CEO Severance Pay: With $11 million exit pay, Delaporte joins other CEOs in costly exits

Outgoing Wipro CEO Thierry Delaporte is set to get a separation payment of Rs 92.1 crore (or about $11 million) after his ahead-of-schedule exit from India’s fourth-biggest outsourcing company, joining a swelling list of top executives in the country’s most globalized industry to have inked iron-clad job contracts that guarantee hefty severance packages.
“Pursuant to the terms of the employment arrangement with Mr. Delaporte, if his employment is terminated by the company without a cause, the company is required to pay Mr. Delaporte, severance pay of 12 months’ base salary as last applicable when in service, payable over a 12-month period following the date of termination,” reads the employment contract with the former chief executive of Wipro. “These payments will cease if Mr. Delaporte obtains a new employment within the 12- month period or becomes a consultant to any company.”

Delaporte’s total compensation in FY23 was just over $10 million.

ET’s email to Wipro on the severance amount to be paid to the outgoing CEO remained unanswered until the publication of this report.

An analysis of employment contracts of top IT leaders shows that in recent years, payments to exiting CEOs at companies such as Tata Consultancy Services (TCS), Cognizant and Wipro have ranged from Rs 48 crore to Rs 92 crore.

“When the tenure of an IT Services company’s CEO is abruptly cut short, the exit compensation is determined by the contract or industry practices, which could amount to up to one year of their salary,” said Pareekh Jain, CEO, EIIRTrend. “Generally, these CEOs do not receive further employment opportunities from other service providers, making it a fair industry practice to compensate them accordingly.”

When former CEO and MD of TCS, Rajesh Gopinathan resigned in 2023, the board approved expenses of Rs 48 crore, customary filings showed.

The TCS annual report showed Gopinathan drew a Rs 29.1 crore salary in FY23, up 13.17% from his pay in FY22.

Meanwhile, the former CEO of Cognizant, Brian Humphries, stepped away from the top job effective January 12, 2023, and served as a special advisor until March 15, 2023. Severance benefits to which he would have been entitled due to involuntary termination without cause (as defined in the Humphries employment agreement) included three components: A base salary, annual cash incentives and accelerated vesting of stock awards. These, cumulatively, amounted to $6.6 million, showed regulatory filings of the company.