Vishal Sikka vs Salil Parekh’s Infy CEO contract: Retirement at 60, garden leave, no-compete clause vis-a-vis TCS, Wipro

After the disagreement with its former CEO Vishal Sikka, Infosys has relied on an iron-clad, detailed employment agreement for current CEO, Salil Parekh. Here’s how the two contracts differ, on a few points:
Also read: Vishal Sikka updates Twitter bio, posts e-mail on personal blog

VISHAL SIKKA

Compensation
A key sore point between Infosys co-founder Narayana Murthy and Sikka was the hefty compensation that the latter was being paid. A look at Sikka’s updated agreement shows that no amounts have been mentioned. Only the terms for fixed pay, variable pay and stock compensation have been enumerated.

Employment term
“The term of this agreement shall begin on April 1, 2016 (the “Effective Date”),and terminates on March 31, 2021 or such other term as decided by shareholders from time to time (the “Employment Term”).”

Severance terms
“The company may, in its discretion, satisfy its notice obligation under this section by providing Executive with the equivalent of 90 days of his (a) base pay, (b) an amount equal to 3 times the liquidated pay-out as defined below, and (c)other compensation and benefits that Executive would have earned during the notice period had Executive remained employed during such notice period.”

Non-competition
“The receipt of any severance benefits...will be subject to Executive executing a non-competition agreement to the extent that a non-competition agreement is enforceable under the applicable laws.”

Cause for being fired
Sikka had six conditions laid out as causes for termination. Reasons included: “Executive’s material failure to abide by Company’s code of conduct or code of ethics policies resulting in demonstrable injury to the company or its reputation” and “willful misconduct or breach of fiduciary duty for personal profit by executive”.

SALIL PAREKH

Compensation
In Parekh’s case, the numbers are clearly spelt out: be it annual salary of Rs 6,50,00,000 or a variable pay of Rs 9,75,00,000 which will be payable to the current CEO over the next few years, subject to the company meeting “milestones” as agreed upon.

Employment term
“The initial term of this Agreement will be for a period of five years beginning on the effective date, provided however that this Agreement may be extended for a successive term of three years on mutually agreed terms and conditions...However the executive will retire upon reaching the age of 60, unless the Company agrees to continue to employ the executive.” While in Sikka’s agreement, there is no mention of a retirement age, in Parekh’s there is.

Severance terms
While the terms of settling the notice period remain largely the same, there is the additional inclusion about garden leave. Infosys reserves the right to put Parekh on garden leave — suspension from work on full pay — during the notice period.

Non-competition
The receipt of any severance benefits will be subject to Parekh not violating any of the agreed upon terms as per the contract. In the event that he does so, the severance payouts will stop with immediate effect, and he will have to return any payouts that have been disbursed previously.

One of the terms lists out the names of the major competitors that Parekh cannot work with during the restricted time period (TCS, Accenture, IBM, Cognizant, Wipro, Tech Mahindra, Cap Gemini and HCL Technologies). Something that was missing from Sikka’s agreement.

Cause for being fired
Parekh has 14 of these, including, “Executive’s misuse of alcohol or drugs which interferes with Executive’s performance of Executive’s duties for the company, or which is harmful to the reputation or goodwill of the company,” and his “failure or refusal to follow the reasonable and lawful instructions of the Board.”