Infosys does not need strategy overhaul: new CEO Sikka
31 July 2014
New Infosys chief executive officer Vishal Sikka, who takes over from S D Shibulal on Friday, today said there is no need for drastic changes in the company's strategy for a turnaround, but there will be greater emphasis on processes and innovation.
Sikka, speaking on the sidelines of an extraordinary general meeting where shareholders approved his appointment, said the initiatives put in place by executive chairman N R Narayana Murthy and Shibulal had started yielding results. The focus will be on continuing with existing businesses and becoming more effective at running them.
''With the team we have in place and the recent momentum being in our favour, we see no reason to change the strategy. There is no reason to make any grand changes to the present direction that we are going, but I do see a great opportunity to augment that with a new kind of innovation,'' Sikka said.
The former SAP executive said he would continue to build on Infosys' deep-rooted set of culture and values. ''But there comes a time in the life of a company when the knowledge of the founders is replaced by processes and innovations,'' he added.
At the EGM, a few nostalgic shareholders, however, were apprehensive of Sikka's remuneration and the fact that he would be based in the US and not at the Infosys headquarters in Bangalore.
''Last year, I opposed a resolution on a salary of Rs1 to Narayana Murthy. But now, we are considering an annual salary of $5.08 million for the new incumbent. Murthy had brought us a net profit of Rs10,000 crore against Rs1. So we can predict a proportionate increase for $5 million. We will be very happy if it is done,'' said a shareholder.
Infosys vice-chairman Kris Gopalkrishnan said since a chunk of Infosys business came from the US (62 per cent) and Europe (23 per cent), Sikka being based in the US, would be a good model for the company.
The annual base salary of Sikka will be $900,000 and the variable pay will be $4,180,000 ($4.18 million). Besides this, Sikka will also be entitled to receive annual grant of restricted stock units (RSUs) covering either the company equity shares or American Depository Shares (ADS) with a value of $2 million.
Sikka is being appointed as CEO and managing director of Infosys for a period of five years starting 1 August, 2014 till June 13, 2019.
In comparison, the highest paid CEO among the Indian IT services companies till now was N Chandrasekaran of India's largest IT services exporter, Tata Consultancy Services (TCS), with a total compensation being a little above $3 million at R18.68 crore for the 2013-14 financial year. The next highest paid executive was TK Kurien, CEO of Wipro, with a total compensation of $1.02 million for FY14.
Infosys, the country's second-largest IT services exporter, in the first quarter of FY15, recorded a 1 per cent sequential decline in net profit in dollar terms, doing better than generally expected (See: Infosys Q1 net profit jumps 21.6% to Rs2,886 crore).