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No. 4: GENPACT
N.V. Tyagarajan, CEO
Pramod Bhasin, Former CEO
Obermatt/CRN Pay-For-Performance Index: 295 percent excess pay
Genpact's CEO, N.V. Tyagarajan, has overseen an attractive 43 percent growth in revenue at the business-process-outsourcing pioneer through the past three fiscal years. But from fiscal 2009 to fiscal 2011, the total CEO compensation for Tyagarajan and his predecessor, Pramod Bhasin, increased 170 percent. It's that spike in total compensation that contributed to Genpact being ranked No. 4 on the list of most overpaid CEOs with 295 percent in excess pay, according to the Obermatt/CRN Pay-For-Performance Index.
Genpact's 2012 proxy notes that part of the base salary for the CEO and other executives is to retain them and ensure they can "maintain a standard of living commensurate with their skill set and experience."
Tyagarajan was named CEO in 2011 after serving the company as COO in 2009 and 2010 under former CEO Bhasin. About $4.5 million of Tyagarajan's total compensation in 2011 was in equity grants that are vested out over a four-year period, in effect reducing the compensation that Tyagarajan actually received last year, said Piyush Mehta, Genpact's senior vice president of human resources. SEC guidelines dictate that the compensation be reported the first year, Mehta said.
"When you have a new CEO you want to give him some level of assurance and provide him with some [security] so that he will continue to deliver," Mehta told CRN. "It only looks like you're paying him $8 million because it's all factored into one year."
New York-based Genpact, which was spun out of General Electric in 2004, does not use predetermined individual or corporate performance factors or goals to establish compensation levels for executive officers. However, in determining 2011 annual cash bonuses for the named executive officers, the compensation committee looked at overall operational and financial performance and each named executive officer's role in that performance, according to the company's proxy.
The committee awarded higher bonuses in 2011 than 2010 because revenue increased 27 percent compared to 2010 and revenue from global clients (excluding General Electric) increased 43 percent, according to the proxy. Tyagarajan's increase in 2011 total compensation came in share awards ($5.2 million for 2011 after taking over as CEO in June 2011, according to the proxy). He also earned a 2011 bonus of $1.3 million, about 80 percent higher than his 2010 bonus, because he exceeded the targets set forth in his contract, according to Genpact.
"The compensation committee also considered Mr. Tyagarajan's seamless transition into the CEO role and strategic acquisitions in determining Mr. Tyagarajan's bonus. Due to the scope of Mr. Tyagarajan's position, the compensation committee also determined that a bonus that was materially higher than the other named executive officers was warranted," the company wrote in the proxy.