This article will reflect on the compensation paid to Salil Parekh who has served as CEO of Infosys Limited (NSE:INFY) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Infosys.
Comparing Infosys Limited’s CEO Compensation With the industry
Our data indicates that Infosys Limited has a market capitalization of ₹4.1t, and total annual CEO compensation was reported as US$6.2m for the year to March 2020. We note that’s an increase of 27% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$801k.
In comparison with other companies in the industry with market capitalizations over ₹587b , the reported median total CEO compensation was US$2.6m. This suggests that Salil Parekh is paid more than the median for the industry. Moreover, Salil Parekh also holds ₹424m worth of Infosys stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Infosys pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
Infosys Limited’s Growth
Infosys Limited’s earnings per share (EPS) grew 5.2% per year over the last three years. Its revenue is up 5.5% over the last year.
We would argue that the improvement in revenue is good, but isn’t particularly impressive, but we’re happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.
Has Infosys Limited Been A Good Investment?
Boasting a total shareholder return of 136% over three years, Infosys Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Infosys pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, shareholder returns for the last three years have been excellent. That’s why we were hoping EPS growth would match this growth, but sadly that is not the case. We’d ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.
CEO compensation can have a massive impact on performance, but it’s just one element. We’ve identified 3 warning signs for Infosys that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
If you decide to trade Infosys, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.