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Revised deal for Infosys top brass faces resistance from shareholders

BENGALURU: Infosys CEO Salil Parekh’s amended terms of employment faced resistance from some shareholders at the company’s annual general body meeting on Saturday, with about a fifth of votes polled dissenting, even as the IT company’s promoters unanimously approved the resolution.

The terms, which were amended last month, called for faster vesting of stock options.

About 15% of shareholder votes went against granting stock options to both Parekh as well as COO UB Pravin Rao, data filed with the Bombay Stock Exchange showed.

In May, the Bengaluru-headquartered company said Parekh would get shares worth Rs 10 crore under a new employee stock option plan and changed his employee agreement to enable him to vest the restricted stock units in 12 months instead of the earlier three years. Under the new plan, Pravin Rao also gets shares worth Rs 4 crore.

In total, Infosys revived its Esop for all staff, offering as many 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 dissenting investors may have had concerns that the short-term incentive plan could affect the company in the long term, analysts said.

“In the past, shareholders had approved the vesting period of three years, which has now been changed to an accelerated vesting of one year. The fear among investors is that this change could lead to short-term thinking,” said Shriram Subramanian, managing director of InGovern, a proxy advisory firm.

Infosys said the grant of stock options was to provide an incentive to increase shareholder value and drive execution excellence of the company’s business strategy.

Last week, in a filing with the US Securities and Exchange Commission, Infosys said the CEO’s remuneration was tied to revenue growth, operating margin percentage, digital revenue growth and organisational goals, including leadership motivation and organisational stability.

Source: Economic Times