Infosys proposes 88% jump in salary for its CEO Salil Parekh

Infosys Chief Executive Officer (CEO) Salil Parekh will become one of the highest paid executives in the world with a proposed yearly compensation of Rs 79.75 crore, an 88 percent jump over his salary in 2020-21.

Parekh’s pay revision, if okayed by the shareholders, will come into effect on July 2, Infosys annual report released on Thursday (May 26) stated.

For the financial year 2021-22, Parekh was paid ₹ 71 crore salary, about 40% jump from ₹ 49.68 crore in 2020-21. That way, he is already the highest paid CEO in India at present.

A few days back, Parekh was reappointed managing director and CEO of the IT major till 2027, signalling trust in his leadership for turning around the company’s fortunes in his time with the company since 2018.

However, the hike may widen the gap between the salaries of the CEO and an average Infosys employee. At present, the ratio of median remuneration of CEO to employees is 229 (excluding stock-based compensation) and 872 (including stock-based compensation).

Company co-founder NR Narayana Murthy had said a few years back that CEOs should not be offered disproportionate salaries and suggested a ratio of 20 to 25 between the lowest and highest salary taker.

Critics say such a significant jump in salary, that too for a CEO, is unusual for a company like Infosys that often takes pride in its humble origins.

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While the top-level professionals in the IT sector have benefitted from recent rounds of salary hikes, mainly due to high attrition rate, it is the fresher/new joinee category which is struggling to get a decent pay. Salaries of freshers now stand at Rs 3.5-4 lakh per annum.

Infosys has defended offering a fat pay hike to its CEO. The company argued that a comparison of CEO’s salary to the median remuneration should be seen in the context of the company’s strong performance and stock price growth. The company stated that Parekh was reinstated as the CEO and offered a pay hike mainly because of total shareholder return, rise in market cap and growth witnessed of late.

“Under his (Parekh’s) leadership the total shareholder return (TSR) was an impressive 314 percent, the highest among peers. Revenue has grown from Rs 70,522 crore (fiscal 2018) to Rs 1,21,641 crore (fiscal 2022), a compound annual growth rate of 15 percent (versus nine percent for the four years before that) and the profits have also increased from Rs 16,029 to Rs 22,110 crore,” Infosys stated.

If the latest round of salary compensation is approved by shareholders, Parekh will be the highest paid CEOs in India. In comparison, TCS CEO Rajesh Gopinathan draws an annual salary of Rs 25.76 crore; Wipro’s Paris-based CEO gets a pay of Rs 64.34 crore. HCL Tech CEO has a package of Rs 32.21 crore while Tech Mahindra CEO earns Rs 22 crore.

Infosys defended its decision by arguing that almost 97 percent of the hike in Parekh’s proposed annual salary is linked to performance.