Infosys plans new incentives for top performers

Infosys, one of the first Indian companies to offer stocks to its employees in the 1990 s, has initiated moves to roll out a new stock incentive plan for top and mid-level executives as part of a strategy to attract and retain top talent.

In an exclusive interview with ET, Infosys chief operating officer Pravin Rao said the country’s second largest software exporter was in the process of finalizing the new stock option plan and is looking to allot 1-1.5% of the company’s equity to create a stock pool for top executives.

Infosys will seek shareholder approval for the same in the coming weeks, he said. Despite setting new standards for employee benefits with its original employee stock option plan (ESOPs), Infosys had to discontinue it in the early 2000s as it added thousands of employees every year at the peak of outsourcing boom.

“Today if you look at global technology companies, especially at a senior level, stock compensation is very big element of their strategy. And at times, when we’re trying to recruit some key people from outside, we run into a challenge since we’ve discontinued the options plan,” said Rao.

Rao, a 30-year veteran at Infosys who is also on its board of directors, said the company was currently working with consultants and compensation experts to flesh out the new stock option plan that will be restricted to a small percentage of top and mid-level executives, and not for all its 193,000-odd employees.

“It will be given to a set of people, and not be broad-based,” he said. “We’re looking at the best practices of compensation structures — we’re working with consultants who are experts in this space and we want to make sure that our compensation practices are in line with the industry,” said Rao. “On the incentive plan, we had announced in our quarterly results that we had set aside 1% or 1.5% of our equity to give options.

The plan is getting fleshed out. In the next two weeks, before the end of this quarter, we will give a postal ballot for shareholder approval for that scheme,” he added. In 2011, Infosys founder NR Narayana Murthy had famously said that the company had given away Rs 50,000 crore (at then stock prices) of stock options to its employees since inception. Rao also clarified that Infosys made an exception for its CEO Vishal Sikkim when he joined the company in August 2014.

At that time Infosys had granted the former SAP product chief 22,794 restricted stock units as part of his annual pay package that included stock options worth $2 million a year.

The new stock option plan from Infosys comes at a time when it is looking to bolster its top and middle management with next-generation outside talent. Last week, Infosys appointed Scott Sorokin as global head of its digital business. Sorokin was chief strategy officer at Razorfish, a digital agency that is part of French advertising giant Publicis Group.