The Hindu Business Line : Key executive pay packages zoom at top 3 firms

Bulk of the growth in the compensation packages was driven by an increase in incentives and commissions, even as stock options or restricted stock units lose their charm.

Vishwanath Kulkarni
Adith Charlie

Bangalore/Mumbai, June 5 Compensation packages of key non-promoter executives at the country’s top three IT firms — TCS, Infosys and Wipro — grew faster than the companies’ net revenues for fiscal 2009 over previous year. Their pays were also more than the industry wage inflation of 12-15 per cent. The remuneration for top executives at Infosys grew faster than that of their counterparts at TCS and Wipro. The net revenues of these three firms grew an average of 17.5 per cent.

Interestingly, much of the growth in the compensation packages was driven by an increase in incentives and commissions, even as stock options or restricted stock units lost their charm.

For Infosys promoters such as the Co-chairman, Mr Nandan Nilekani, CEO Mr S. Gopalakrishnan, COO, Mr S. D. Shibulal and Director, Mr K. Dinesh, the compensation grew by about 11 per cent each. However, the CFO, Mr V. Balakrishnan’s package saw a dramatic increase of 274 per cent at Rs 2.36 crore, followed by Director’s Mr Srinath Batni at 47 per cent and Mr T. V. Mohandas Pai’s at 44 per cent.

The TCS Chief Executive and Managing Director, Mr S. Ramadorai’s total compensation grew 21 per cent to Rs 4.09 crore, while the CFO, Mr S. Mahalingam’s remuneration rose 30 per cent to Rs 1.70 crore. The COO and CEO-designate, Mr N. Chandrasekaran’s package increased 36 per cent to Rs 1.92 crore over fiscal 2008, while the Executive Director, Mr Phiroz Vandrevala’s remuneration saw the highest increase of 41 per cent at Rs 1.41 crore.

Though the Wipro Chairman, Mr Azim Premji, took a cut of eight per cent in his package, the compensation of other key executives went up. The Joint CEO, Mr Girish Paranjpe’s package saw the highest rise of 38.6 per cent to $363,000, while the other Joint CEO, Mr Suresh Vaswani’s remuneration grew 35.4 per cent to $384,000. The CFO, Mr Suresh Senapaty, and the Head of HR, Mr Pratik Kumar, got jumps of 26 per cent each at $364,000 and $270,000, respectively.

Key parameters

“The CEO and top management salaries are generally benchmarked against key parameters which may differ from company to company,” said Mr E. Balaji, CEO, Ma Foi Management Consultants. The target set could be anything from improving market capitalisation, earnings, profit after tax or a combination of all the above.

“In the case of IT companies, one would not be surprised if key performance indicators are related to bringing down day sales outstanding, maintaining key customers, doing well in specific geographies or controlling costs,” he said.

The trend of offering big incentives as part of overall compensation package is likely to continue, said Ms Priya Chetty Rajagopal, Vice-President, Stanton Chase.

Satyam effect

The fall of Satyam Computer Services may also have contributed to the swelling wallets of IT company’s executives. Major IT firms lay lot of impetus on winning new clients especially at a time when firms are shrinking their IT budgets.

“It is a known fact that all companies were busy making sales pitches to Satyam`s customers soon after the fraud came to light. Invariably, the ones who were able to attract most of Satyam’s customers were the top tier IT firms. As a result, key officials with those IT firms would have been appropriately rewarded by the management,” said a senior official of Mumbai-based IT solutions firm.

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