Infosys' Richie Rich club: Number of executives earning over Rs 1 crore increases to 64 in FY19, says report
In a regulatory filing last week, Infosys said that it had proposed CEO and Managing Director Salil Parekh be granted annual performance-based stock incentives worth Rs 10 crore under its latest 'Expanded Stock Ownership Programme 2019'. He is not the only executive looking at a big bonanza - the plan proposes to allocate 5 crore shares to incentivise its over 2.28 lakh employees, subject to shareholder approval.
But the employees of India's second largest IT have fared exceedingly well even in the last fiscal. Sixty-four Infosys executives boasted compensation packages of over Rs 1 crore in the year ended March, up from 28 in FY18, The Times of India reported, with many more senior vice-presidents and vice-presidents making it to this Richie Rich club.
A company spokesperson told the daily that a significant part of the increase in remuneration was on account of the increase in perquisite value of stock incentives - the average stock price increased by more than 35 per cent in FY19 over the previous year. The company, under the 2015 Stock Incentive Compensation Plan, has been offering share-based benefits to employees to retain talent. At the end of the March quarter, Infosys had pegged attrition at 20.4 per cent compared to 19.5 per cent in Q4FY18.
Apart from red hot stock options, some senior executives had reportedly also seen an expansion in their roles and responsibilities in the last fiscal, and their salary packages were increased accordingly. "Our compensation approach provides for competitive salaries for our employees benchmarked with the industry, which includes performance-linked rewards for senior executives with their compensation aligned to shareholder value," the company added. Remuneration typically includes fixed pay, variable pay, retiral benefits and the perquisite value of stock incentives exercised during the period.
Infosys' crorepati club mushroomed by over 128% in the last fiscal since time-based stock incentives granted in 2017-18 and 2018-19 vested during the year and the stock price rally made for a windfall. Interestingly, the company's 2019 Plan will vest strictly on performance, and won't be based on time any longer.
"This programme builds on the strong legacy of meritocracy that was established by the founders and strengthens the company's efforts towards wealth creation for the company's employees, enhanced shareholder returns and delight for customers," Infosys informed the exchanges on Friday.
The grants allocated to employees over a period of seven years will vest based on challenging performance criteria, including relative total shareholder return (TSR) against an industry peer group, relative TSR against domestic and global indices, and operating lead performance metrics such as total revenue, digital revenue growth, and operating margins. As Parekh rightly pointed out, "By making employees owners, they get an opportunity to be beneficiaries in the long term success of the company".
Long standing true to this strategy, Infosys is credited with spawning some of India's early salaried millionaires. The company reportedly created as many as 20,000 rupee millionaires in the 1990s and 2000s.
Sushmita Agarwal with PTI inputs