The Nomination and Remuneration Committee of Infosys Ltd has proposed chief executive Salil Parekh’s compensation for this fiscal to be revised upwards by 88% to ₹79.75 crore per annum from the current terms at ₹42.50 crore, the company revealed in its latest annual report. Of this, only ₹11 crore is fixed while ₹68.75 crore is performance-based remuneration.
During FY22, Parekh received a total remuneration of ₹71 crore which includes perquisites on account of stock options exercised. In comparison, Rajesh Gopinathan, chief executive of Tata Consultancy Services Ltd (TCS) received a total compensation of ₹25.8 crore during FY22.
The revised compensation comes as Parekh has been reappointed as CEO and MD of the company, commencing on 1 July, 2022 and ending on 31 March, 2027. Interestingly, the average hikes at Indian IT services companies range between 4-8%.
Management experts believe top leadership talent will continue to command disproportionate salaries in India. “In a free-market system, scarce commodities command a premium. Top leadership for global companies is a rather scarce commodity in India. This demand-supply mismatch, coupled with the enormous performance pressure that shareholders of prominent companies place on CEOs, necessitates the payment of globally benchmarked salaries,” said Abhisek Mukherjee, cofounder and director of management consulting firm Auctus Advisors.
Infosys said that under Salil’s leadership, the company’s total shareholder return (TSR) was up 314%, the highest among peers and was well above the TSR (in rupee terms) of benchmark indices of NIFTY at 77% and S&P 500 at 117%.
“The company’s market capitalization increased during his tenure by about ₹5,77,000 crore (about $69 billion). In comparison, during the preceding four-year period, prior to the appointment of Salil, the company’s TSR was 30% as compared to the peers’ median TSR of 47%. The revenue growth of the company under Salil’s leadership has accelerated and grown from ₹70,522 crore (fiscal 2018) to ₹1,21,641 crore (fiscal 2022), a CAGR of 15% (prior four years CAGR 9%) and the profits have also increased from ₹16,029 crore to ₹22,110 crore,” Infosys said.
“These results were delivered under the Navigating your Next strategy, led by Salil, comprising scaling digital revenue, accelerating the core, localization and reskilling, which has resulted in an increased market share in a highly competitive environment,” Infosys said.
Under Parekh’s leadership, Infosys said it has executed its “market-differentiating” strategy by more than doubling the share of digital revenue from 25.5% (fiscal 2018) to 57.0% (fiscal 2022). It has signed large deals with a total value of about $39 billion for the four-year period from FY 2019-22.
“We are starting to see inflation across several markets in the world, interest rate increases, with the European conflict and continuing covid-19 impact in some geographies creating supply chain constraints. While our demand outlook is strong, we remain vigilant to ensure we are agile and evolve our approach with the changing dynamics,” Parekh said in a letter to shareholders.
“As I look ahead, nonetheless, I remain more optimistic than ever. Large enterprises and governments everywhere are adopting digital and driving transformation to make them more connected with their customers, employees, and partners. We are especially well-positioned to be the provider of choice with the set of capabilities that are most relevant to our clients.”