Infosys hands out a bounty to 4 top executives: ToI

Generous stock-based incentives boosted the total compensation of four senior executives at Infosys by over 50% in the previous fiscal year, according to the annual report of India’s second-largest software services company, which also announced the creation of a ‘committee of directors’ tasked with advising the management.

The report for fiscal 2017 shows that presidents Rajesh Murthy, Sandeep Dadlani and Mohit Joshi, and deputy chief operating officer Ravi Kumar S each received total compensation of over Rs 14 crore. The increase, over the compensation in fiscal 2016, was mainly in the form of performance-based stock incentives that will vest over four years.

Such hikes in executive compensation based on variable pay and stock incentives — which Infosys regards as a tool to make the company more competitive —has been one of the subjects of heated debate roiling the firm in recent months. Last month, founder NR Narayana Murthy had expressed anger over the steep hike in compensation to chief operating officer UB Pravin Rao.

In fiscal 2017, Rao’s total compensation rose to Rs 11.80 crore from Rs 8.14 crore, including incentives. Rao, based in Bengaluru, earns less than the presidents, who are posted abroad and earn salaries denominated in foreign currency. The annual report said the ‘committee of directors’, which includes co-chairmen R Seshasayee and Ravi Venkatesan as well as board member DN Prahlad, “will support and advise the management in executing the company’s strategy”.

Shareholder advisory firms are of the view that while “unusual”, the move is not “unheard of “. “It will be interesting to see what the exact role of the committee will be,” said Shriram Subramanian, MD of shareholder advisory firm InGovern, who expects more questions to be raised at the annual general body meeting about the actual duties of the committee.

The previous AGM, in June 2016, had seen shareholders question the pay hike given to CEO Vishal Sikka, though they approved the increase in a vote. Infosys also received their approval for increase in COO Rao’s compensation, which included annual fixed salary of Rs 4.62 crore, annual variable compensation of Rs 3.87 crore and performancebased stock options of Rs 4 crore. Murthy had slammed Rao’s compensation increase . Infosys had defended Rao’s hike. “It is essential for us to see this revision in his compensation, as with several of our senior leadership team, is focused on making Infosys more competitive, is benchmarked against peers,” said Sikka in a statement in April.

Excluding the stock incentives, the company’s top executives, including Rao, saw their fiscal 2017 remuneration fall by 12-25%. Chief financial officer MD Ranganath’s total compensation rose over 40% to Rs 9.25 crore. He was granted Rs 4.5 crore in stock incentives. Excluding the stock incentives, his remuneration for the year dropped 26%. Infosys has been battling a slew of issues — including questions on governance standards and slowing industry growth.

It is also dealing with the fallout of former chief financial officer Rajiv Bansal’s outsized severance, which has been termed ‘hush money’. The annual report did not address that issue. The stock-based compensation increases come at a time when rank-and-file employees have yet to receive their annual hike. Infosys has delayed salary hikes for fiscal 2018 until July for junior employees while senior employees will see an even longer delay, Rao told employees in an email two weeks ago.

Murthy had said blame for the company’s troublesome remuneration policies lay with the board and had suggested Prahlad be named head of the nomination and remuneration committee. While Prahlad has a seat on the remuneration committee, he was not named chairman. Indian IT employees are facing an uncertain future. IT companies have been aggressive in letting go of non-performers in their annual appraisals and hikes across the industry will be in single digits as growth is harder to come by. Nasscom has delayed releasing agrowth target for fiscal 2018.

Source: ToI – 24 May 2017