Infosys justifies COO pay hike, says effective rise only 1.4%

Infosys today vehemently defended the hike in its COO UB Pravin Rao's compensation, saying the revision was arrived at after benchmarking against peers.

It said the revision, as rolled out for several of its senior leadership team, is "focused on making Infosys more competitive and is benchmarked against peers" and is critical to retaining key talent.

Barely two months after a face-off between founders and management on issues such as CEO salary hike and severance package to former employees, a fresh row has erupted between the two sides, this time over Rao's compensation. Co-founder and former chairman N R Narayana Murthy had yesterday criticised the hike in COO compensation, calling it "grossly unfair" for a majority of Infosys employees who get 6-8% annual hike.

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Infosys, in a statement issued today, said it views Murthy's statement as "important feedback" and will continue to work with all stakeholders to ensure long-term interest of the company.

It justified the over 33% rise in Rao's compensation, saying Infosys had undertaken a comprehensive survey of best practices and benchmarked senior management compensation with key Indian and global companies.

Infosys said the cash component has decreased by 10.6% to Rs 4.6 crore from Rs 5.2 crore and it is only the performance-based portion that has been raised to 63% from 45% of the total compensation.

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"Given the four-year vesting period of stock, the net increase in Pravin Rao's compensation for 2017-18 will be 1.4%. This could go up to 33.4% in year 4, assuming similar grants are made in subsequent years based on company and individual performance," it explained.

Defending the decision, Infosys CEO Vishal Sikka said: "Pravin's commitment and contribution to the company have been immense, and his partnership over the past about 3 years has been critical to the successes and growth of our company."

He added that the decision "aligns the long-term interests of our leadership team with that of our shareholders".

Infosys contended that the proposal was placed before the shareholders and the recommendations have been approved by 67% of the company's shareholders in a postal ballot.

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Interestingly, only 24% of the promoters had voted in favour of the resolution while the rest, including Murthy, abstained.

"The Infosys board would like to state that it acknowledges the sentiment of shareholders who have not voted in favour of the resolution, and has also taken careful note of the statements expressed by the company's promoters," it said.