Infosys CEO Salil Parekh gets an 88% Pay Hike: Details here

Such an enormous salary hike is unusual for a firm that often prides itself on humble origins and the middle-class background of founders.

Digital Desk: Infosys CEO Salil Parekh's compensation has increased 88 percent to Rs 79.75 crore a year, making him one of the highest-paid executives in India, as the software services firm justified the fat hike citing industry-leading growth in recent years.

According to the company's annual report released on Thursday, the new employment agreement, subject to shareholder approval, will come into effect on July 2.

For FY22, Parekh took home a salary of Rs 71 crore, of which Rs 52 crore came from exercising RSUs or restricted stock units granted to him before. Infosys co-founder and chairman Nandan Nilekani voluntarily chose not to receive any remuneration for his services rendered to the company.    

Such an enormous salary hike is unusual for a firm that often prides itself on humble origins and the middle-class background of founders.

The hike announcement comes days after it reappointed Parekh as managing director and CEO for five more years, starting July 1, signaling trust in a leader who turned around the company and restored stability. 

The new pay hike will further widen the gap between the CEO and an average Infosys employee. Currently, the ratio of median remuneration of CEO to employees is 229 (excluding stock-based compensation) and 872 (including stock-based compensation).

Many years ago, co-founder NR Narayana Murthy said that giving huge salaries to just the CEOs does not make sense and suggested a ratio of 20 to 25 between the lowest and highest salaries. 

While IT CEO salaries have been steadily rising, fresher salaries have stagnated in the last decade despite a war for talent and zooming attrition. Salaries of freshers now stand at Rs 3.5-4 lakh annually, an 8-10 percent increase over a decade. 

Infosys said that any comparison of CEO salary to the median remuneration should be seen in the company's strong performance and stock price growth. The firm said it considered key factors such as total shareholder return, rise in market cap, and growth while recommending his reappointment and change in remuneration.  

"Under his leadership, the total shareholder return (TSR) was an impressive 314 percent, the highest among peers. Revenue has grown from Rs 70,522 crore (fiscal 2018) to Rs 1,21,641 crore (fiscal 2022), a compound annual growth rate of 15 percent (versus nine percent for the four years before that), and the profits have also increased from Rs 16,029 to Rs 22,110 crore," it said.  

Parekh will be the highest-paid among Indian peers. For context, larger rival TCS CEO Rajesh Gopinathan's annual salary stands at Rs 25.76 crore, while Wipro's Paris-based CEO has paid Rs 64.34 crore. HCL Tech CEO has a package of Rs 32.21 crore, while Tech Mahindra CEO earns Rs 22 crore. 

Furthermore, almost 97 percent of Parekh's proposed annual remuneration increase is linked to performance. Under the revised remuneration, fixed compensation will account for less than 15 percent of this total compensation at target (compared to 23 percent under his current terms).