Cognizant linked top execs pay to its share performance

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Cognizant has agreed to pay $5.7 million compensation to former employees for underpaid overtime hours

IT major Cognizant has linked the compensation of all top executives to its share performance relative to those of direct competitors and the company has also scrapped its ‘days sales outstanding’ metric, presumably in response to the Covid-19 pandemic.

“Brian Humphries, CEO of Cognizant and other top executives obtain mounted parts like basic pay in addition to non-fixed ones like performance-based pay. Humphries earned a complete annual compensation of about $16.5 million in 2019.”

Former CEO Francisco D’Souza, who stepped down from its board in February, earned round $29.2 million together with a $750,000 bonus and inventory awards gathered throughout his time with the corporate.

Earlier, only Humphries’ performance-based fee was linked to a ‘relative’ Whole Shareholder Returns (TSRs) metric. In contrast to an absolute TSR metric, a relative TSR metric is measured in opposition to the S&P 500 Info Expertise Index and likewise in opposition to direct opponents corresponding to Infosys, TCS, and Wipro.

This metric will now apply to all top leadership. This assigns prime govt extra direct accountability for income development, in what’s forecast to be a troublesome 12 months for enterprise hit by the Covid-19 pandemic. Inside performance-based pay, there are the 2 components – annual money incentive (ACI) and efficiency inventory models (PSUs). In each, the weightage given to the general income of the corporate has been elevated.

The latest TSR metric falls within the PSU component. “TSR metric favoured by shareholders helps align management and shareholder interest,” the company said in its proxy statement for 2020.

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