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Srinivas, Pratt are highest-paid executives at Infosys in FY13-14

LiveMint logoLiveMint 12-05-2014 Anirban Sen

Bangalore: Infosys Ltd president B.G. Srinivas and Stephen Pratt, former head of utilities and resources for North America who resigned from the company last November, have emerged as the highest-paid executives at India’s second-largest software services exporter in fiscal 2013-14, according to a regulatory filing by the company on Monday.

For the year ended 31 March, Pratt took home a total package of about $2.11 million (around `12.6 crore), including bonuses and incentives, marginally down from the $2.13 million he earned in the previous fiscal, while Srinivas earned a total of about $1.28 million—up more than 40% from the $869,035 he took home in the year earlier.

An Infosys veteran of nearly 15 years, Srinivas is widely seen as one of the front-runners to take over as the company’s first non-founder chief executive officer (CEO) when current CEO S.D. Shibulal retires. Shibulal, a co-founder, has announced his intention to retire before his term ends in March 2015.

The nominations committee of Bangalore-based Infosys is currently hunting for Infosys’s next CEO from a list of internal and external candidates.

Last year, Pratt and former Infosys Americas head Ashok Vemuri were the highest-paid executives at the company. Vemuri, who earned $524,039 during the 2014 fiscal year, left Infosys in August to join smaller Nasdaq-listed rival iGate Corp. as CEO.

Graphic by Yatish Asthana/Mint

Srinivas, in his current role, oversees over $3 billion of business for Infosys, heading the crucial financial services and manufacturing segments.

CEO Shibulal and vice-chairman S. Gopalakrishnan both took a pay cut in fiscal 2014. They earned annual compensation of $26,113 each, down from the $120,000 they made in the last fiscal, excluding, dividend earnings from the shares they hold in the company.

In fiscal 2014, Gopalakrishnan and his family earned about $20.57 million through dividends from their stock holdings in Infosys, while Shibulal and his family made about $13.28 million through dividend payouts, according to Bloomberg data. Gopalakrishnan and his family currently hold about 3.4% of Infosys’s shares, while Shibulal and his family hold 2.2%.

In fiscal 2014, Infosys met the lower end of its target guidance of 11.5-12% revenue growth, almost double the 5.8% growth it achieved a year earlier—a dismal performance that had prompted worried investors to recall founder N.R. Narayana Murthy from retirement to lead the company as chairman in June.

Murthy had earlier said he would take home a token annual compensation of `1 through his term as chairman. He and his family currently hold about 4.48% of the total shares in Infosys and raked in about $27.1 million in dividends during the 2013-14 fiscal.

As on 12 May, Murthy and his family’s net worth stood at $1.6 billion, according to Forbes.

During the year, the company’s non-executive directors were paid an aggregate of $1.32 million.

The salaries of top Infosys executives compare favourably with those earned by top management of rival companies like US-based Cognizant Technology Solutions Corp.

Cognizant CEO Francisco D’Souza, also a board member at General Electric Co., took home a package of nearly $1.5 million for 2013 including bonuses and incentives, while president Gordon Coburn raked in roughly $1.4 million. Their salaries excluded dividends earned from their respective shareholdings in Cognizant.

Infosys, in its regulatory filing, also voiced concerns about the upcoming US immigration Bill and the potential impact on its business in North America—its largest market—due to anti-outsourcing clauses in the proposed legislation that is currently awaiting approval from the US House of Representatives.

The immigration Bill, if passed in its current form, will double visa-application related costs for top Indian software services firms such as Tata Consultancy Services Ltd and Infosys.

The Bill has the potential to disrupt the business model of top Indian software exporters by forcing them to remove professionals on H1B work permits from onsite client locations in the US and, if passed, will force companies to file fewer visa petitions, as the cost for each petition would nearly double and increase by about $5,000.

“If any of those provisions are signed into law, our cost of doing business in the United States would increase and that may discourage customers from seeking our services. This could have a material and adverse effect on our business, revenues and operating results,” said Infosys in the stock-exchange filing.

Infosys currently has about 12,769 employees in the US holding H1-B work visas, which allow employees to remain in the US for up to six years as long as they continue working with the sponsoring company.

During the fiscal year, Infosys significantly reduced its spending on research and development (R&D), as part of the cost optimization drive led by chairman Murthy. During the year, R&D expenses stood at $147 million, down from the $173 million it spent in the previous year. During the year, Infosys Labs filed 79 unique patent applications.

Infosys also formally said it had hived off its products and platforms business, as has been widely expected, into a separate subsidiary called Edgeverve Systems Ltd and is awaiting shareholder approval at the company’s annual general meeting in June.

“On February 14, 2014, a wholly owned subsidiary Edgeverve Systems Ltd was incorporated. Edgeverve was created to focus on developing and selling products and platforms. On April 15, 2014, the board of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with Edgeverve, subject to securing the requisite approval from shareholders in the ensuing Annual General Meeting scheduled on June 14, 2014,” Infosys said.

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