Cognizant’s current CEO, Ravi Kumar Singisetti, stands out as the highest paid Indian executive in the IT sector. In the last financial year, he earned a staggering $22.56 million, which translates to approximately ₹186 crore. This sum places him at the apex of the salary scale when compared to his peers in other prominent IT companies.
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Detailed Breakdown of Cognizant CEO Salary in Rupees
Ravi Kumar Singisetti, as the CEO of Cognizant, stands among the highest-paid executives in the global IT industry. His compensation structure is reflective of the company’s strategy to align executive pay with shareholder returns and company performance. Here’s a closer look at the components of his $22.56 million salary for the last fiscal year, which is approximately ₹186 crore when converted to Indian rupees.
Salary Components
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Base Salary:
- Although the specific base salary amount is not detailed in public filings, the base salary generally forms a small but stable component of a CEO’s total compensation package, intended to provide a fixed annual income.
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Performance Stock Units (PSUs):
- Target Value: $3 million (approx. ₹25 crore)
- Payout Range: 0% to 250% of the target, depending on the absolute total shareholder return of Cognizant’s stock over a four-year performance cycle.
- Performance Conditions: The payout from PSUs is contingent on reaching predefined performance thresholds, which typically include financial metrics like revenue growth and profitability, as well as stock market performance.
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Restricted Stock Units (RSUs):
- Grant Date Value: $5 million (approx. ₹41.75 crore)
- Conditions: These are granted as part of a buyout agreement to compensate for equity forfeited from his previous employer when he joined Cognizant. RSUs vest over a period, commonly in increments over several years, thus ensuring the executive’s continued commitment to the company.
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Bonus and Incentives:
- Annual Performance Bonus: This is typically linked to both personal performance and the company’s financial achievements. The specifics of Singisetti’s annual bonus were not disclosed, but such bonuses can significantly augment a CEO’s compensation.
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Other Compensation:
- Perquisites: These might include benefits such as private use of company jets, health insurance, retirement contributions, and other non-cash benefits which are standard for high-ranking executives in large corporations.
Valuation of Shares
The bulk of Singisetti’s compensation comes in the form of equity, which ties a significant portion of his earnings to the company’s performance:
- Equity Structure: By structuring compensation with a strong equity component, Cognizant aims to align Singisetti’s interests with those of the shareholders. The assumption is that as the CEO, he will be motivated to enhance shareholder value, which will, in turn, benefit him personally.
- Market Fluctuations: The actual value realized by Singisetti from his PSUs and RSUs can vary greatly depending on stock market performance, thereby adding a variable component to his compensation that can exceed the base and target values in favorable conditions or fall below them if performance falters.
Read: Air Aisa CEO Salary: Per Year Salary Calculated in Indian Rupees
Comparative Analysis of Cognizant CEO Salary with Other IT CEOs
To put Singisetti’s earnings into perspective, let’s compare them with other leaders in the field:
| CEO Name | Company | Total Compensation (in million $) | Compensation in INR (crore) | Company’s Annual Revenue (in billion $) | Salary as % of Revenue |
|---|---|---|---|---|---|
| Ravi Kumar Singisetti | Cognizant | 22.56 | 186 | 19.35 | 0.11% |
| Thierry Delaporte | Wipro Ltd | 10.1 | 83 | 11.16 | 0.089% |
| Vijayakumar | HCL Technologies Ltd | 10.65 | 88 | 12.58 | 0.085% |
| Julie Sweet | Accenture Plc | 31.55 | Approx. 261 | 64.1 | 0.049% |
| Salil Parekh | Infosys | 6.8 | 56.4 | 18.1 | 0.037% |
| Rajesh Gopinathan (Former) | Tata Consultancy Services | 3.5 | 29.16 | 27.9 | 0.012% |
The Implications of High CEO Compensation
The substantial compensation packages awarded to CEOs like Ravi Kumar Singisetti are not merely reflections of personal success but indicators of broader economic trends and business strategies. These packages are structured to incentivize CEOs to drive company performance, which is directly tied to shareholder value. This structure is evident in the allocation of performance-based stock units that vary according to the company’s stock performance, a common practice in the industry.
Global Comparisons and Sectoral Insights
When compared globally, CEO salaries in the Indian IT sector often mirror trends in Western corporations, albeit with some lag in absolute figures. For instance, Julie Sweet of Accenture, commanding a compensation of $31.55 million, highlights the disparity between Indian and Western compensation models. This difference can be attributed to various factors including company size, market capitalization, and global footprint.
Global IT CEO Compensation Trends:
- North America: CEOs in this region typically receive higher compensation packages. For example, Sundar Pichai of Alphabet Inc. reported earnings over $280 million in recent filings, primarily from stock options.
- Europe: CEO pay is generally more conservative but includes significant performance incentives. SAP’s CEO, Christian Klein, earned about €10 million, majorly influenced by the company’s performance in the European market.
Economic Impact and Stakeholder Perspectives
The high salaries of CEOs are often a point of contention among stakeholders, particularly when juxtaposed against average employee wages. Here are some perspectives:
- Shareholders: Generally support high CEO pay when linked to performance, as this aligns CEO incentives with their interests.
- Employees: There may be concerns about wage disparity within the company, which can affect morale and perceived equity.
- Public and Media: High CEO salaries are frequently scrutinized, especially during economic downturns or layoffs, questioning the fairness and optics of such compensations.
Final Words
The salary of Cognizant’s CEO in rupees not only reflects his leadership value but also serves as a benchmark for assessing corporate health and strategic alignment in the IT industry. As businesses evolve, so too will the frameworks for executive compensation, potentially leading to more balanced and transparent practices that address the needs of all stakeholders.