Infy CEO takes home a smaller pay packet

NEW DELHI: India's most respected IT company Infosys believes in the best HR practices, even rewarding employees with salaries higher than the CEO or chairman. During FY06, Infosys CEO and managing director Nandan Nilekani earned Rs 0.41 crore as annual salary, chief mentor Narayan Murthy grossed Rs 0.42 crore.

On the other hand, Infosys group head, worldwide customer delivery, SD Shibulal grossed Rs 1.01 crore followed by customer delivery head Srinath Batni who grossed Rs 68 lakh, VP, retail, Pravin Rao (Rs 50.7 lakh) and SVP Girish G Vaidya (Rs 49 lakh) grossed more than the CEO and chairman. On the extreme end, many top IT company CEOs across the globe have opted to cut their gross salaries and earn through stock options and dividend payouts.
Apple CEO Steve Jobs along with Google executives Eric Schmidt (CEO) and founders Larry Page and Sergey Brin earned $1 each in salary last year.

The rest was in dividend payouts and stock options. Mr Page made a whopping $1.5 billion and Google co-founder Mr Brin made $1.45 billion selling Google stock.

In Infosys, overall, 16 vice-presidents (of areas such as infrastructure management, accounts and administration, education and research, product engineering) and group heads earn more than CEO and chairman, according to the Infosys director’s report 2005-06.

On the other hand, at the largest Indian IT company - TCS, CEO S Ramadorai grossed Rs 2.14 crore last year followed by his subordinates executive VP Phiroz Vandrewala (Rs 58.9 lakh), CFO S Mahalingam (Rs 72.21 lakh). TCS chairman Farrokh K Kavarana, however, earned Rs 1.13 crore.

Wipro chairman Azim Premji’s gross salary in FY06 was Rs 1.86 crore. Gross salaries of all other top executives at Wipro were below Rs 1 crore.

Interestingly, in Infosys’ case, the net salary of the MD, CEO and chairman was even lesser - at Rs 13 lakh each. Rest went to PFs and perks/allowances and incentives/bonus.

Infosys top team is, however, reported to be earning more through dividend payouts. “Most top employees these days earn about 80-100 times their net salaries in the form of dividends which depends upon the performance of the company. These days proxy shares are also in fashion. The Merrill Lynch global CEO earned about $18 million through proxy shares in fiscal 2005-06,” says executive search firm Redileon’s MD Vikram Bhardwaj.

According to sources, one Infosys top executive is reported to have made about Rs 600 crore through dividend payouts alone. About 21.7% in Infosys was held by promoters which came down to about 16.9% because of the recent ADS offering. This means that about 21.7% of the total dividend (Rs 1,238 crore) was distributed amongst promoter shareholders.

Being members of the board, top executives also earn about Rs 5 lakh per board meeting. Raise or cut in top executive salaries is decided by an independent compensation committee under the board. According to hiring contracts, salary of an employee can be reduced if there is mutual agreement of the board on the same.