BENGALURU – Possibly in a bid to avoid criticism of high pay to its top official, global software major Infosys has said it will pay its new Chief Executive Officer and Managing Director (CEO & MD) Salil S. Parekh Rs 16.25 crore salary per annum.
In a regulatory filing on the BSE, the company said in addition to Rs 6.5 crore fixed pay and Rs 9.75 crore variable pay, Parekh would get its restricted stock units (RSUs) or shares (Rs 5 face value) equivalent to Rs 3.25 crore as annual equity grant and annual performance equity grant worth Rs 13 crore, taking the total package to Rs 32.5 crore ($5 million) per annum for five years.
Parekh’s overall annual compensation ($5 million) is 45 per cent less than the $11.26 million (Rs 73 crore) the company paid to Vishal Sikka per annum during his three-year tenure from August 1, 2014 to August 24, 2017.
Infosys founder N.R. Narayana Murthy had severely criticised the company for paying such high compensation to Sikka, saying pay for top executives should be moderate.
Sikka’s compensation included a fixed annual salary of $5.08 million, variable pay of $4.18 million and stock options worth $2 million.
“The compensation for Parekh is subject to approval of the Board’s special resolution by the company’s shareholders through postal ballot and electronic voting (e-voting) by February 20,” said the filing.
The resolution also sought the investors’ approval for Parekh’s appointment as the CEO and MD and Additional Director on the Board from January 2, 2018 to January 1, 2023.
In addition to salary and stock options, Parekh will get health and life insurance as applicable to his executive post.
“Compensation benefits will include paid vacation, travel and entertainment expenses as applicable to the company’s executive,” added the filing.
As the variable pay (Rs 9.75 crore) will be applicable from April 1, the company will pay Parekh Rs 2.4 crore from January 2 to March 31 of this fiscal (2017-18) as initial variable pay.
“The variable pay (Rs 9.75 crore) will be payable to Parekh subject to the company’s achievement of certain milestones determined by the Board or its committee from time to time,” noted the filing.
Parekh will also be given a one-time equity grant of RSUs having a value equal to Rs 9.75 crore in two instalments of 50 per cent each on the first anniversary of the grant date and its second anniversary.
According to other terms of the appointment resolution, Parekh’s five-year term has an option of renewing it for three more years subject to the shareholders’ approval.
“Parekh, 53, will retire upon attaining the age of 60 years,” added the filing.
In the event of leaving the company during the tenure, Parekh or Infosys has to give a three-month notice.
Parekh joined the city-based outsourcing firm on Tuesday after the Board appointed him on December 2.
A veteran in the software industry, Parekh is the second non-founder executive of the $10-billion firm after the exit of the first non-promoter CEO Sikka in August following a spat with its co-founders over governance issues last year.
Prior to joining Infosys, Parekh was an executive board member of the Paris-headquartered global consulting, technology and IT firm Capgemini for 25 years since 1992.
Parekh has Masters degrees in computer science and mechanical engineering from Cornell University in the US and a B.Tech degree in aeronautical engineering from IIT-Bombay.
The Board’s second resolution pertains to the re-designation of U.B. Pravin Rao as Chief Operating Officer (COO) and whole-time Director from January 2 to August 17, 2022 on the terms and conditions of his appointment.
Rao’s annual compensation of Rs 12.5 crore includes Rs 4.63 crore fixed salary, Rs 3.87 crore variable pay and Rs 4 crore worth stock options.
Rao, 56, was the company’s interim CEO and MD from August 18 to January 1 after Sikka resigned from the top execute post.
The company’s Board has appointed Parameshwar G. Hegde, a practising company secretary, as scrutiniser to conduct the postal ballot and electronic-voting from January 22 to February 20 and submit his report to the Chairman (co-founder Nandan Nilekani) with its results on or before February 24.
The resolutions will be sent to the shareholders for approval on January 15.
The company’s blue-chip scrip of Rs 5 face value was quoting Rs 1,014.70 per share on the BSE in the post-noon trading on Thursday after opening at Rs 1,022 and as against Wednesday’s closing price of Rs 1,019.10.