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Salil Parekh will earn an annual salary of Rs 162. 5 million ($ 2.55 million) as the CEO of Infosys, less than what Infosys had offered his high-profile predecessor Vishal Sikka, who quit the firm after three years in turmoil.
The compensation also reflects the reality at Infosys and its chairman Nandan Nilekani who would like the low-profile senior executive to execute a vision of focused delivery for customers rather than over-promise and under-delivery that would be in contrast with the company's culture.
Parekh, the soft-spoken executive who was poached from global rival Capgemini, will get an annual fixed salary of Rs 65 million and a variable pay of Rs 97.5 million that would be compensated based on achieving metrics set by the company.
The second non-founder CEO at Infosys is also being offered a generous compensation in stock. He is being paid an annual equity grant of Rs 32.5 million; an annual performance stock award of Rs 130 million and a one-time equity grant worth Rs 97.5 million that would be vested over two years, the company said in its postal ballot disclosed in regulatory filings. This would amount to Rs 260 million, taking his total compensation to Rs 422.5 million ($6.65 million)
Sikka, who had a tumultuous three-year stint at Infosys, had signed up for a $11-million package, including stock options. However, in fiscal 2017, the last of the three-year term, Sikka earned Rs 451 million ($7 million), as he struggled to grow business faster in a volatile business environment and the battle he was facing internally with the entrenched system at Infosys.
Infosys has also spelt out the severance pay terms -- half the compensation in the previous 12 months and vesting of outstanding stock options till that period.
The severance pay to Rajiv Bansal, the former CFO, 10 times his annual compensation, had earlier sparked a controversy for an alleged corporate governance failure, which eventually brought the downfall of Sikka and R Seshasayee, the former Chairman at Infosys.
Nilekani's choice of Parekh, a low profile executive who grew up the ranks at Capgemini, to head Infosys comes at a time when the company has struggled to grow faster in an environment, where customers are shifting budgets towards digital projects. Infosys and its peers earn just a quarter of their revenue from digital, while the legacy traditional services business that contributes over three-fourths of revenue is seeing a massive fall as customers cut budgets and expect them to embrace automation to deliver services.
Parekh emphasised the point of reskilling in his first message to employees, pointing to the grim business environment, where there is an opportunity to tap, provided IT firms position themselves as those who can help their clients navigate towards the shift to digital.
On January 2, Infosys gave a low key welcome to Parekh, unlike the aggressive marketing exercise it undertook to welcome Sikka, hoping that he would transform the company. Parekh will be based out of Infosys headquarters in Bengaluru, unlike Sikka, who worked out of Palo Alto in the US.
Pravin Rao, interim MD and CEO has been redesignated as COO, the filings disclosed.