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May 31, 2001
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Money > Business Headlines > Report May 31, 2001 |
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Infosys plans performance driven salary packageK Giriprakash Compensation norms for the top management of Infosys Technologies are expected to undergo changes with salary packages being tied to the performance of the company. With Infosys itself lowering revenue projections for the current fiscal to around 30 per cent, compensation norms are expected to be reworked with changes in percentage of guaranteed compensation. "In the current year, Infosys will look at directly linking compensation of middle and top management to the performance of the company," Infosys chief financial officer TV Mohandas Pai told Business Standard. He, however, did not respond to a query whether there would be any salary reductions for Infosys management employees because of the profit warning and global infotech slowdown. Even the number of Esops granted to the top management too may see changes. The software giant has already set a trend by giving as much as 95 per cent of total compensation package for each of its senior management staff via stock grants. This is a trend which is in vogue in Silicon Valley where start-ups give more in terms of stock grants than salaries, Infosys has replicated it quite successfully. According to a leading human resources consultancy group, even if one were to value the stock compensation using the Blackscholes model, a widely-accepted industry model for valuing stock options, the value of the stock compensation in the case of a few employees, would exceed 90 per cent of their total compensation package. As per the consultancy group, it has been empirically observed that when options are granted at the fair market value on the date of the grant, the value as per the Blackscholes model is about 30 per cent to 40 per cent of the intrinsic value of the option. According to the human resource consultant, typically, employees including the top management's compensation is linked to the overall growth of the company but in a scenario where the company itself does not expect to perform well because of considerations like poor market conditions, certain compensation norms are changed so that employees' contribution during such a period does not get shortchanged. Powered by YOU MAY ALSO WANT TO READ:
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