BANGALORE, INDIA: Indian IT giant Infosys Technologies today said that there was hike in the compensation given to its Independent Directors in dollar terms and the apparent increase was due to the currency fluctuations over the year that have affected the value of the total remuneration reported in Indian rupee terms in the Annual Report 2010.
Infosys made this clarification in response to a media report that the company's top officials took home increased salary in 2009-10 despite the company reporting lower profit of Rs 5,803 crore compared with Rs 5,819 crore in the previous year.
According to a statement issued by Kris Gopalakrishnan, the CEO of Infosys, the inference that the whole-time directors have got 11-29 per cent hike and executive council members got a hike between 3-36 per cent is imprecise and does not take into account deferred payments of previous years.
All the executive board directors have taken an effective cut of 35 per cent in their Individual Performance Incentive (IPI), in the previous four quarters (starting Q4 FY09 to Q3 FY10), said the statement, which claimed that the bonus and incentive component of the directors' salaries reported in the Annual Report 2010 comprise variable pay for Q3, Q4 FY09 and Q1, Q2 and Q3 FY10.
Hence, the variable pay shown in the Annual Report 2010 comprised five quarterly payments instead of four, as Q3 FY09 was included in this year, whereas Annual Report 2009 had only 3 quarterly payments reported.
In addition, the bonus and incentive component for Mohandas Pai and Srinath Batni includes a payout towards Long Term Bonus (LTB), which was a deferred payout, clarified Infosys. LTB payout is deferred for a period of 2 years. The LTB payment received by these directors in FY10 was for FY08.
If the salaries of the directors are normalized, the increase in the salary as against the previous year is in the range of 1 - 4 per cent only, it added. Also, the directors did not receive a pay hike of an average 8 per cent announced in October 2009 for the period October 2009—March 2010.
With regard to the remuneration given to the executive council members, the statement said that they have two unique components — EC Bonus and a Role Allowance as part of their compensation, which are also paid out as a deferred payment. In FY09, the EC bonus was only paid for four months as the EC was created in November 07. This was reflected in the salaries reported in the Annual Report 2009.
As the variable payouts are deferred payments, the payout happens in subsequent years. Hence, what is shown in the Annual Report 2010 includes the catch up payments of the previous years. If the salaries are normalized over the years the average growth for the year will be 7-8 per cent, claimed Infosys.