Infosys CEO Salil Parekh’s annual salary jumped by 88 percent
Infosys CEO Salil Parekh has received a whopping 88 per cent increase in annual remuneration to Rs 79.75 crore, making him one of the highest paid executives in the country. The software services firm has sought shareholders’ approval for the reappointment of Parekh as chief executive officer and managing director for a second five-year term beginning July 1.
According to the company’s annual report released on Thursday, 58-year-old Parekh took a salary of Rs 71.02 crore in the financial year ended March 31, 2022. This included Rs 52.33 crore from RSUs (restricted stock units) given to them earlier.
Infosys co-founder and chairman Nandan Nilekani voluntarily opted not to receive any remuneration for his services rendered to the company. In the shareholder notice, the firm justified the fat growth, citing industry-leading growth in recent years.
“Salil’s proposed total target remuneration will be around the average of the remuneration recently paid to peer CEOs (based on publicly available information as analyzed by the company’s external advisors),” it said.
The peers used for the analysis are Accenture plc, Cognizant Technology Solutions Corporation, DXC Technology Co., Tata Consultancy Services Ltd., Wipro Ltd., Tech Mahindra, Capgemini, HCL Technologies Ltd., IBM and Atos SE.
TCS CEO Rajesh Gopinathan has an annual salary of Rs 25.76 crore, while the Paris-based CEO of Wipro has a salary of Rs 64.34 crore. The CEO of HCL Tech has a package of Rs 32.21 crores while the CEO of Tech Mahindra has a package of Rs 22 crores.
Infosys has increased the fixed cash compensation to Parekh from Rs 6.50 crore per annum to Rs 8 crore. The annual grant to RSUs covering the equity shares of the company remains unchanged at around Rs 3 crore.
They will get Rs.13 crore to Rs.34.75 crore as performance equity grant. Variable cash compensation has also been increased from Rs 9.75 crore to Rs 17 crore. Remaining remuneration is in the form of RSU.
Infosys said, “The company’s compensation philosophy is to ensure the alignment of executive compensation with shareholder value. Accordingly, approximately 97 per cent increase in Salil’s proposed annual remuneration is performance linked.”
Under the revised remuneration, Salil’s fixed compensation (fixed pay and time-based RSU) would be less than 15 per cent of this total compensation on target (compared to 23 per cent under his current terms).
“Additionally, 70 per cent of Salil’s performance-based compensation is given as an RSU or PSU grant, and is therefore based on the performance of the company’s share price,” it said.
He will be given 2.21 lakh PSUs (Rs 34.75 crore) for FY2023 performance, which is the same as 2.17 lakh (adjusted for bonus shares) PSUs (Rs 13 crore) given in the first year of his appointment.
Infosys said, this clearly reflects a substantial price increase in the company’s share price. The hike has been announced a few days after Infosys reappointed Parekh as managing director and CEO for five more years. He was first appointed CEO on January 2, 2018.
The new pay hike will further widen the gap between the CEO and an average Infosys employee. At present, the ratio of CEO to average remuneration of employees is 229 (excluding stock-based compensation) and 872 (including stock-based compensation).
Co-founder NR Narayana Murthy, a few years ago, had expressed concern over huge salaries being paid to CEOs only and suggested a ratio of 20 to 25 between the minimum and highest salary.
Infosys said any comparison of CEO salaries with average remuneration should be viewed in the context of the company’s strong performance and stock price growth. Key factors considered include total shareholder return, growth in market cap and growth.
“Salil is the CEO of Infosys, a globally listed company, and has demonstrated successful business and overall performance since his appointment,” the statement said. “Competing with the company’s global counterparts, particularly in North America and Europe, approximately 87 per cent of the company’s revenues come from these geographies, and therefore, Salil’s remuneration has to be determined taking into account international benchmarks. Is.”
Infosys said the key factors considered for reappointment included 314 per cent growth in the company’s total shareholder returns under his leadership.
“The company’s market capitalization increased by Rs 5,77,000 crore (USD 69 billion) during his tenure. In comparison, during the four-year period prior to Salil’s appointment, the company’s TSR (Total Shareholder Return) was 30 per annum. The mean TSR of the competitors was 47 percent as compared to the percentage.”
Under his leadership the company’s revenue growth has increased from Rs 70,522 crore (FY 2018) to Rs 1,21,641 crore (FY 2022) and profits have also increased from Rs 16,029 crore to Rs 22,110 crore.
These results were delivered under Salil’s Navigating Your Next strategy, which includes increasing digital revenue, accelerating core, localization and reskilling, resulting in increased market share in a highly competitive environment.
Read also: Salil Parekh reappointed as CEO, MD of Infosys for 5 years