Proxy firms back Infosys CEO designate Vishal Sikka's over $7 million pay package

MUMBAI: Skyrocketing pay packages of senior executives usually raise eyebrows in the industry and spark concern among shareholder advisory firms. But surprisingly, this time around, these firms are batting for Infosys CEO designate Vishal Sikka's over $7 million package, which is not only one of the highest in India but also comparable to that of his global peers.

Infosys will pay Sikka, who replaces S D Shibulal, up to $5.08 million in annual salary besides stock options worth $2 million. Proxy firms believe that Infosys, which been hit by several top-level exits over the past few months, needs to "invest in talent", and put in place a team that can frame the company's vision for the future" and so shareholders should vote for his appointment and remuneration.

India's second-largest software services exporter has called for an extraordinary general meeting of its shareholders on July 30 at Bangalore to approve the appointment of Sikka as the new CEO, and his annual remuneration at a maximum of $7.08 million (Rs.42.48 crore).

Recently, institutional investors and public shareholders in Tata Motors had rejected the proposal on the remuneration of three top executives.

"Infosys' decision to appoint Sikka must be looked at as an investment in its leadership that will bear returns in the future. Sure enough, one may question the potential return ratios ? but you must first invest," Amit Tandon, co-founder of Institutional Investor Advisory Services (IiAS), a proxy firm, told TOI.

"Infosys has been under stress for a while. The compensation is not out of sync globally, and is suitable coming from a company of the size of Infosys which has a market cap of nearly Rs 2 lakh crore," says Shriram Subramanian, founder and MD, of shareholder advisory firm, InGovern Research Services, adding "the company needs to spell out the performance criteria".




Given that more than 60% of the company's topline comes from North America, Sikka will continue to operate from his existing base of California (US), and shuttle in and out of the company headquarters in Bengaluru. Hence, a more comparable peer base will be global counterparts like Capgemini, Cognizant and Adobe where the remuneration levels for CEOs are comparable (and in some cases, higher than) to that proposed by Infosys, IiAS says.

Moreover, over 80% of his total remuneration (including restricted stock) is variable and based on target achievement, which establishes a strong link between pay and company performance, experts added.

Many are hopeful that Sikka with his fresh perspective will breathe a new life into the company. "We think the strong technology credentials of Sikka and his relative youth (age 47 years) should bring back confidence in the company and could set it on the next leg of growth. The appointment also resolves the longer term leadership issue," Barclays had said in an earlier note.