Amid IT job cuts, Infosys offers hefty stock compensation to top executives

Stocks would be vested over 4 years and is linked to performance of the individual and the company

Infosys, India’s second-largest software exporter, rewarded its top employees with significant salary hikes last year. Total compensation, including performance-based stock units for nine leaders, grew nearly 60 per cent on an average at a time when the industry is experiencing the slowest growth in a decade. 

The stocks would be vested over four years and is linked to the performance of the individual and the company.

Infosys chief executive Vishal Sikka’s total compensation, however, was reduced last financial year as the company achieved lower-than-forecast growth numbers.   

These numbers are declared in the company’s annual report for the financial year 2016-17 and rates have been calculated on total compensation, including fixed and variable. 

The firm incurred an expenditure of Rs 107 crore towards stock compensation expenses. This stock incentive plan covers approximately top 25 per cent of the mid-to senior-level employees.

While some of these leaders - who are at executive vice-president and president levels - drew more than 100 per cent in FY17 as against FY16, others got between 45 and 80 per cent hike in total compensation.

Four presidents — Rajesh K Murthy, Mohit Joshi, Sandeep Dadlani and Ravi Kumar S, who were recently elevated as deputy chief operating officers, were offered more than 70 per cent hikes on an average. Their remuneration, including only the value of stock units exercised and excluding incentives, dropped by 16 per cent on an average for these four leaders. 

Infosys, however, deferred its salary review till July for a large chunk of its employees with more than eight years of experience.  

Infosys claimed that its remunerations committee reviewed salaries of key leaders and linked them with performance. 

“The nomination and remuneration committee continuously reviews the compensation of CEO, COO and other key management persons to align both short-term and long-term business objectives of the company and to link compensation with the achievement of goals,” said the company in its annual report. 

A sharp rise in salaries of key people, including Chief Operating Officer Pravin Rao was criticised by founders of the company. 

Last month, founders of Infosys, including N R Narayana Murthy raised concerns over offering a significantly higher salary to Chief Operating Officer Pravin Rao especially when the IT services industry has been seeing a slowdown. 

Shriram Subramanian of In Govern, a proxy advisory firm, believes the management should make the compensation increase in line with the company’s overall performance. 

“It is important to check whether these are golden handcuffs. It should be similar to what peers are paying, but should be linked to company’s performance," Subramanian said. 

Murthy criticised the company’s board for Rao’s hefty salary hike and said, "This was the time to demonstrate fairness in compensation that the company had practised since inception."

Infosys defended the move saying it was important to pay a good hike to retain talent. About a week ago the company deferred increment for its senior employees who have been for eight years and more under the job level 5 (JL5) category and they would see their performance and salary review happening from July.