Infosys to pay CEO much less than Sikka

Infosys will pay about Rs 32.5 crore (approximately $5.12 million) every year to its new chief executive Salil Parekh, subject to his achieving laid down milestones. That’s significantly lower than the $11 million that former CEO Vishal Sikka was eligible to.

Some of that difference perhaps arises because Sikka was based in the US, while Parekh will be stationed in Bengaluru. But it is also likely a reflection of the unhappiness expressed by the company’s promoters, notably N R Narayana Murthy, on Sikka’s compensation.

Parekh, a former Capgemini executive, will be paid an annual fixed salary of Rs 6.50 crore and a variable portion of Rs 9.75 crore. The latter will be “subject to the company’s achievement of certain milestones as determined by the board or its committee, in its sole discretion, from time to time,” Infosys said in a filing with the BSE late on Wednesday.

In addition, the 53-year old executive is also eligible for an annual equity grant of restricted stock units (RSUs) worth Rs 3.25 crore for three years and an annual performance equity grant of RSUs worth Rs 13 crore upon completing three years in 2021 subject to achieving certain milestones. He will also be paid a one-time Rs 9.75 crore in stocks.

Sikka, who joined as the first non-founder CEO in August 2014, had a fixed compensation of $3 million, while the remaining $8 million was variable. In his last full year (2016-17), he received only $3.68 million of variable pay because the company did not meet the laid-down milestones.

“The flamboyant western salary and private jet use of Sikka created a major perception issue for Infosys internally. Parekh’s salary seems lower than most of his peers, which is understandable considering this is his first CEO gig,” Phil Fersht, CEO of HfS Research said.

“In reality, Parekh can still make a lot of money from stock and performance, so this is much more about perception than anything else — appeasing Narayana Murthy and the Indian IT aristocracy that Infosys will not behave like a Silicon Valley firm ever again,” he said.

Cognizant’s Francisco D’Souza, who is based in the US, received a compensation of $12 million (Rs 76.1 crore) for the year ended December 2016, while TCS’ Rajesh Gopinathan was paid Rs 6.22 crore before he became the CEO. Wipro’s Abidali Neemuchwala, who is based in the US, was paid about Rs 13.3 crore ($2.09 million) for 2016-17.

Dan Marcec, director, content & communications at compensation research firm Equilar, said US tech companies tend to pay their executives more in stock and options than other US companies. According to Equilar’s annual CEO pay report, technology CEOs received the lowest proportion of their total pay from base salary.

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