Backing Infosys co-founder N.R. Narayana Murthy’s view on pay hike to COO U.B. Pravin Rao being “not proper,” the company’s ex-director T.V. Mohandas Pai on Monday said the salary in this case was “spectacular” but performance was not.
Alleging that Infosys’ board was “misguided”, Mr. Pai said the “fundamental problem” was the pay hike given earlier to CEO Vishal Sikka “without any justification”, because of which other executives were also expecting higher pay.
“I think the Board was misguided. You hired a CEO (Vishal Sikka). You are forced by the CEO to increase (his) salary from $7 million to 11 million. There was no justification,” he said. “When you see CEO getting so much, then COO will say: what about me? I cannot be paid one-tenth of what CEO is being paid,” he said.
“The fundamental error was increasing CEO’s salary from $7 million to $11 million without any justification,” Mr. Pai further said.
He said salary levels in India could not be compared with that in the U.S and argued that at a time when the salary for entry level software engineers had not been raised in the IT industry in India for the past seven years, it was wrong to hike the compensation for top-level executives.
The salary of Chief Operating Officer (of Infosys) three-four years ago was ₹3.5-₹4 crore. Now, it has gone up to ₹12 crore, according to Mr. Pai, who is the Chairman of Manipal Global Education Services and Aarin Capital.
“You can’t compare compensation levels with that in the US because employees (of Indian companies) are all here. A software engineer is paid ₹3.5 lakh. A person who is COO gets paid ₹12 crore or ₹13 crore. 400 times. You have not raised the software engineer’s salary for 7 years,” he said. “The starting salary for software engineers has not gone up for the past seven years; and the inflation in the last seven years is about 60%,” he added.
“I totally agree with Murthy that it was not proper. We should have Indian norm for compensation; we can’t follow American norm, we (Infosys) are not an American company,” Mr. Pai, who was also formerly Chief Finance Officer of Infosys, told PTI in a telephonic interview.
“I think unless people at the bottom (software engineers) get good, regular hike, paying people at the top for doing nothing for a long period of time is totally wrong,” Mr. Pai said.
Without naming Mr. Rao, he added, “That too we have been paying (compensation hike) for a person who has been in the company for 30 years.”
“If somebody has done spectacularly well, then it’s okay. Performance is not spectacular. Salary is spectacular,” he said.
Mr. Murthy had, on Sunday, said the compensation hike to Mr. Rao approved by the board in February was not “proper” and “will likely erode the trust and faith of the employees in the management and the board.”
“Giving nearly 60 to 70% increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6 to 8 % is, in my opinion, not proper,” Murthy had said.
