Infosys defends pay hike for COO Rao
Infosys on Monday defended the pay hike to its Chief Operating Officer Pravin Rao, saying the stock-linked compensation was needed to retain talent as the company underwent a transformation. The Infosys board had in February approved Rao’s salary with a higher performance-driven compensation benchmarked to targets set by Vishal Sikka, the company’s chief executive officer.
Infosys on Monday defended the pay hike to its chief operating officer Pravin Rao, saying the stock-linked compensation was needed to retain talent as the company underwent a transformation.
The Infosys board had, in February, approved Rao’s salary with a higher performance-driven compensation benchmarked to targets set by Vishal Sikka, the company’s chief executive officer.
“Rao’s reflects the philosophy of aligning the interests of our leadership team to long-term shareholder interests ,” Info sys said in a statement on Monday, in response to criticism by its founder N R Narayana Murthy.
Murthy, who as part of the promoter group shareholders abstained from voting on are solution to increase Rao’s pay, has critic is ed the Info sys board over governance. Healso questioned the conscience of Rao, a three-decade veteran at Infosys, in accepting the hike.
“Pr a vin’ s commitment and contribution to the company has been immense, and his partnership over the past three years has been critical to the successes and growth of our company,” Sikka said. The defence by Infosys, after twothirds of its shareholders supported the pay hike to Rao, indicates the company will take Murthy head on.
Infosys said Rao’s annual cash compensation decreased by 10.6 per cent to ~4.6 crore from ~5.2 crore, while his performance-based salary increased to 63 per cent from 45 per cent. With a four-year stock vesting, the net increase in Rao’s salary will be 1.4 per cent in 2017-18, which will go up to 33.4 percent in the fourth year, subject to meeting commitments set by the board.
Infosys has set itself a $20 billion revenue target by 2020, nearly double its expected revenue in 2016-17. The company will declare its results for 2016-17 on April 13.
Murthy doubted the board's commitment to enforce the 2020 targets, saying current governance standards at Infosys were poor.
“Finally, given the current poor governance standards at Infosys, let us also remember that these targets for variable pay may not be adhered to if the board wants to favour a top management person,” wrote Murthy on Sunday.
‘It is unfortunate that he (Murthy) is raising this issue again. Salaries must be seen in the context of whether they are linked to performance,” said Shriram Subramaniam, founder and managing director of InGovern, a proxy advisory firm.