Infosys CEO Salil Parekh is getting relatively less attractive salary package as compared with the earlier CEO Vishal Sikka, according to a report in Mint.
The report said Infosys chairman Nandan Nilekani appears to have drawn lessons from the ugly public spat with its first non-founder CEO.
Infosys has structured a tighter and transparent employment contract with Salil Parekh.
The Bangalore-based IT services firm, however, has still not spelt out the metrics based on which Parekh will be paid his variable pay.
Main features of the contract
Salil Parekh is not assured of any minimum salary as part of his compensation structure. In contrast, Infosys had agreed to pay Sikka $10 million in annual compensation, irrespective of the firm’s performance.
Salil Parekh, in comparison, can earn as much as Rs 17.3 crore, including fixed salary and variable pay, in the first full year. His earnings could possibly double to Rs 35.25 crore in the year ended March 2021, provided he steers the company well.
A “Release of Claims” condition ensures that Infosys does not have to pay more than the promised severance to Salil Parekh, in case the board ends his tenure before 2023. Vishal Sikka’s contract did not have such a clause.
The Release of Claims clause, although pretty common globally, is probably the first time an Indian firm has got it included as part of an employment contract.
Infosys pays considerably less in severance payment to Salil Parekh than what it committed to pay Vishal Sikka. Salil Parekh stands to get half of his full-year fixed and variable pay, as against Infosys agreeing to pay two years of fixed and variable salary to Vishal Sikka.
Salil Parekh cannot work with eight IT firms, including Tata Consultancy Services (TCS), Accenture and Parekh’s former employer, Capgemini for six months from the time he leaves Infosys.
IBM, Cognizant Technology, Wipro, Tech Mahindra and HCL Technologies are the five other companies. Vishal Sikka did not have a non-compete clause.
Infosys has spelt out the process of arbitration, in case of dispute with the CEO.
Both Infosys and Salil Parekh have agreed to abide by a three-member arbitration panel’s decision and not to contest the panel’s verdict before any court. Vishal Sikka’s employment contract did not specify details of the arbitration process.
Clarity on arbitration should further assuage investor concerns as Infosys’s former chief financial officer Rajiv Bansal has challenged the firm’s decision to withhold from making the full Rs 17.38 crore in promised severance pay.
Infosys, after making payment of Rs 5 crore to Rajiv Bansal, stopped the balance payments, with the firm declining to share the reason behind this decision. It is not clear if Infosys or Bansal will accept the arbitration verdict and if either of the two warring sides will contest it in court.
