infosys, told PTI in a telephonic interview.

The comments come at a time when a row has erupted again between some founders and the current management of the firm.

Pai argued that at a time when the salary for entry level software engineers had not been raised in the IT industry in India for the past seven years, it is totally wrong to hike the compensation for top-level executives.

"The starting salary for software engineers has not gone up for the past seven years; and the inflation in the last seven years is about 60 per cent," he said.

The salary of Chief Operating Officer (of Infosys) three-four years ago was Rs 3.5 crore or Rs 4 crore. Now, it has gone up to Rs 12 crore, according to the Chairman of Manipal Global Education Services and Aarin Capital. "I think unless people at the bottom (software engineers) get good, regular hike, paying people at the top for doing nothing...for long period of time is totally wrong," Pai said.

Without naming Rao, he said, "That too we have been paying (compensation hike) for a person who has been in the company for 30 years." "If somebody has done spectacularly well, then it's okay. Performance is not spectacular. Salary is spectacular," he said.

"I think the Board was misguided. You hired a CEO (Vishal Sikka). You are forced by the CEO to increase (his) salary from USD 7 million to 11 million. There was no justification," he said.

"When you see CEO getting so much, then COO will say: what about me? I cannot be paid one-tenth of what CEO is being paid," he said.

"The fundamental error was increasing CEO's salary from USD 7 million to 11 million without any justification," Pai further said.

Raising the CEO's salary was the "fundamental problem," and it could now lead to top-level executives and executive committee members seeking a pay hike, he said.

"You can't compare compensation levels with that in the US because employees (of Indian companies) are all here. A software engineer is paid Rs 3.5 lakh. A person who is COO gets paid Rs 12 crore or Rs 13 crore. 400 times. You have not raised the software engineer's salary for 7 years," he said.

Murthy had yesterday said the compensation hike to Rao approved by the board in February was not "proper" and "will likely erode the trust and faith of the employees in the management and the board."

"Giving nearly 60 to 70 per cent increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 to 8 per cent is, in my opinion, not proper," Murthy had said.