Infy justifies COO Rao’s pay hike, says effective rise only 1.4%

Infosys on Monday defended the hike in the compensation of chief operating officer UB Pravin Rao, saying the revision was arrived at after benchmarking against peers.

On the objections raised by co-founder and former chairman NR Narayana Murthy, the country’s second-largest software exporter said it views Murthy’s statement as “important feedback” and will continue to work with stakeholders to ensure longterm interest of the company.

“Giving 60% to 70% 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% to 8% is not proper. This is grossly unfair to the majority of employees...,” Murthy said in a letter.

Justifying the over 33% hike in Rao’s compensation, Infosys said the cash component has decreased from ₹5.2 crore to ₹4.6 crore and it is only the performance-based component that has been raised from 45% to 63%. Considering the four-year vesting period of the stocks given to Rao, the hike came to just around 1.4% for 2017-18, it added.

Meanwhile, echoing Murthy’s view, former CFO V Balakrishnan and ex-director TV Mohandas Pai on Monday said a pay hike for a top executive is “terrible for any leadership” when subordinates were being asked to “sacrifice” on wages, and in this particular case, the salary is “spectacular” but performance is not.

Balakrishnan reiterated the need for reconstituting Infosys’ board, stating that the golden standards of governance and value system the company was known for was “being decimated under the current leadership”.

“I tell all subordinates that you have to sacrifice and you have to make sure your wage increase will be less, we have to cut costs while I will take 40-50% raise (in compensation), I think it is terrible for any leadership to do,” the former Infosys chief financial officer (CFO) told ET Now.

Alleging that Infosys’ board was “misguided”, Pai said the “”fundamental problem” was the pay hike given earlier to CEO Vishal Sikka “without any justification”, because of which other executives were also expecting higher pay. “I totally agree with Murthy that it was not proper. We should have Indian norm for compensation; we can’t follow American norm, we (Infosys) are not an American company.”