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Vishal Sikka justifies COO Pravin Rao's salary hike; says necessary to retain talent

Infosys, in a statement, said that the effective hike of Rao's compensation for FY18 was only 1.4%.

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Infosys Chief Executive Officer Vishal Sikka came to the defence of the salary hike provided to Chief Operating Officer U B Pravin Rao saying that it was necessary to 'retain key talent'.

The statement came at a time when the criticism against Rao's compensation hike was gaining momentum, with comments from founder N Narayana Murthy and ex-chief financial officer Mohandas Pai. 

Justifying the salary hike, Sikka, in a statement submitted to the bourses, 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." 

Infosys said that the revised compensation structure "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 Pravin Rao. 

Infosys said that while Rao's pay hike was 33%, the effective hike was only 1.4%.

That is: 

The cash component of his compensation decreased from Rs 5.2 crore (including annual cash bonus) to Rs 4.6 crore, a fall of 10.6%, Infosys explained. 

Performance-based component of the compensation (directly linked to company and individual performance) increased from 45% to 63%. Given the 4-year vesting period of stock, the net increase in Pravin Rao's compensation for FY18 will be 1.4%. This could go up to 33.4% in year 4, assuming similar grants are made in subsequent years based on Company and individual performance, Infy said. 

Infosys said that the compensation proposal was approved by 67% of the company's shareholders in a postal ballot. 

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