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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).
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