Bengaluru, July 25: Even as NR Narayana Murthy had laid down benchmarks for CEO pay in Infosys, the software major seems to have taken a different route of benchmarking, claiming that the decision to hike the salary of its CEO and MD Salil Parekh had overwhelming support of shareholders across the globe.
Replying to a query by UNI at Q1 results announcement on Sunday, Infosys Chief Financial Officer Nilanjan Roy said, “The company board decides and very extensively it does benchmarking. In fact we have given out a three-page statement on the reason for the increase in compensation, and I think more importantly we have overwhelming support of all shareholders across the world.
“The promoters were close to 98 per cent. In my view I think it would be the highest reaffirmation in terms of the compensation for Salil that have been globally benchmarked.”
This correspondent had asked whether the recent salary hike of Parekh was in line with Infosys co-founder Narayana Murthy’s philosophy of remuneration.
The company, in its annual report for fiscal 2022, had stated that Parekh’s salary was increased to Rs 79.75 crore per annum, which was 88 per cent higher from his previous salary of Rs 42.50 crore.
The company provided the sharp hike citing industry-leading growth in the recent years. It also had said that the CEO’s salary should be seen in the context of the company’s performance and stock price growth.
The firm also had said that it considered key factors such as total shareholder return, rise in market cap and growth while recommending his reappointment and change in remuneration. Contrary to these key factors spelt out by Infosys, Murthy in September 2020, had raised a storm in the IT world by saying at an event that the managerial remuneration has to be a fair multiple of the compensation of the lowest level employee in the company.
As an example, Murthy had explained that the CEO remuneration should be Rs 70-80 lakhs if the lowest paid employee’s remuneration was Rs 2-3 lakh a year, otherwise it does not make any sense.
The Infosys co-founder had suggested a ratio of 20 to 25 between the salary of the lowest level professional in a corporation and the highest compensation paid in the corporation. According to him, such fairness raises the confidence and enthusiasm of everybody in the corporation and engenders trust in corporate leaders.
Murthy had also suggested that the compensation should be based on accountability and performance. A large part of the compensation, he said, has to be variable and linked to performance over a sustained period like five to seven years.
Murthy also had stated that taking huge global-level compensation in the midst of poverty does not seem right. He said if they do not take this step, they may raise the anger of the poor and there may be violence, and the rich may become victims of this anger.
Quoting late US President John Kennedy, Infosys Chairman Emeritus had said that a society that cannot help many who are poor cannot save the few who are rich. Murthy also suggested sharing full detail of the remuneration to shareholders and linking the variable part of it to long-term performance of the company, not just to the current results. He also had said that “the management in the professionally managed companies can push weak boards to extract unjustifiable compensation for themselves and use company’s resources for personal benefits, and the owner managers can use listed companies to enrich their private companies. (UNI)
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