In another possible dispute rising between founders and the board of Infosys – this time over compensation – N R Narayana Murthy critised COO Pravin Rao’s pay hike saying a 60-70% hike wasn’t appropriate and was ‘grossly unfair’ to the majority of the Infosys employees.
Later on Monday, Infosys responded with a statement saying Rao’s pay increases reflects the philosophy of aligning the interests of the company’s leadership team to long-term shareholder interests. In fact, Infosys said that the cash component of Rao’s salary actually declined 10.6% to $708,183.
“Given the four-year vesting period of stock, the net increase in Mr Pravin Rao’s compensation for FY18 will be 1.4%. This could go up to 33.4% in the fourth year, assuming similar grants are made in subsequent years based on company and individual performance,” Infosys said in its statement.
As per a report in Reuters, a stock exchange filing over the weekend showed only 24% of Infosys' promoter shares voted in favor of a resolution seeking a revision in Rao's compensation, while others abstained from voting.
Infosys defended the pay hike saying that 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,” it said.
It further said that as per the details disclosed to the stock exchange on October 14, 2016, the new compensation structure with the reduced cash component and higher stock incentives was rolled out for the entire senior leadership including Rao.
Infosys said that is acknowledges the sentiments of shareholders who have not voted in favor of the resolution.
In February, founders first expressed dissent with the management of the company, however Infosys had said that it wasn’t distracted by with dispute with its founders.
The founders, including the likes of Murthy, Nandan Nilkeni, Kris Gopalakrishnan, own 12.75% of Infosys.