Infosys defends salary hike of COO Pravin Rao after Narayana Murthy opposes

By: | Updated: April 3, 2017 7:57 PM

A day after Infosys founder N R Narayana Murthy raised corporate governance issue with the company while opposing and criticising the hike in salary of chief operating officer U B Pravin Rao, the company has justified the decision.

infosys, infosys pay hike controversy, n r narayanamurthy, vishal sikka, pravin raoInfosys CEO Vishal Sikka and COO Pravin Rao. (PTI file)

A day after Infosys founder N R Narayana Murthy raised corporate governance issue with the company while opposing and criticising the hike in salary of chief operating officer U B Pravin Rao, the company has justified the decision. According to new agency Reuters, the company has said that Rao’s compensation revision “reflects the philosophy of aligning interests of the leadership team to long-term shareholder interests.”

In a statement to media, Murthy had said on Sunday, “Giving 60 to 70% increase in compensation for a top-level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6-8% is, in my opinion, not proper.”

However, Infosys says cash component of Pravin Rao’s compensation has decreased from Rs 5.2 crores (including annual cash bonus) to Rs. 4.6 crores, a decrease of 10.6%. Moreover, revised compensation proposal was placed before shareholders and recommendations have been approved by 67% of company’s shareholders, the company said, adding, the performance-based component of the compensation (directly linked to company and individual performance) has been increased from 45% to 63% of total compensation.

Infosys says it has the “responsibility to attract and retain top quality talent to be effective in the transformation journey that the company has embarked upon. In this context, the company undertook a comprehensive survey of best practices and benchmarked senior management compensation with key Indian and global companies.”

“The compensation structure revised thereafter reduces the proportion of cash component in the total compensation and has introduced higher stock incentives (to be vested over a 4-year period); it was rolled out for the entire senior leadership including Mr. Pravin Rao, Chief Operating Officer. The details were disclosed in the stock exchange filings on October 14, 2016. Mr. Pravin Rao’s compensation revision reflects the philosophy of aligning the interests of our leadership team to long-term shareholder interests. While the breakup of Mr. Pravin Rao’s compensation has been provided in the postal ballot, it is relevant to note the following,” Reuters reported the company as saying.

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Justifying the revision of Rao’s compensation, Vishal Sikka, CEO, Infosys, said, “Pravin’s commitment and contribution to the company has been immense, and his partnership over the past ~3 years has been critical to the successes and growth of our company. It is essential for us to see that this revision in his compensation, as with several of our senior leadership team, is focused on making Infosys more competitive, is benchmarked against peers, is critical for us to retain key talent and aligns the long-term interests of our leadership team with that of our shareholders.”

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