Infosys to Match Rivals in CEO Remuneration
IT firm loosens purse strings to attract top talent but undefined role at the helm may play spoilsport
CEO pay has never been a topic of discussion at Infosys during its 33-year history because the job has always gone to founders whose shareholding in the firm compensated for their relatively low salary compared with industry peers. Now, as it prepares to hire its first non-founder CEO, the software company is ready to loosen its purse strings to attract the best talent. According to people familiar with the CEO search process, Infosys will match salary of the new CEO with the best paymasters in the industry, putting itself in a position to reach out to top IT executives who may be interested in the job but are sceptical about the willingness of the company to pay top dollar.
“Of course $10-20 million (.`60 crore to .` 120 crore) pay package is out of question. But clearly, it (executive search firm Egon Zehnder) has been told not to reject anyone a $1 million or $2 million if talent is available,” a person aware of the company’s move told ET. The source declined to put a number to the remuneration that the company is willing to offer to its new chief executive, saying it would match “industry figures.”
“Billions are at stake... No reason why the company would shy away from paying the best,” the person explained. During the 2013-14 financial year, Infosys, India’s second-largest software company, reported revenue of $8.4 billion.
It has about .` 30,000 crore of cash in its kitty, making it one of the wealthiest corporations in the country. Infosys will have a new chief executive after the company announced last month that the current chief executive SD Shibulal expressed his desire to step down earlier than his planned retirement in March 2015. Until now, Infosys’ founder CEOs have been paid considerably lower than peers at rival companies, including TCS and Wipro. Rather, Infosys chief executives have made more money from the dividends earned through the equity shares held. Shibulal got only .` 16 lakh as salary during FY14, but he holds about 25 lakh Infosys shares. Wipro’s TK Kurien led the pack in FY14 among the three homegrown IT firms, receiving remuneration of .` 6.1 crore, including salary and benefits. TCS chief executive N Chandrasekaran was paid .` 1.2 crore. However, starting April this year, his salary stands revised at .` 1.8 crore, in addition to 88,528 company shares. US-listed Cognizant paid CEO Francisco D'Souza a base salary of $590,000 besides target bonuses of $844,812, thereby taking his net pay to $1.4 million (.`8.4 crore). D’Souza also holds stocks worth $9.6 million. Some experts, however, doubt whether Infosys’ decision to pay top dollars would be enough to attract top talents as there is still no clarity on the role and powers of the incoming chief executive. “Matching the rivals (when it comes to CEO salaries) is fine, but anyone interested in the job would be more concerned with what role and powers he will have,” said the head of a Bangalore-based staffing firm that also works on CEO compensation. “Till now, there were founder CEOs. So there was no problem working with chairman. Now you will have a nonfounder person. And if it is an out- sider, then roles need to be defined,” said the executive, who did not want to be named as his firm advises IT services firms, including Infosys. Infosys president BG Srinivas, one of the front-runners among internal ranks, told ET in an earlier interview that the role demarcation would be spelt out by the company at the time of CEO announcement. During the last fiscal, Srinivas was paid Rs 7.52 crore, which was considerably more than what Shibulal earned, though he holds only 60,015 shares. Both Egon Zehnder and Infosys declined to comment with the IT company saying details of the salary of the new CEO would be disclosed at the time of the appointment.