INFOSYS SETS METRICS FOR CEO PAY, BUT INVESTORS WARY

BENGALURU: Infosys Ltd has signalled its intention to significantly increase its share of business from digital technologies, build a stable management team and ensure a higher return for its shareholders with the board linking chief executive officer Salil Parekh’s annual compensation to the progress the firm makes in each of the three metrics.

For the first time, the Infosys board disclosed the parameters on which the company will give the variable pay to Parekh. This, according to one proxy advisory firm, does assuage many of the shareholder’s concerns on CEO compensation. However, three executives—one at Infosys and two from two executive search firms—said the firm could do better by disclosing more details.

Parekh, who took over on January 2 for a period of five years and was given a joining bonus of ₹9.75 crore, stands to earn up to ₹16.25 crore in cash every year, which includes a fixed salary of ₹6.5 crore and a variable pay of up to ₹9.75 crore. However, his compensation includes two additional components as well. These are an annual grant of ₹3.25 crore in stocks, a third of which will be vested every year over the next three years, and an annual performance equity grant of ₹13 crore that will be paid at the completion of three years.

“The number of shares that will vest shall be calculated upon the CEO’S successful completion of three full fiscal years with the firm, concluding on March 31, 2021, and will be determined by company’s performance on total shareholder return, quality of revenue and organisational capability building, as determined by the board (or its committee) in its sole discretion for the three-year period,” Infosys said in a filing to the exchanges on May 4.

This decision by the board, led by co-founder and non-executive chairman Nandan Nilekani, is a marked departure from the earlier board’s move to link former CEO Vishal Sikka’s $11 million compensation to Infosys’s progress to become a $20 billion firm with an operating margin of 30% and revenue per employee of $80,000 by March 2021.