Company founders and CEOs often participate on the upside when a company does well, but now they’re also taking a hit when they performance isn’t so great.
Wipro Chairman Rishad Premji has taken a 50 percent pay cut after the company’s muted performance this year. In FY22, Premji had received $1.82 million (Rs. 14.5 crore) as salary, which fell to $951,353 (Rs. 7.6 crore). in FY23. Wipro CEO Thierry Delaporte’s compensation also fell 5 perecnt from 10.5 million (Rs. 85 crore) in FY22 to $10 million (Rs. 80 crore) in FY23.
Premji’s salary fell because he’s entitled to receive a commission at the rate of 0.35 percent on Wipro’s incremental consolidated net profit. Wipro’s consolidated profit, however, fell this year, and as a result Premji received no commission at all for the period.
This year, Wipro’s gross profit as a percentage of revenue from the IT Services segment decreased 0.94 percentage points, primarily due to an increase in employee compensation cost by Rs. 7,429.5 crore. This higher employee cost was due to promotions and increase in headcount including through acquisitions. There were also incremental subcontracting costs of Rs 607.3 crore, increase in travel expenses by Rs 323.2 crore as Covid-19 travel restrictions were eased and higher software license costs for internal use (Rs 407.4 crore).
Wipro has had to face some other challenges as well. Chairman Rishad Premji had earlier courted controversy when he had declared during the pandemic that moonlighting amounted to “cheating”, and working from home had made IT a “spoilt” industry. The statement had drawn sharp reactions from netizens. Wipro, though, had doubled down, and had fired 300 employees who it had determined were moonlighting for competitors. Other indications of stress at the company had also been visible — Wipro had delayed the joining dates of newly-hired freshers, and had then offered them the same roles at half the pay.
All this — along with the lowered profitability numbers — seems to have contributed to Chairman Rishad Premji getting half his salary compared to the previous year. The halved salary isn’t exactly going to pinch — the Premji family is worth nearly $10 billion (Rs. 80,000 crore), so a Rs. 7 crore cut in salary isn’t exactly going to give them sleepless nights. But Wipro’s many employees would take solace in the fact that as the company goes through some hard times through delayed joinings and lowered profitability numbers, the leadership is taking a bit of a personal hit as well.