Infosys Ltd defended the pay hike to Chief Operating Officer Pravin Rao, after co-founder NR Narayana Murthy raised questions over executive salary at the software services company for second time in nearly two months.
Rao’s pay will increase by only 1.4 percent in the financial year 2017-18 and a little over 33 percent over four years, depending on the company’s performance, Infosys said in a statement.
The revision was aimed at making the company more competitive and retaining key talent, Infosys Managing Director and Chief Executive Officer Vishal Sikka said in the statement.
Murthy raised concerns after only 24 percent of promoters’ votes went in favour of the resolution to increase Rao’s pay.
Murthy said in an email reviewed by BloombergQuint.Giving nearly 60 percent to 70 percent increase in compensation for a top-level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 percent to 8 percent is, in my opinion, not proper.
Infosys had said in October that it would raise Rao’s salary to include a fixed compensation of Rs 4.62 crore and a variable compensation of Rs 3.88 crore per annum. He would also get stock compensation worth Rs 4 crore based on his performance in the financial year 2015-16, the company said.
Infosys undertook “a comprehensive survey of best practices and benchmarked senior management compensation with key Indian and global companies”, the information technology major said, adding that the revised compensation structure reduces the proportion of the cash component.
According to the company, the cash component including bonus payable to Rao will decline by 10.6 percent from Rs 5.2 crore to Rs 4.6 crore, while the performance-based compensation will increase from 45 percent to 63 percent of total compensation. His compensation will rise by up to 33.4 percent only in the fourth year, the company said.
Infosys StatementGiven the four-year vesting period of stock, the net increase in Mr. Pravin Rao’s compensation for FY18 will be 1.4 percent. This could go up to 33.4 percent in year four, assuming similar grants are made in subsequent years based on company and individual performance.
The company has noted the sentiments of the shareholders and promoters who voted against the resolution revising Rao's compensation, the statement said.
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