Infosys Allocates More Than 511,000 Shares To Its Employees

On May 12, 2023, Infosys, a prominent technology company, disclosed in a filing with the stock exchange that it had issued over 511,000 equity shares to its eligible employees through two programs.

This distribution of equity shares occurred as a result of qualified employees exercising their Restricted Stock Units. The stock market was informed that a total of 511,862 equity shares would be distributed. Based on the current market price, these shares are valued at approximately Rs 64 crore.

Furthermore, Infosys also announced the allocation of 407,527 equity shares under the Infosys Expanded Stock Ownership Programme 2019 and 104,335 equity shares under the 2015 Stock Incentive Compensation Plan.

Following the announcement during after-hours on Friday, the share price of Infosys experienced an increase of approximately 1% in early trading on May 15 on the BSE (Bombay Stock Exchange). However, it is worth noting that the company’s stock has incurred a decline of nearly 17% in 2023, negatively impacting investors’ value, while the benchmark Sensex index has witnessed a growth of 1.7%.

Shortly after announcing a noteworthy 7.8% rise in year-on-year consolidated net profit, amounting to Rs 6,128 crore, for the final quarter of the fiscal year 2022-2023, Infosys failed to meet market predictions. Facing uncertainties in the macroeconomic environment, the company, which competes with Wipro, Tata Consultancy Services, and other software firms, has projected a 4-7% sales growth for FY24.

In the fourth quarter of FY22, Infosys recorded a net profit of Rs 5,686 crore. However, there was a sequential decline of 7% in net profit for the final quarter. On a positive note, the company’s consolidated sales for the last quarter of FY23 witnessed a significant year-over-year increase of 16% to reach Rs 37,441 crore. Looking ahead to FY24, Infosys has forecasted revenue growth ranging from 4% to 7%.

In the January announcement of its Q3 results this year, Infosys revised its revenue forecast for FY23, upgrading it from the initial estimate of 15 to 16 per cent to a more elevated range of 16 to 6 per cent. Moreover, the company’s net profit for the entire fiscal year FY23 exhibited a significant rise of 9 per cent compared to the preceding year, amounting to Rs 24,095 crore.

Additionally, sales experienced a significant growth of 20.7 per cent, amounting to Rs 146,767 crore. Salil Parekh, the CEO and Managing Director of Infosys commented on the shifting business landscape, highlighting the substantial demand from clients for effectiveness, affordability, and opportunities for collaboration. Consequently, Infosys has witnessed a substantial increase in its deal pipeline, reflecting the strong market position and prospects for the company.

This decision comes at a time when a large IT company is experiencing a significant rate of employee turnover. According to the company, Infosys had 3,611 fewer employees at the end of Q4FY23 compared to the previous quarter. This represents a decline of 46% in workforce growth compared to the previous year, where the company added a net total of 54,396 employees. As of March 31, 2023, Infosys’ total headcount stood at 343,234.

This marks the first quarter since the pandemic-affected quarter of FY21 where Infosys had a smaller workforce at the end of a quarter compared to the previous quarter. Despite facing increased attrition, Infosys has expressed its commitment to investing in talent. The company’s HR leader stated that their HR strategy is influenced by the lessons learned during the pandemic and focuses on factors such as adaptability, talent cultivation, and fostering a positive work environment.

Following the allotment, the company’s enhanced share capital amounts to 2,074.9 crores. As for the shares acquired subsequent to the exercise of the award, there are no restrictions on their transferability within the Infosys Expanded Stock Ownership Programme 2019. The primary objective of the Infosys Expanded Stock Ownership Programme 2019 is to augment employee ownership in the company through a performance-based stock award initiative, aiming to reward, retain, and attract critical talent.

All employees at Infosys are eligible to participate in this program. Infosys has specified that the assessment process for determining an employee’s eligibility to receive restricted stock units under this scheme is conducted by an administrator. The evaluation criteria encompass factors such as the employee’s organizational level, performance track record, future potential, and any additional criteria set by the administrator as per evolving circumstances.

The Stock Incentive Compensation Plan introduced in 2015 is designed to attract, retain, and motivate skilled and valuable employees by fostering a strong connection between their individual performance and the overall objectives of the company.

By aligning employee interests with organizational goals, the plan aims to recognize and reward employees based on their contributions, granting them ownership that reflects their level of dedication. This plan supersedes the previous RSU Plan from 2011. The primary focus of the key performance indicators lies in generating value for shareholders through the consistent delivery of superior business growth, thereby promoting the effective execution of the mutually agreed-upon business strategy.

As per the guidelines outlined in the Infosys Expanded Stock Ownership Programme 2019, the period during which a restricted stock unit becomes fully available for the recipient, known as the vesting period, must be at least one year and should not exceed three years from the date the award is granted.

The specific duration within this range is determined periodically by the administrator, as stated by Infosys. If a participant has been granted restricted stock units under an applicable award agreement but has not yet met the requirements for vesting, Infosys states that those units will automatically be forfeited if the vesting conditions are not fulfilled by the time of termination or resignation, depending on the circumstances, such as employment termination or participant resignation.

Proofread & Published By Naveenika Chauhan