Wipro’s public shareholders baulk at ₹36-crore severance to Delaporte

Baulking over an apparent lack of transparency in the decision-making, 78.4% of Wipro’s public shareholders voted against the cash compensation to Delaporte, show voting records published on BSE on Thursday. Despite that, a 73% promoter holding helped the resolution secure an overall 90% vote in favour.

Delaporte resigned on 6 April after Wipro chair Rishad Premji asked him to put in his papers. Following his resignation, Wipro disclosed that it had agreed to pay $4.33 million to Delaporte, a first-of-its-kind cash payment made to any outgoing executive in the company’s history.

Including the ₹36 crore in cash and accelerated vesting of unvested stocks, the cost of which Wipro pegged at ₹31 crore, Delaporte reaped a total salary of  ₹167 crore ($20.1 million) for last year, making him among the highest-paid chiefs in the country’s IT services sector.

At least seven large foreign institutional investors, including the UK’s largest fund manager, opposed the decision, show documents reviewed by Mint.

“A vote AGAINST this resolution is warranted given that there is insufficient disclosure and that certain aspects of the reward justification fall within the scope of an executive’s appointment contract," said London-based Legal & General Investment Management, which manages $1.5 trillion of assets.

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Overall, about 80% of institutional shareholders, who own 10.5% of Wipro, voted against approving the cash compensation to Delaporte. About 70% of Wipro’s retail shareholders who voted also opposed the decision. Retail investors own 16.5% of the company, but only 11% of them exercised their vote.

All against

Canada Pension Plan Investment Board, which oversees $460 billion in assets, and British Columbia Investment Management Corporation, a Canadian pension fund that manages $200 billion in assets, also rejected the proposal.

“We do not support the proposal as the company’s current disclosures do not provide sufficient transparency to evaluate fully the associated risks and opportunities," said Nordea Asset Management, which handles about $400 billion in assets under management (AUM). Nordea Asset Management is the investment arm of the Nordic region’s largest bank, Nordea Bank Abp.

The California Public Employees’ Retirement System, or CalPERS, which has about $500 billion of AUM, and Calvert Research and Management, part of Morgan Stanley Investment Management, also opposed the resolution. The City of New York Trust, with about $200 billion of AUM, also voted against the proposal.

Rationale unclear

Delaporte, who took over as the CEO on 6 July 2020, resigned 14 months before his five-year tenure was to end in July next year, and was replaced by Srinivas Pallia at India's fourth-largest IT services company.

In a regulatory filing, Wirpo said the cash severance was “in recognition of Mr. Delaporte’s contributions in driving significant transformation at Wipro… and to ensure adherence to post engagement obligations (including, but not limited to, confidentiality, non-solicitation, non-disparagement, and other obligations)".

Also read | With Delaporte gone, can legacy hand Srinivas Pallia steer Wipro through the AI age?

“The rationale for such a large payout for what appear to be obligations born out of basic professionalism is unclear," proxy advisory firm Institutional Investor Advisory Services India Ltd said in a note dated 16 May, recommending to shareholders to reject the proposal.

“The company must also clarify if this payout was agreed to as part of his employment contract," IiAS added. “It is unclear if this compensation was part of the terms negotiated on his employment contract."

Wipro has outlined bleak revenue growth for the first quarter of this financial year (2024-25), after reporting one of its worst years with declining revenue (-3.8%), profit (-2.7%) and headcount (-9.5%) in FY24.

Wipro shares fell 2.8% to ₹438.20 each on NSE on Thursday.