Infosys CEO Salil Parekh's salary hike up 88% to Rs 79.75 crorea. Salil Parekh, chief executive officer and managing director of Infosys, has got a massive 88 per cent jump in annual remuneration to Rs 79.75 crore, making him one of the highest-paid executives in the country.
Parekh's total salary has jumped to Rs 79.75 crore from Rs 41 crore last year, while other senior management team members have got anywhere between 35 per cent and 60 per cent increase in their annual salaries.
1) What is the issue?
The issue is his annual pay-hike of 188%. I thought corporate honchos were not supposed to earn more than 100 times their average employees. In case of Indian IT companies, it is usually 150-200 times, which is unacceptable in a poor country like India. One may say that given his prior experience and responsibilities, he deserved such an increase but given below two facts will make you question if that’s really true
2) How much will he make?
Just as we can calculate how much a professional golfer will make over their lifetime by multiplying winnings by number of tournaments played, we can also compute how much one's earning potential is based on education and skills. For example, let’s say that you went to a top-tier school and graduated in Computer Science with a GPA of 3.95 – your estimated lifetime earnings would be around $3 million!
3) Why the sudden hike?
The board of Infosys, India’s second-largest software services firm, on Thursday gave a hefty pay hike of nearly 89 per cent to its chief executive officer and managing director Salil S Parekh, bringing his annual compensation at par with his American peer Satya Nadella of Microsoft. The Board had reappointed Mr.
4) When did this happen?
Salil Parekh became chief executive of Infosys in August last year, succeeding S D Shibulal, who stepped down as part of a planned handover process after serving two years as CEO. Salil has been granted stock options worth Rs 6.5 crore at current market prices to reward him for his performance during fiscal 2014-15 and 2015-16.
5) Does he deserve it?
He may be an excellent manger and leader, but has he taken any steps that increase shareholder value? What are his goals for boosting revenue, and how will his pay be tied to those targets? Asking these questions is a good way of assessing whether he’s worth it—and, more importantly, gives you insight into whether your own manager is deserving of her salary. (My guess: no.)
6) Is this justified?
Yes, it is justified because Infosys is doing very well and their revenues are growing at a great pace. The company has also been in news for bagging large deals like banking transactions of HDFC and ICICI bank. So, it makes sense for them to give good salary hike along with a bunch of stock options.
What Does This Mean For Other CEOs?
Higher salaries are also a reflection of a raging debate in India about income inequality, especially as India’s top executives have been making more than their counterparts abroad for several years now. Mr Parekh’s compensation is higher than that of some CEOs of large MNCs, who also head much larger corporations and operations globally compared with Infosys.
Conclusion
But then why should a company pay so much for its executives when that could have gone into raising salaries of lower level employees or paying off loans? Perhaps, if all are paid well, they would help in creating a happy and productive work environment where there is less pressure on recruitment and firing costs. Also, let us not forget that with China gradually losing its cost advantage, India will become an important manufacturing hub in the coming years-the country will need experienced people who can lead companies and teams effectively.