Infosys CEO Compensation Sparks Outrage: ₹50 Crore Payout Amid 12% Profit Drop Stuns Investors

Infosys sparked debate by awarding CEO Salil Parekh employee stock options (ESOPs) worth ₹50.75 crore despite reporting an 11.8% drop in Q4 FY25 net profit and narrowing its FY26 revenue growth forecast to 0–3%. While the company attributed the grants to Parekh’s role in securing $11.6 billion in large deals (56% net new), critics question rewarding leadership during a downturn. The ESOPs, tied to performance metrics like ESG goals and shareholder returns, aim to retain top talent and align long-term growth with executive incentives.

However, the move risks alienating stakeholders, particularly amid cost-cutting pressures and muted sector demand. Infosys’ emphasis on stability and future growth reflects a broader IT industry trend of prioritizing stock-based compensation over short-term results. Shareholders remain divided, balancing optimism over deal wins against concerns over declining profits. The decision underscores the delicate balance between motivating leadership and maintaining fiscal accountability in uncertain markets. 

Infosys CEO Compensation Sparks Outrage: ₹50 Crore Payout Amid 12% Profit Drop Stuns Investors

India’s IT giant Infosys sparked debate this week after granting CEO Salil Parekh employee stock options (ESOPs) worth ₹50.75 crore, even as the company reported a 12% year-on-year profit drop in Q4 FY25. The move raises questions about executive compensation strategies during challenging economic climates and how companies balance leadership incentives with shareholder expectations.  

Q4 Results: Mixed Signals 

Infosys’ Q4 FY25 results revealed a net profit of ₹7,033 crore, down 11.8% from the previous year, alongside a muted revenue growth forecast of 0–3% for FY26. Despite this, the company secured large deals worth $11.6 billion in FY25, with 56% classified as net new contracts—a highlight likely influencing the board’s decision to reward Parekh. Full-year revenue grew 6% to ₹1.63 lakh crore, suggesting resilience in a sector grappling with reduced tech spending in North America. 

Breaking Down Parekh’s ESOP Package 

The CEO’s compensation package includes four distinct grants tied to performance metrics:  

• Annual Performance Equity Grant: ₹34.75 crore in restricted stock units (RSUs).  

• ESG-linked Grant: ₹2 crore in RSUs, aligning with environmental, social, and governance goals.  

• TSR-linked Grant: ₹5 crore in RSUs, tied to Total Shareholder Return benchmarks.  

• 2019 Plan Grant: ₹10 crore under a legacy stock ownership program. 

These grants emphasize long-term performance, with vesting periods likely contingent on hitting specific targets. For instance, the ESG-linked component reflects growing investor emphasis on sustainability, while TSR metrics tie compensation to shareholder returns.  

Why Reward Leadership During a Downturn? 

Infosys’ decision mirrors a broader trend in the IT sector, where companies often use stock-based pay to retain top talent despite short-term headwinds. Competitors like TCS and Wipro have similarly structured CEO compensation to emphasize future growth over immediate results.  

Critics argue that hefty payouts during profit slumps risk alienating stakeholders, especially employees facing cost-cutting measures. However, proponents note that Parekh’s leadership has driven $11.6 billion in new deals—a critical factor for future revenue. The board may view these grants as an investment to maintain stability and steer the company through uncertain demand.  

Shareholder and Market Reactions 

While Infosys announced a final dividend of ₹22 per share, the ESOP decision could divide investor sentiment. Some may question the timing, given the profit decline and narrowed revenue guidance. Others might applaud the focus on retaining a CEO who has overseen consistent large-deal wins, a key strength in a competitive market.  

The company’s stock price, which has remained relatively stable despite sector volatility, suggests cautious optimism. Analysts will watch closely to see if Parekh’s strategic bets on digital transformation and AI-driven services yield the projected returns.  

The Bigger Picture: Executive Pay in Turbulent Times 

Infosys’ move highlights the complexity of executive compensation in cyclical industries. While base salaries for IT leaders have remained modest, stock incentives increasingly dominate pay structures, linking rewards to multi-year performance. This approach aims to balance immediate accountability with long-term vision.  

However, transparency remains critical. Detailed disclosures about performance triggers for ESOPs—such as specific revenue targets or ESG milestones—could help align stakeholder expectations.  

Looking Ahead 

As Infosys navigates a “soft” demand environment, Parekh’s ability to convert large deals into sustained growth will be under scrutiny. The ESOP grants signal the board’s confidence in his strategy, but the true test lies in FY26’s results. For now, the decision underscores a calculated gamble: betting on leadership continuity to weather economic storms, even at the risk of short-term criticism.  

In an era where corporate governance and stakeholder trust are paramount, Infosys’ balancing act between rewarding performance and maintaining fiscal prudence offers a case study for the industry—one where the outcomes will shape both its trajectory and the broader discourse on executive pay.