Infosys CEO Salil Parekh will get shares worth Rs 10 crore under a new employee stock option plan that the IT bellwether unveiled for staff on Thursday, as part of its revised performance criteria for the top executive.
The Bengaluru-based software services provider has also changed Parekh’s employee agreement to enable him to vest the restricted stock units in 12 months instead of the earlier three years.
The vesting period is the time between allotment of shares in an Esop and when the shares are fully owned by an employee.
Under the new plan, chief operating officer UB Pravin Rao also gets shares worth Rs 4 crore. In total, Infosys has revived its Esop for all staff, offering as much as five crore shares or 1.15% of its total stock. In 2016, the firm had committed 1% of shares in an Esop as it battled attrition of employees.
“The grant of stock incentives to Salil Parekh…(is) to incentivise him to increase shareholder value and to drive execution excellence of the agreed business strategy,” Infosys said in a regulatory filing after markets closed on Thursday. The move to provide incentives to employees, especially top executives, will benefit shareholders, said analysts.
“It is right to provide such stock-linked benefits to CEO and COO as long as they are linked to profitable and sustainable growth in terms of margins,” said Shriram Subramanian, MD, InGovern, a proxy advisory firm. “What the shareholders will see is overall profitability and not specific digital or application development growth.”
Infosys stock closed 2.47% higher at Rs 734.20 on the Bombay Stock Exchange.
“Our employees are our biggest asset, and through this programme we aim to recognise and reward individuals who are committed to driving value creation for all stakeholders through their continued and consistent performance,” Parekh said.
The company’s attrition rate continues to remain high, as more technology professionals with skills in newer areas such as digital and analytics, particularly in the three- to five-year experience bracket, leave for better opportunities.
“By making employees owners, they get an opportunity to be beneficiaries in the long-term success of the company and realise the results of their work and dedication,” Parekh said.
Attrition at Infosys climbed to more than 18% by the end of the fourth quarter of the previous fiscal year, compared to 17.8% in the third quarter.
Peers such as Wipro and HCL Technologies are also losing out on talent with less than five years’ experience, particularly in the newer digital and cloud skills, to local operations of firms such as Amazon and captive operations of global MNCs such as Deloitte, Goldman Sachs and PayPal.
Source: Economic Times