Back on a growth trajectory, Indian technology major Infosys has hiked company CEO Salil Parekh's compensation by a whopping 88% to Rs 79.8 crore (more than $10 million). The announcement comes following an industry-leading performance of the company, and the phenomenal increase in shareholder value during Parekh's tenure.
The revision in compensation also comes alongside the five year term extension to Parekh. According to the company, most of the increase is in performance-based rewards (cash and stocks). This has risen by 110%, to Rs 68.8 crore. Fixed compensation has risen by 13% to Rs 11 crore.
As per company's annual report for 2021-22, the overhaul in the CEO compensation was undertaken to benchmark it with those of peers like Accenture, IBM, TCS, Capgemini, Cognizant, DXC and others.
Accenture CEO Julie Sweet took a paycheque of $23 million, mostly in stock awards, in 2021, and IBM's Arvind Krishna got $17.5 million as overall compensation the same year.
While Cognizant CEO Brian Humphries' compensation rose 42.5% to $19.6 million in 2021, TCS CEO Rajesh Gopinathan's total compensation in the last fiscal rose by about 28% to Rs 25.8 crore. The company said Parekh's compensation is now around the median compensation for peers.
Infosys noted that under Parekh's leadership (January 2, 2018, to March 31, 2022), Infosys's total shareholder return (TSR) was 314%, the highest among peers. “And was well above the TSR of benchmark indices of Nifty at 77% and S&P 500 at 117%. The company's market capitalisation increased during his tenure by about Rs 5,77,000 crore ($69 billion). In comparison, during the preceding four-year period, prior to the appointment of Salil, the company's TSR was 30% as compared to the peers' median TSR of 47%,” the company said.
The remuneration committee also considered that Parekh is not a first-time CEO and MD, as he was at the time of his initial appointment in 2018. “Salil is the CEO of Infosys, a globally listed entity and has demonstrated successful business and overall performance since his appointment. The company competes with global peers, particularly in North America and Europe, with almost 87% of the company's revenue coming from these geographies, and therefore, Salil's remuneration has to be determined keeping in view international benchmarks. Salil's proposed total target remuneration vis-a-vis the remuneration most recently paid to CEOs of the peers (based on publicly available information as analysed by the company's external advisors Egon Zehnder) would be around the median,” Infosys annual report said.
In 2021-22, Parekh drew Rs 71 crore as compensation, mostly due to stock incentives awarded in previous years. The median remuneration (MRE) of Infosys employees was Rs 8.1 lakh in FY 2022, an increase of 12.9% from Rs 7.2 lakh in FY 2021. The ratio of Parekh's salary to MRE rose sharply to 872.
The Infosys board has also recommended the reappointment of its non-executive chairman Nandan Nilekani. In a letter to shareholders, Nilekani said the future – full of uncertainties – is not something that anyone can claim to predict. “Rising interest rates, the situation in Ukraine, the lingering impact of Covid in many parts of the world, the disruption of supply chains, all accompanied by mounting costs and increased volatility, is confronting corporate leaders with complexities and challenges that are only just being understood. At the same time, digital acceleration is creating tremendous new opportunities for differentiation and gaining market leadership,” he said.