Wipro executive chairman Rishad Premji's compensation halved in the financial year 2022-23 as the IT company reported a drop in its FY23 profit.
Premji's total salary stood at ₹7.8 crore for the year ended March, according to Wipro's annual report. This includes salary and allowances of ₹7.1 crore and deferred benefits — such as provident fund — worth ₹61 lakh. The Wipro chairman had received a salary of ₹13.8 crore during FY22.
Premji is entitled to a commission at the rate of 0.35% on incremental consolidated net profits of Wipro over the previous fiscal year. However, in light of the fact that the incremental consolidated net profit for the fiscal year 2023 was negative, the company determined that no commission was payable to Premji for FY23, says Wipro.
The pay cut comes after the net profit of the software services company declined 7% year-on-year to ₹11,366.50 crore for FY23. Wipro reported a 0.4% drop in its fourth-quarter net profit.
There were no stock options granted to Premji in FY23. In comparison, Wipro CEO and managing director Thierry Delaporte took home around $10 million (or ₹83 crore) in FY23 compared with the $10.5 million he earned in the previous fiscal.
According to Wipro, the remuneration of executive officers is computed on an accrual basis which includes the amortisation of restricted stock units (RSUs) granted to them, which vest over a period of time, and performance-based stock units (PSUs) that vest based on performance parameters of the company.
Wipro says its cost of revenues increased by 16.11%, primarily due to an increase in employee compensation due to the impact of salary increases, including promotions, and increase in headcount, including through acquisitions, incremental sub-contracting costs incurred to fulfil vacant positions, increase in travel expenses as travel restrictions related to COVID-19 eased, and increase in software licence expenses.
"As a result of the foregoing factors, our gross profit as a percentage of our total revenue decreased by 100 basis points," the company says.
The annual compensation of Wipro's executive directors is approved by the Nomination and Remuneration Committee. Remuneration of the company's executive officers, including its executive directors, consists of a fixed component and a variable performance-linked incentive. The criteria for variable pay include financial parameters like revenue, profit achievement, operating margin achievement and other strategic goals.
Premji became the executive chairman of Wipro in 2019. He joined the company in 2007 and worked in several roles before becoming a member of the board in May 2015. Prior to being appointed the chairman, Premji was the chief strategy officer, responsible for shaping Wipro's strategy to drive sustained and profitable growth.
The Wipro chairman is also on the boards of FMCG major Wipro Enterprises and Wipro-GE, a joint venture between Wipro Enterprises and General Electric in the healthcare domain.
Prior to joining Wipro in 2007, Premji was with Bain & Company in London, working on assignments across the consumer products, automobile, telecom and insurance industries. He also worked with GE Capital in the U.S. in the insurance and consumer lending space.
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