Infosys hikes CEO Salil Parekh's salary by 88% to Rs 79.75 crore

IT services major Infosys has recommended to revise the compensation package of its CEO Salil Parekh to Rs 79.75 crore up 88 per cent from his previous salary of Rs 42.50 crore, said the company’s annual report for fiscal 2022.

These changes are part of the recent announcement of reappointment of Parekh as the CEO and MD of the company for five years.

For FY22 Parekh received a total remuneration of Rs 71.02 crore, up 43 per cent. This compensation included Rs 52.33 crore from restricted stock unit options.

Under the new remuneration composition, Parekh’s performance based compensation will go up to 86 per cent from the earlier 77 per cent. Fixed compensation will be less than 15 per cent. This includes a fixed pay, which would constitute 10 per cent from the earlier 15 per cent, and time based stocks will be 4 per cent from the earlier 8 per cent.

The company in its annual report also gives a detailed explanation on the need for the change in the compensation. “Salil is not a first-time CEO and MD, as he was at the time of his initial appointment. Salil is the CEO of Infosys, a globally listed entity and has demonstrated successful business and overall performance since his appointment. Salil’s remuneration has to be determined keeping in view international benchmarks. Salil’s proposed total target remuneration vis-à-vis the remuneration most recently paid to CEOs of the peers (based on publicly available information as analyzed by the company’s external advisors Egon Zehnder) would be around the median,” said the company in the annual report.

For this analysis, the company’s peers are Accenture plc, Cognizant Technology Solutions Corporation, DXC Technology Company, Tata Consultancy Services Limited, Wipro Limited, Tech Mahindra, Capgemini, HCL Technologies Limited, International Business Machines Corporation, and Atos SE as defined in the Infosys Expanded Stock Ownership Programme, 2019.

The report further stated, “It is pertinent to note that Salil will be granted 2,21,000 PSUs (Rs 34.75 crore) for the fiscal 2023 performance, which is a similar number to the 2,17,200 (adjusted for bonus shares) PSUs (Rs 13 crore) that was granted in his first year of appointment. This vividly reflects the substantial value accretion to the Company’s share price.”

Under Salil’s leadership, the company’s Total Shareholder Return (TSR) was an impressive 314%, the highest among peers, and was well above the TSR (in INR) of benchmark indices of NIFTY at 77 per cent and S&P 500 at 117 per cent. The company’s market capitalisation increased during his tenure by Rs 5,77,000 crore ($69 billion). In comparison, during the preceding four-year period, prior to the appointment of Salil, the Company’s TSR was 30 per cent as compared to the peers’ median TSR of 47 per cent, said the annual report.

This growth is accompanied by an increase in the total number of employees from 204,107 to 314,015 during his tenure.

The explanation further added that the revenue growth of the Company under Salil’s leadership has accelerated and grown from Rs 70,522 crore (FY18) to Rs 1,21,641 crore (FY22), a CAGR of 15 per cent (prior four years CAGR 9 per cent) and the profits have also increased from Rs 16,029 crore to Rs 22,110 crore.

“These results were delivered under the Navigating your Next strategy, led by Salil, comprising Scaling digital revenue, accelerating the core, localisation and reskilling, which has resulted in an increased market share in a highly competitive environment."

The company has executed its market-differentiating strategy by more than doubling the share of digital revenue from 25.5 per cent (FY18) to 57.0 per cent (FY22) and is now considered a leading digital company with industry analysts rating it as a leader in 32 categories,” said the company in the report.

Infosys has signed large deals with a total value of $39 billion for the four-year period from FY19 to FY22. As part of its strategy execution, the company also launched Infosys Cobalt – a set of services, solutions and platforms to accelerate the cloud journey for enterprises. The strength and stability of leadership across the organization, increase in number of $100 million clients from 20 in FY18 to 38 in FY22, strategic mergers & acquisitions, successful implementation of the new capital allocation policy, path-breaking ESG 2030 5 vision and seamless navigation of the uncertainties of the Covid-19 pandemic while converting challenges into business opportunities have all been drivers of significant long-term shareholder value creation, under the leadership of Salil, said the report.