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

The Economic Times - - Front Page - VARUN SOOD

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.

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