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The Infosys management on Monday said that it has taken “careful note of the statements expressed by the company’s promoters” on its decision to revise the pay of Chief Operating Officer UB Pravin Rao. However, it added that a survey of best practices and senior management compensation in key Indian and global companies were factored into the decision.
Vishal Sikka, Chief Executive Officer, said that it is essential for Infosys to see that this revision in Rao’s compensation (with several of the senior leadership team) is focussed on making the company more competitive.
Some founders had openly expressed their displeasure about COO Rao’s new annual compensation package of ₹4.62 crore in fixed pay and ₹3.88 crore as variable compensation.
He will also receive 27,250 restricted stock units and 43,000 stock options vested over four years. The stock options are based on his performance in fiscal 2016.
In a letter, founder Narayana Murthy, said: “Giving nearly 60-70 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 6-8 per cent is, in my opinion, not proper.”
In a recent resolution, Rao’s salary increase was supported by majority shareholders, with 75 per cent of institutional investors voting in favour, even though 67 per cent of retail investors voted against it
An Infosys spokesperson said the company has the responsibility to attract and retain top quality talent to be effective in its transformation journey. “In this context, the company undertook a comprehensive survey of best practices and benchmarked senior management compensation with key Indian and global companies,” the statement said.
A company spokesperson explained that the cash component of Rao’s compensation has decreased from ₹5.2 crore (including annual cash bonus) in fiscal 2016 to ₹4.6 crore for this fiscal, a decline of 10.6 per cent.
Further, the compensation structure revised in October last year, reduces the proportion of cash component in the total compensation and has introduced higher stock incentives, which is to be vested over a four-year period, the spokesperson added. This was rolled out for the entire senior leadership including Rao.
Infosys stock closed marginally lower, by 1.1 per cent, at ₹1,009 on the BSE on Monday.
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