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TCS’s N. Chandrasekaran highest paid CEO in India’s IT sector

LiveMint logoLiveMint 03-06-2014 Anirban Sen

Bangalore: N. Chandrasekaran, the chief executive officer (CEO) of India’s largest software services exporter Tata Consultancy Services Ltd (TCS), received a nearly 60% hike in annual salary in 2013-14, making him the highest paid chief executive in India’s $118-billion information technology (IT) industry.

Chandrasekaran, who has built on the strong foundation laid by predecessor S. Ramadorai and extended Mumbai-based TCS’s lead over the likes of Infosys Ltd and Wipro Ltd, earned an annual compensation of `18.68 crore ($3.15 million) in the year ended March, compared with `11.7 crore the previous year.

The compensation figures include special benefits, allowances and commission on performance. The pay does not include Chandrasekaran’s earnings from the 88,528 shares he held in the company as of 31 March. The CEO earned about `28.22 lakh from his stock holdings. In comparison, Cognizant Technology Solutions Corp.’s chief executive Francisco D’Souza, who also serves on the board of General Electric Co., took home a package of about $1.5 million for 2013.

Infosys CEO and co-founder S.D. Shibulal’s pay for 2013-14 stood at about $26,000, but his dividend earnings from his stake in Infosys touched nearly $13 million.

The highest paid executives at Infosys Ltd in 2013-14 were Stephen Pratt and B.G. Srinivas who earned about $2.1 million and $1.3 million, respectively. Wipro Ltd’s T.K. Kurien raked in a package of about $1.1 million, up from $888,228 he earned the previous year.

“If you look at the CEO salaries of top companies like TCS, Wipro and Infosys, their salaries are extremely high since they’ve become global roles,” said Anshuman Das, co-founder and chief operating officer of recruiting firm CareerNet Consulting. “They’ll be making much more than say, what the India head of a multinational company like Yahoo or Walmart would be making. There is also a component of the compensation that is linked to the stock price, which benefits Indian IT services CEOs.”

Graphic: Ahmed Raza Khan/Mint

Chandrasekaran appears to enjoy support of the 300,000-odd employees of his company. According to job and career site Glassdoor, where employees anonymously rate the top leaders of a company, Chandrasekaran holds an 89% approval rating—second only to the 92% held by Cognizant’s D’Souza.

Since Chandrasekaran took over as CEO in October 2009, TCS’s revenue has more than doubled from $6.34 billion in the 2009-10 fiscal to about $13.4 billion in the 2013-14 financial year.

Alongwith US-based Cognizant Technology Solutions, TCS has aggressively snatched away market share from not only traditional IT sector powerhouses Infosys and Wipro, but also from global multinational rivals such as International Business Machines Corp. (IBM) and Capgemini North America Inc.

According to figures compiled from annual reports, TCS posted $6.89 billion of incremental revenue in the previous four calendar years, which is nearly thrice as much as the services business of IBM that generated $1.38 billion during the same period.

Incremental revenue, which denotes actual revenue gained by a company over a given period of time, is a measure of market share growth and has evolved as a truer benchmark for the IT sector with profit margins eroding as firms push to win deals.

In 2013-14, TCS posted nearly 16% annual revenue growth in the fiscal, ahead of industry lobby Nasscom’s forecast of 12-14%, and said its growth in the current year would top industry expectations comfortably. TCS added seven customers that contribute more than $100 million in annual business during the year, taking the total number of such clients to 24. TCS counts the likes of Citigroup Inc., Johnson and Johnson and Target Corp. among its clients.

Chandrasekaran, in the annual report statement, told shareholders that TCS would continue to perform strongly on the back of higher spending by clients globally on newer technologies.

“At a macro level, global IT spending continues to grow year-on-year, and it is my firm belief that Digital Five Forces (mobility, big data, social media, cloud computing and robotics) are going to accelerate this trend, as IT usage increases across industries. The on-going investment of your company in these recent trends will enable it to play an impactful role in this technology revolution,” said the CEO in a letter to shareholders.

The technology researcher Gartner Inc. estimates that global IT spending will grow 3.2% to touch $3.8 trillion in 2014.

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