From Wipro to TCS: Here's How Much Money Did Ex-CEOs Receive As Severance Pay?
CEO severance pay refers to the compensation package provided to a Chief Executive Officer (CEO) upon their departure from a company. This package typically includes various financial benefits and perks outlined in the CEO's employment contract or severance agreement. Severance pay for CEOs often includes elements such as cash payments, stock options or grants, bonuses, continuation of benefits, and sometimes outplacement services. The purpose of CEO severance pay is to provide financial security to the departing CEO and to facilitate a smooth transition for both the CEO and the company.
In recent years, severance payments to departing CEOs at companies like Tata Consultancy Services (TCS), Cognizant, and Wipro have varied between Rs 48 crore and Rs 92 crore.
Why Wipro is willing to pay Rs 92.1 Crore to its Ex-CEO Thierry Delaporte
Wipro, a leading IT services company in India, made headlines with its generous severance offer to departing CEO Thierry Delaporte. However, this substantial compensation package comes with a significant stipulation, highlighting the complexities of the industry's executive pay and non-compete agreements.
According to a report in The Economic Times, Wipro will provide Delaporte with a massive severance package of Rs 92.1 crore (approximately $11 million) following his earlier-than-expected departure from the company. However, this payment is contingent upon Delaporte adhering to a crucial requirement: he must refrain from taking up any employment or advisory roles with another company for twelve months after his official exit on May 31, 2024.
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Generous severance packages to CEOs
The clause restricting individuals from engaging in competing activities for a specified period after leaving a company is a common practice in the industry and is often included in employment agreements. In Delaporte's case, the agreement states that if he is unjustly terminated, Wipro must provide him with a payout equivalent to his 12-month base salary at the time of termination. However, these payments will cease if Delaporte secures a new job or serves as a consultant for any company within the stipulated timeframe.
How much did ex-CEOs of Wipro, and TCS Others get as severance pay?
| Former CEO | Company | Year | Amount (In INR Crore) |
|---|---|---|---|
| Thierry Delaporte | Wipro | 2024 | 92 |
| Rajesh Gopinathan | TCS | 2023 | 48 |
| Brian Humphries | Cognizant | 2023 | 28 |
Such generous severance packages for departing CEOs are commonplace in the IT services industry, especially when their tenure in the role is abruptly ended. For instance, in 2023, Tata Consultancy Services (TCS) approved expenses of Rs 48 crore for former CEO Rajesh Gopinathan's departure agreement. Similarly, Brian Humphries, the former CEO of Cognizant, received a severance package valued at $6.6 million when he departed in early 2023.
These substantial severance packages typically align with the contractual obligations or prevailing industry norms of the companies involved. Their objective is to provide equitable financial support to executives who experience an unexpectedly shortened tenure in their positions.
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