DEF 14A of Cognizant Technology Solutions Corp
Filed Apr 23, 2024 · FY20230001308179-24-000541
Proposal 1: Election of 12 directors
Proposal 1: Election of 12 directors Elect the following 12 directors to serve until the 2025 annual meeting of shareholders See page 17 for additional information regarding this proposal.
Proposal 1: Election of 12 directors
| | | Leadership roles / Committees | Key qualifications | | | Zein Abdalla, 65 Former President of PepsiCo Independent director since 2015 | • Chair, Governance and Sustainability Committee • Compensation and Human Capital Committee | • Operations management • International business development • Public company leadership • Public company governance | | | Vinita Bali, 68 Former CEO and Managing Director of Britannia Industries and Former VP, The Coca-Cola Company Independent director since 2020 | • Compensation and Human Capital Committee • Governance and Sustainability Committee | • Operations management • International business development • Public company leadership • Public company governance | | | Eric Branderiz, 59 Former EVP and CFO of Enphase Energy Independent director since 2023 | • Audit Committee • Compensation and Human Capital Committee | • Technology and consulting services • Operations management • International business development • Public company governance • Finance, accounting and risk management | | | Archana Deskus, 58 EVP and Chief Technology Officer of PayPal Independent director since 2020 | • Audit Committee • Compensation and Human Capital Committee • Finance and Strategy Committee | • Technology and consulting services • Security • Regulated industries • Operations management • International business development • Public company governance | | | John M. Dineen, 61 Former President and CEO of GE Healthcare Independent director since 2017 | • Chair, Finance and Strategy Committee • Audit Committee | • Regulated industries • Operations management • International business development • Public company leadership • Public company governance | | | Ravi Kumar S, 52 CEO of Cognizant Director since 2023 | | • Technology and consulting services • Talent management • Operations management • International business development • Public company leadership • Public company governance | | | Leo S. Mackay, Jr., 62 SVP, Ethics and Enterprise Assurance of Lockheed Martin Independent director since 2012 | • Chair, Compensation and Human Capital Committee • Audit Committee • Governance and Sustainability Committee | • Technology and consulting services • Security • Regulated industries • Operations management • Public company governance • Finance, accounting and risk management | | | Michael Patsalos-Fox, 71 Former Chairman, the Americas of McKinsey & Company and Former CEO of Stroz Friedberg Independent director since 2012 | • Compensation and Human Capital Committee • Finance and Strategy Committee | • Technology and consulting services • Talent management • Security • International business development |
Proposal 1: Election of 12 directors
| | | Leadership roles / Committees | Key qualifications | | | Stephen J. Rohleder, 66 Former Group Chief Executive, North America and Chief Operating Officer of Accenture plc Independent director since 2022 | • Chair of the Board of Directors • Audit Committee • Finance and Strategy Committee • Governance and Sustainability Committee | • Technology and consulting services • Talent management • Regulated industries • Operations management • International business development • Public company leadership • Public company governance | | | Bram Schot, 62 Former Chairman and CEO of Audi AG Independent director since 2023 | • Finance and Strategy Committee • Governance and Sustainability Committee | • Operations management • International business development • Public company leadership | | | Joseph M. Velli, 66 Former Senior EVP of The Bank of New York Independent director since 2017 | • Audit Committee • Compensation and Human Capital Committee | • Technology and consulting services • Regulated industries • Operations management • International business development • Public company leadership • Public company governance | | | Sandra S. Wijnberg, 67 Former CFO of Marsh & McLennan Companies and Former CAO of Aquiline Holdings Independent director since 2019 | • Chair, Audit Committee • Finance and Strategy Committee | • Technology and consulting services • Talent management • Regulated industries • International business development • Public company governance • Finance, accounting and risk management |
Proposal 1: Election of 12 directors
Board recommendation: Vote FOR each director nominee.
Proposal 1: Election of 12 directors
| • | We have built an independent Board with broad and diverse experience and sound judgment that is committed to representing the long-term interests of our shareholders. |
Proposal 1: Election of 12 directors
See our Board qualifications on pages 15-16 and our director nominees’ biographies starting on page 19.
Proposal 1: Election of 12 directors
| Qualified | Our Board’s key qualifications | | | | 67% 33% 25% 50% 83% 92% 58% 83% 25% | Technology and Consulting Services Talent Management Security Regulated Industries Operations Management International Business Development Public Company Leadership Public Company Governance Finance, Accounting and Risk Management | | Diverse | Our Board’s demographics (see also our Board diversity matrix on page 17) | | | | 58% 50% 42% 25% | born outside the United States worked overseas racially/ethnically diverse female | | Independent | 92% directors are independent with five of such directors appointed since January 2020 | | | Engaged | 97% weighted average attendance of directors at 2023 Board and committee meetings | | | Tenure | Average: 5 years | | | | 33% 33% 33% | 0-2 years 3-6 years 7-10+ years | | Age | Average: 63 years old | | | | 25% 75% | 50-60 years old > 60 years old | | Except with respect to attendance at 2023 Board and committee meetings, information above is for our 2024 director nominees and excludes Nella Domenici, who resigned from the Board in order to pursue a nomination for U.S. Senate for the State of New Mexico in January 2024, at which time the size of the Board was decreased to 12. | | |
Director nominees
Director nominees Presented on the following pages are the 12 director nominees recommended by the Board for election at the 2024 annual meeting.
Director attendance
Director attendance There were 15 meetings of the Board in 2023. Each director in 2023 attended at least 75% of the aggregate of (i) all meetings of the Board held during the period in which he or she served as a director and (ii) the total number of meetings held by the committees on which he or she served during the period, if applicable. All committee meeting numbers and attendance percentages include attendance at any applicable sub-committee meetings.
Weighted average attendance of directors at 2023 meetings
Weighted average attendance of directors at 2023 meetings
Weighted average attendance of directors at 2023 meetings
| 98% | | 94% | | 100% | | 96% | | 96% | | | | Board of Directors | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee |
Weighted average attendance of directors at 2023 meetings
Our corporate governance guidelines provide that directors are expected to attend the annual meeting of shareholders. For the 2023 annual meeting, which was virtual, Mr. Kumar acted as Chair and all of the other 12 then-current non-employee directors attended virtually.
Board diversity matrix (as of April 23, 2024)
Board diversity matrix (as of April 23, 2024) As part of our commitment to diversity, we prioritize diversity on our Board of Directors.
Board diversity matrix (as of April 23, 2024)
| Total Number of Directors: 12 | | | | | | Part 1: Gender Identity* | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 3 | 9 | — | — | | Part 2: Demographic Background* | Female | Male | Non-Binary | Did Not Disclose Demographic Background | | African American or Black | — | 1 | — | — | | Alaskan Native or American Indian | — | — | — | — | | Asian (including South Asian) | 2 | 1 | — | — | | Hispanic or Latinx | — | — | — | — | | Native Hawaiian or Pacific Islander | — | — | — | — | | White | 1 | 6 | — | — | | Two or More Races or Ethnicities | — | 1* | — | — | | Did Not Disclose Demographic Background | — | — | — | — | | LGBTQ+ | — | — | — | — | | Military Veterans | — | 1 | — | — | | * Information was voluntarily provided by directors and reflects self-identified attributes. The director who self-identified as two or more races or ethnicities did not disclose the specific races or ethnicities | | | | |
Key governance practices
Key governance practices
Key governance practices
| Shareholder rights and engagement | | Board of Directors | | | | Annual director elections / no classified Board | | Majority of independent directors (11 of 12 director nominees) | | | Proxy access | | Separate independent Board Chair and CEO positions since 2003 | | | Shareholder right to call a special meeting (10% threshold) | | Annual Board and committee self-assessments | | | Annual vote to ratify executive compensation | | Majority voting in director elections | | | Annual vote to ratify selection of independent registered public accounting firm | | A director who experiences a material change in job responsibilities (other than retirement) is required to offer to resign | | | No poison pill | | Regular executive sessions of independent directors | | | Each share of company common stock is entitled to one vote on matters put to a shareholder vote | | Directors limited to service on no more than three other public company boards (one other board if the director is a public company NEO) |
Key governance practices
| Board member independence Other than Mr. Kumar as our CEO, each of our director nominees has been determined by the Board to be an “independent director” under the rules of Nasdaq, which require that, in the opinion of the Board, such person not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition, the Board determined that each of Maureen Breakiron-Evans and Nella Domenici was an “independent director” while they served on the Board through their retirement on June 6, 2023 and resignation on January 17, 2024, respectively. | Commitment to Board gender diversity On January 17, 2024, Nella Domenici resigned from the Board in order to run for the U.S. Senate for the State of New Mexico. With her departure, the size of the Board was decreased to 12 directors and the Board’s ratio of women directors decreased from 31% to 25%. The Governance Committee is currently evaluating potential candidates for an additional Board position with a focus on women candidates. We believe strongly that greater diversity of the Board improves the effectiveness of the Board for the benefit of the company and its shareholders. As such, the Governance Committee remains committed to Board diversity and is actively seeking highly qualified individuals from a variety of backgrounds. We consider gender diversity a high priority and we are actively engaged in identifying candidates with the appropriate skills and experience. We expect that we will be able to complete the search and appoint a new director before the end of the year. | | Director time commitments Serving on the Board requires significant time and attention. Directors must spend the time needed and meet as often as necessary to properly discharge their responsibilities. Each Board member is expected to ensure that his or her existing or future commitments do not interfere with such service. Our Corporate Governance Guidelines establish limits on our directors serving on public company boards: • A director who serves as a named executive officer of the company or any other public company is not permitted to serve on the board of more than one other public company in addition to the company’s Board • All other directors are not permitted to serve on the boards of more than three other public companies in addition to the company’s Board The Board may grant exceptions on a case-by-case basis, taking into consideration whether doing so will not impair the director’s ability to effectively serve on the Board. Directors are expected to advise the Chair of the Board prior to accepting an invitation to serve on another public or private board. The Governance Committee annually reviews outside director time commitments, including compliance with the requirements set forth above, the nature of and time involved in service on other boards and any other existing or anticipated outside directorship and leadership commitments. Based on its review, the Governance Committee has confirmed that all director nominees are in compliance, having demonstrated that they have committed and expect to commit appropriate time to serve effectively on the Board and its committees. | Director tenure considerations The Governance Committee annually reviews each director’s continuation on the Board and considers a variety of factors in conducting its annual review, including the mix of capabilities on the Board, the need to ensure appropriate refreshment and change on the Board, the diversity of the Board in terms of backgrounds, expertise, capabilities and leadership, the degree of engagement and effectiveness of Board members and confirmation of interest in continuing to serve as a director. The Board believes that the director nominees for 2024 have the right balance of skill sets, experiences and fresh perspectives to guide our management team in executing our long-term strategy for the benefit of our shareholders. Our nominees bring extensive and diverse business, financial, operating, regulatory and technology backgrounds from a variety of industries to our Board. We also have a good balance of tenures on our Board, with a mix of both newer directors and more long-standing directors who have in-depth and historical knowledge of our company. Since 2020, we have brought six new independent directors onto our Board. |
Key governance practices
| | | | | | | | Zein Abdalla Former President of PepsiCo Director Since 2015 Age 65 Independent | Committees | Birthplace Sudan | Education Imperial College, London University – B.S. |
Key governance practices
Mr. Abdalla brings to Cognizant’s Board of Directors decades of experience having led and shaped large-scale operations across the world as President and a manager of key divisions of PepsiCo.
Key governance practices
| Period | Relevant experience | Key Qualifications | | 1995-2014 | PepsiCo, Inc. (PEP), a multinational food, snack and beverage company President (2012 – 2014) CEO, PepsiCo Europe (2009 – 2012) President, PepsiCo Europe (2006 – 2009) Various senior executive positions (1995 – 2006) Public company leadership and experience leading and shaping large scale operations across the world from his global President role and decades of executive experience at a leading Fortune 50, Nasdaq-listed global company. | | | 2012-2022 | Past director positions The TJX Companies, Inc. (TJX), a retailer of apparel and home fashions | | | Since: 2017 2017 2016 2016 | Select board and other positions Mastercard Foundation – board member and chair (since 2020) Kuwait Food Company K.S.C.P. – board member Imperial College Business School Advisory Board – member Mars, Incorporated – board advisor | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Vinita Bali Former CEO and Managing Director of Britannia Industries and Former VP, The Coca-Cola Company Director Since 2020 Age 68 Independent | Committees | Birthplace India | Education University of Delhi, India – B.A. Jamnalal Bajaj Institute of Management Studies in India – M.B.A. |
Key governance practices
Ms. Bali brings experience to the Cognizant Board of Directors gained through leading large multinationals in CEO and senior marketing and sales roles around the globe, having worked for over three decades with companies like Britannia Industries, The Coca-Cola Company and Cadbury Schweppes plc.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2005-2014 | Britannia Industries, an international food products company based in India and listed on the National Stock Exchange and Bombay Stock Exchange in India Chief Executive Officer and Managing Director Public company CEO experience directing and shaping strategy for an international food products company. | | | 2003-2005 | The Zyman Group, a marketing and communications strategy firm Managing Principal and Head of Business Strategy Practice, USA | | | 1994-2003 | The Coca-Cola Company (KO), a multinational beverage company Officer, Vice President and Head, Corporate Strategy (2001 – 2003) President, Andean Division (1999 – 2000) Vice President, Marketing for Latin America (1997 – 1998) Worldwide Marketing Director (1994 – 1997) Executive-level business, operational and marketing leadership roles, based in the United States and Chile, for key divisions around the globe for a then Fortune 100, NYSE listed company. | | | 1980-1994 | Cadbury Schweppes plc, a multinational confectionery company Senior marketing roles across a number of geographies, including South Africa, Nigeria, India and the U.K. Senior business, operational and marketing leadership roles across a number of geographies for a leading multinational confectionery company. | | | Since: 2024 2021 2017 | Current public company boards Bajaj Auto Ltd. (BAJAJ-AUTO), a multinational automotive manufacturing company listed on the National Stock Exchange (“NSE”) in India SATS Ltd. (S58), a leading provider of food solutions and gateway services and listed on the Singapore Stock Exchange Syngene International Ltd., a research and manufacturing company listed on the NSE and Bombay Stock Exchange (“BSE”) in India | | | 2014-2024 2018-2021 2014-2020 | Past director positions CRISIL Ltd., a global analytical company providing ratings, research and risk and policy advisory services listed on the NSE and BSE Bunge Ltd. (BG), an agribusiness and food company Smith & Nephew Plc (SNN), a global portfolio medical technology business | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | | Eric Branderiz Former Executive Vice President and Chief Financial Officer of Enphase Energy Director Since 2023 Age 59 Independent | Committees | Birthplace Argentina | Education University of Alberta – BCom | Certifications CPA in California |
Key governance practices
Mr. Branderiz brings to Cognizant’s Board of Directors experience in finance, accounting, M&A execution, risk management, ESG and corporate governance across various energy, semiconductor and technology sectors, including Enphase Energy and Tesla.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2018-2022 | Enphase Energy, Inc. (ENPH), a renewable energy and semiconductor technology company Executive Vice President and Chief Financial Officer Insight into the particular financial and operational challenges of a global business gained through his role as CFO of a public company. | | | 2016-2018 | Tesla, Inc. (TSLA), an automotive, software, semiconductor and renewable energy company Chief Accounting Officer and Corporate Controller | | | 2010-2016 | SunPower Corporation (SPWR), a solar energy system design and manufacturing company Various senior roles, including Senior Vice President, Corporate Controller and Chief Accounting Officer and Senior Vice President, Head of Global Residential and Light Commercial Operations and Finance | | | 2009-2010 | Knowledge Learning Corporation (now KinderCare Learning Centers, LLC), an operator of child care and early childhood education facilities Vice President, Corporate Controller, Corporate Treasurer, and Head of Subsidy Business Operations | | | 2007-2009 | Spansion, Inc. (Now Infineon Technologies, AG), a semiconductor manufacturer of flash memory, microcontrollers, mixed-signal and analog products, and system-on-chip solutions Senior Vice President, Corporate Controller, Head of Sales & Marketing Finance, Tax and Treasury | | | 2002-2005 | Advanced Micro Devices, Inc. (AMD), a multinational semiconductor company Americas Controller | | | 1996-2002 | Ernst & Young LLP, a multinational professional services partnership Auditor | | | Since 2023 | Current public company boards Fortive Corporation (FTV), a provider of essential technologies for connected workflow solutions across a range of end-markets | | | Since 2023 Since 2022 | Select other director positions UNIVERS, a leading net zero technology provider AESC, a leading battery technology company | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Archana Deskus Chief Technology Officer of PayPal Director Since 2020 Age 58 Independent | Committees | Birthplace India | Education Boston University – B.S. Rensselaer Polytechnic Institute – M.B.A. |
Key governance practices
Ms. Deskus brings CTO and CIO experience to Cognizant’s Board of Directors, setting and leading the technology strategy for large global corporations, including PayPal, Intel, Hewlett Packard, Baker Hughes, Ingersoll Rand, Timex and North America HVAC.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2022 to present | PayPal Holdings, Inc. (PYPL), a digital payments company Executive Vice President, Chief Technology Officer (2023 – Present) Executive Vice President, Chief Information Officer (2022 – 2023) Extensive experience as a senior leader, setting and leading technology and information security strategy for a number of large, global technology companies across a diverse set of industries. | | | 2020-2022 | Intel Corporation (INTC), a technology company Senior Vice President, Chief Information Officer | | | 2017-2020 | Hewlett Packard Enterprise Company (HPE), an information technology company Senior Vice President, Chief Information Officer | | | 2013-2017 | Baker Hughes Incorporated, an oilfield services company acquired by General Electric in 2017 Vice President, Chief Information Officer | | | 2011-2012 | Ingersoll Rand Inc. (IR), an industrial manufacturing company Vice President, Chief Information Officer | | | 2006-2011 | Timex Group USA, Inc., a watch manufacturing company Vice President, Chief Information Officer | | | 1987-2006 | United Technologies Corporation, a provider of high technology products and services, and various affiliated entities Vice President, Chief Information Officer of Carrier Corporation, a heating, air conditioning and refrigeration solutions company (2003 – 2006) Various other positions (1987 – 2003) | | | Since 2019 | Current public company boards East West Bancorp, Inc. (EWBC), the holding company for East West Bank, the largest independent bank in Southern California; also on the board of subsidiary East West Bank (since 2019) | | | 2018-2020 2016-2017 2014-2017 | Select past positions Data Science Institute of the University of Houston – advisory board member IBM Global Technology Services – customer advisory board member Junior Achievement of Southeast Texas – board member | | | Since 2022 | Select other director positions DataStax, a real-time data for artificial intelligence company | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | John M. Dineen Former President and CEO of GE Healthcare Director Since 2017 Age 61 Independent | Committees | Birthplace USA | Education University of Vermont – B.S. |
Key governance practices
Mr. Dineen brings to Cognizant’s Board of Directors experience from having managed several key business divisions of General Electric and in the healthcare industry from having served as President and CEO of GE Healthcare.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2015-2022 | Clayton, Dubilier & Rice LLC, an investment firm Operating Advisor (Healthcare sector) | | | 1986-2014 | General Electric Company (GE), a global digital industrial company President and Chief Executive Officer, GE Healthcare (2008 – 2014) Chief Executive Officer, GE Transportation (2005 – 2008) Broad-based leadership, operations management, regulated industry and international business experience gained during his 28 years in leadership roles managing several key business divisions of GE, a then Fortune 20 business. Most recently he was president and CEO of London-based GE Healthcare, a leading provider of medical imaging, diagnostics and other health information technology and then $18 billion annual revenue enterprise with 50,000 employees around the world. He also served in several international management roles in Asia and Europe. | | | Since 2023 | Current public company boards Lam Research Corporation (LRCX), a supplier of wafer-fabrication equipment and related services to the semiconductor industry | | | 2018-2023 2015-2019 | Select past director positions Syneos Health, Inc. (SYNH), a biopharmaceutical solutions organization Merrimack Pharmaceuticals, Inc. (MACK), a pharmaceutical company specializing in the development of drugs for the treatment of cancer | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | Ravi Kumar S CEO of Cognizant Director Since 2023 Age 52 | Birthplace India | Education Shivaji University – B.E. Xavier Institute of Management, India – M.B.A. |
Key governance practices
Ravi Kumar Singisetti (also referred to as Ravi Kumar S or Ravi Kumar) was appointed Chief Executive Officer of Cognizant in January 2023. In his role as CEO, Mr. Kumar sets the strategic direction of the company, promotes Cognizant’s client-first culture, and focuses on ensuring sustainable growth and driving long-term shareholder value. He is a highly accomplished services industry executive with experience across digital transformation, traditional technology and engineering services, data and analytics, cloud and infrastructure, and consulting.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2023 to present | Cognizant Chief Executive Officer Senior leadership, technology, consulting, talent management, operations management and international experience as CEO of Cognizant since January 2023 | | | 2002-2022 | Infosys Limited (INFY), a global managing consulting, technology services and outsourcing company President (2016 – 2022) Various other positions (2002 – 2016) Highly accomplished services industry executive with experience across digital transformation, traditional technology and engineering services, data and analytics, cloud and infrastructure, and consulting gained through progressively more senior executive leadership roles at Infosys, where, as President, he led the global services organization across all industry segments. | | | 2002 | Sapient (Now Publicis Sapient), a digital consulting company Director | | | 2001-2002 | Oracle Corporation (ORCL), a multinational computer technology company Business manager | | | 2000-2001 | Cambridge Technology Partners, a multinational professional services company that specializes in business and IT consulting AVP | | | 1996-2000 | PricewaterhouseCoopers, an international professional services brand of firms Senior consultant | | | Since: 2022 | Current public company boards TransUnion (TRU), a global information and insights company | | | 2021-2023 | Past director positions Digimarc Corporation (DMRC), company that provides digital watermarking solutions | | | Since: 2024 2021 2020 | Select other positions US-India Strategic Partnership Forum - Board member U.S. Chamber of Commerce – Board member New York Academy of Sciences – Board of Governors | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Leo S. Mackay, Jr. SVP, Ethics and Enterprise Assurance of Lockheed Martin Director Since 2012 Age 62 Independent | Committees | Birthplace USA | Education United States Naval Academy – B.S. Harvard University – M.P.P. Harvard University – Ph.D. |
Key governance practices
Dr. Mackay brings expertise in auditing and compliance, security, government contracting, and federal government senior policymaking to Cognizant’s Board of Directors through his positions at Lockheed Martin and in the Bush administration.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2007 to present | Lockheed Martin Corporation (LMT), a Fortune 100 global security and aerospace company Senior Vice President, Ethics and Enterprise Assurance (since 2018) Senior Vice President, Internal Audit, Ethics and Sustainability (2016 – 2018) Vice President, Ethics and Sustainability (2011 – 2016) Vice President, Corporate Business Development and various other positions (2007 – 2011) Extensive expertise in security, government contracting, auditing and compliance from his senior executive roles at one of the world’s largest and most well-known security and aerospace companies. | | | 2005-2007 | Integrated Coast Guard Systems LLC, a joint venture between Lockheed Martin and Northrop Grumman Corporation (NOC) President Operations management experience from his senior leadership roles. | | | 2003-2005 | ACS State Healthcare LLC (now part of Conduent), an IT/BPO services company in the healthcare space Chief Operations Officer Technology consulting and operations management experience specific to the healthcare industry from his role as COO. | | | 2001-2003 | United States Department of Veterans Affairs Deputy Secretary and Chief Operating Officer Operations management experience from having served as Deputy Secretary and COO of the U.S. Department of Veterans Affairs. | | | 1997-2001 | Bell Helicopter, a helicopter and tiltrotor craft manufacturer | | | Since 2020 | Current public company boards Ameren Corporation (AEE), a public utility holding company | | | Since 2018 | Select other positions Lockheed Martin Ventures, the venture capital arm of Lockheed Martin – investment committee member | | | 2016-2023 | Select past director positions USAA Federal Savings Bank, a federal savings bank | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Michael Patsalos-Fox Former Chairman, the Americas of McKinsey & Company and Former CEO of Stroz Friedberg Director Since 2012 Age 71 Independent | Committees | Birthplace Cyprus | Education University of Sydney – B.S. International Institute for Management Development, Lausanne, Switzerland – M.B.A. |
Key governance practices
Mr. Patsalos-Fox brings decades of experience counseling clients in the technology and consulting space to Cognizant’s Board of Directors, gained from his 32-year tenure in senior roles with McKinsey & Company and his role as CEO for Vidyo, as well as expertise in the cybersecurity space from his experience as CEO of Stroz Friedberg. Mr. Patsalos-Fox served as Chair of Cognizant’s Board of Directors from September 2018 until January 2023.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2017-2019 | Vidyo, a cloud-based video conferencing services company Chairman and Chief Executive Officer | | | 2013-2017 | Stroz Friedberg, a global investigation and cybersecurity firm Chief Executive Officer Expertise and insight in the cybersecurity space from his experience as CEO. | | | 1981-2013 | McKinsey & Company, a global management consulting company Senior Partner (1992 – 2013) Board of Directors (1998 – 2010) Chairman, the Americas (2003 – 2009) Member of the Operating Committee (2003 – 2012) Managing Partner of the New York (2001 – 2003) and New Jersey (1996 – 2001) offices, North American Corporate Finance and Strategy practice and European Telecoms practice Decades of experience counseling clients in the technology and consulting space gained from his 32-year tenure with McKinsey & Company, where he also served in various senior leadership roles. Among other things, he brings talent management experience from leading a global professional services business and extensive experience developing a technology consulting business from leading the firm’s new business growth opportunities around data, analytics and software. | | | Since 2020 | Select other director positions MIO Partners, Inc., an investment subsidiary of McKinsey & Company, Chairman of the board | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Stephen “Steve” J. Rohleder Chair of the Board of Directors Former Group Chief Executive, North America and Chief Operating Officer of Accenture plc Director Since 2022 Age 66 Independent | Committees | Birthplace USA | Education University of Texas, Austin – B.B.A. |
Key governance practices
Mr. Rohleder brings decades of experience overseeing operations, developing strategy, counseling clients and developing teams in the technology space to Cognizant’s Board of Directors, gained from his 35-year tenure in senior roles with Accenture and his roles as a board member and later CEO of GTY Technology Holdings.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2015 to present | SGR Equity Investments, a private equity and venture capital company Principal Owner Oversight and direction of personal and family investments in private equity and venture capital opportunities. | | | 2019-2020 | GTY Technology Holdings Inc. (GTYH), a software as a service company that offers a cloud-based suite of solutions for the public sector in North America Chairman, CEO and President Public company CEO experience directing and shaping strategy for a North America technology company following several years of service as a member of the Board of Directors. | | | 1981-2015 | Accenture plc (formerly Anderson Consulting) (ACN), a global managing consulting, technology services and outsourcing company Group Chief Executive, North America (2014 – 2015) Group Chief Executive, Health & Public Service (2009 – 2014) Global Chief Operating Officer (2004 – 2009) Various other roles (1981 – 2004) Extensive experience counseling clients in the technology and consulting space gained from his 35-year tenure with Accenture, a leading NYSE-listed global management consulting, technology services and outsourcing company. Gained senior leadership, technology, consulting, talent management, operations management, strategy, international business development and health and public service experience through progressively more senior leadership roles and experiences. While COO, he was responsible for leading Accenture’s strategic direction and overall operational performance and for all global operations in approximately 50 countries and 175 cities. | | | Since: 2016 | Select other positions KungFu.AI, a professional services firm focusing on AI solutions for businesses – strategic advisor | | | 2018-2020 2017-2020 2016-2020 2015-2019 | Select past director and other positions University of Texas Health Advisory Committee – member Apogee, Inc., the largest provider of on-campus residential networks and video solutions in higher education – advisory board member GTY Technology Holdings Inc. (GTYH), a software as a service company – director Kony, Inc., a cloud-based enterprise mobility solutions company and mobile application development platform provider – advisory board member | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Abraham “Bram” Schot Former Chairman and CEO of Audi AG Director Since 2023 Age 62 Independent | Committees | Birthplace Netherlands | Education University of Bradford, England – Masters in Business Administration |
Key governance practices
Mr. Schot brings international strategic, leadership and transformational expertise to Cognizant’s Board of Directors from more than three decades of experience in the automotive industry, including management positions at DaimlerChrysler, Mercedes-Benz, Volkswagen Group and Audi.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2011-2020 | Volkswagen AG, a global manufacturer of automotive and commercial vehicles Chairman & CEO of the Board of Management (Audi AG) (2018 – 2020) Leadership experience for a significant business unit of a public company leading and shaping large scale operations across the world for a leading automotive manufacturer. Responsible for the transition of the established business model to improve sustainability and continue the push for electrification. | | | | Member of the Board of Management (Volkswagen Group) (2018 – 2020) Member of the Board of Management (Audi AG) (2017 – 2018) Member of the Board of Management and Executive Vice President of Volkswagen Commercial Vehicles group (2011 – 2016) Responsible for global marketing, sales and services for new business model vehicles. | | | 2006-2011 | Daimler AG/Mercedes-Benz Italia, Italian arm of Mercedes-Benz Group, a global automotive company President and CEO Executive level business and operational role, focusing on innovation, cost-optimization, and organizational effectiveness within the broader international company. | | | 1998-2006 | DaimlerChrysler Nederland and Mercedes-Benz Nederland, Netherlands arm of the Mercedes-Benz Group President and CEO (2003 – 2006) Various leadership roles, including previous responsibility as Marketing Director and for heading the Corporate Strategy and Planning department (1998 – 2003) | | | Since: 2023 2022 2020 | Current public company boards Compagnie Financière Richemont SA (Richemont), a luxury goods holding company Signify NV, a multinational lighting company Shell plc (SHEL), a global energy company | | | Since: 2022 2022 2022 2021 2021 2021 2020 | Select other positions ADS-Tec Holding – senior advisor Laureus Foundation – senior advisor Next Mobility Labs GmbH – partner and senior advisor SDA Bocconi School of Management in Milan, Italy – Associate Professor of Practice in Corporate Strategy The Carlyle Group – senior advisor Global Cleantec Management B.V. – senior advisor TomTom, N.V. – senior advisor | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Joseph M. Velli Former Senior EVP of The Bank of New York Director Since 2017 Age 66 Independent | Committees | Birthplace USA | Education William Paterson University – B.A. Fairleigh Dickinson University – M.B.A. |
Key governance practices
Mr. Velli brings experience to Cognizant’s Board of Directors in creating, building and leading global large-scale technology, processing and software platform businesses as a Senior EVP for The Bank of New York and as CEO of ConvergEx Group.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2016 to present | Lovell Minnick Partners, LLC, a private equity firm Advisory Council Member | | | 2006-2014 | ConvergEx Group, LLC, a provider of software platforms and technology-enabled brokerage services Board Director (2014) Chairman and CEO (2006 – 2013) Significant experience in creating, building and leading large-scale technology, processing and software platform businesses for a broker-dealer in the financial services industry. | | | 1984-2006 | The Bank of New York (now BNY Mellon) (BK), a financial services institution Senior Executive Vice President and member of the Senior Policy Committee; various leadership roles, including CEO of BNY Securities, Head of Investor Services and Head of Consumer Banking (1998 – 2006) Executive Vice President (1992 – 1998) Other leadership positions, including Head of Issue Services (1984 – 1992) Senior executive leadership, technology, regulated industries and operations management experience from over two decades in senior business roles at a leading global financial institution. Among other things, he was involved in creating, building and leading large-scale technology, processing and software platform businesses and leading several key business lines, including global issuer services, global liquidity services, pension and 401(k) services, consumer and retail banking, correspondence clearing and securities services. His leadership positions also provided company turnaround and mergers and acquisitions experience. | | | Since: 2020 2014 2007 | Current public company boards AssetMark Financial Holdings, Inc. (AMK), a provider of financial, investment and consulting services Computershare Limited, a global provider of corporate trust, stock transfer, employee share plan and mortgage servicing services listed on the Australian Securities Exchange Paychex, Inc. (PAYX), a provider of payroll, human resource and benefits outsourcing services | | | 2010-2014 | Select past director positions E*Trade Financial Corporation | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Key governance practices
| | | | | | | | Sandra S. Wijnberg Former CFO of Marsh & McLennan Companies Director Since 2019 Age 67 Independent | Committees | Birthplace USA | Education University of California, Los Angeles – B.A. University of Southern California, Marshall School of Business – M.B.A. |
Key governance practices
Ms. Wijnberg brings to Cognizant’s Board of Directors expertise in managing a large global professional services business from her role as CFO of Marsh & McLennan Companies, as well as a private equity perspective from her position as Partner and CAO of Aquiline Holdings.
Key governance practices
| Period | Relevant experience | Key qualifications | | 2007-2019 | Aquiline Holdings, LLC, a registered investment advisory firm Executive Advisor (2015 – 2019) Partner, Chief Administrative Officer (2007 – 2014) Private equity insights and expertise in the investment management sector and with registered investment company regulations from having served in executive and advisory capacities for an investment advisory firm. | | | 2000-2006 | Marsh & McLennan Companies, Inc. (MMC), a global professional services company Senior Vice President and Chief Financial Officer Extensive technology and consulting services, talent management, regulated industries, international business development and finance, accounting and risk management experience from her position as CFO of Marsh & McLennan, a then $11 billion annual revenue enterprise with 55,000 employees around the world providing risk and insurance services, risk consulting and technology and other consulting and investment management services. | | | 1997-1999 | Yum! Brands, Inc. (YUM), a global operator and franchisor of quick service restaurants Senior Vice President, Treasurer and ultimately interim Chief Financial Officer International business development and finance, accounting and risk management experience from her senior finance roles, including as interim CFO, at a large, global enterprise. | | | 1994-1997 | PepsiCo, Inc. (PEP) Chief Financial Officer, KFC Corporation (1996 – 1997) Vice President and Assistant Treasurer (1994 – 1996) International business development and finance, accounting and risk management experience from senior finance roles, including as CFO of a significant subsidiary, at a leading Fortune 50, Nasdaq-listed global company. | | | Since: 2021 2016 2016 | Current public company boards Hippo Holdings, Inc. (HIPO), a homeowners’ insurance company T. Rowe Price Group, Inc. (TROW), a global asset management firm Automatic Data Processing, Inc. (ADP), a provider of human resources management software and services | | | 2014-2016 2003-2016 | Select past director and other positions Office of the Quartet, U.S. Department of State Deputy Head of Mission, Jerusalem recruited to advance the Quartet’s Palestinian economic development mandate Tyco International plc (now Johnson Controls International plc) – director | |
Key governance practices
| Committees | | | | | | | | | | | | | A | Audit Committee | C | Compensation and Human Capital Committee | F | Finance and Strategy Committee | G | Governance and Sustainability Committee | | Committee Chair | + | Audit Committee financial expert |
Key governance practices
| Key qualifications : | | | | | | | | | | | | | | | | | | | | Technology and consulting services | | Talent management | | Security | | Regulated industries | | Operations management | | International business development | | Public company leadership | | Public company governance | | Finance, accounting and risk management |
Director compensation
Director compensation
2023 Non-employee director compensation structure
2023 Non-employee director compensation structure
2023 Non-employee director compensation structure
| Annual Cash Retainer for serving on the Board | | $100,000 | | Additional Annual Cash Retainers | | | | For serving as Chair of the Board | | $150,000 | | For serving as a Member or Chair of a Board Committee | Committee Member | Committee Chair | | Audit Committee | $20,000 | $35,000 | | Finance and Strategy Committee | $15,000 | $20,000 | | Compensation and Human Capital Committee | $15,000 | $25,000 | | Governance and Sustainability Committee | $10,000 | $20,000 | | Annual RSU Award | Board Member | Board Chair | | | $220,000 | $270,000 |
2023 Non-employee director compensation structure
| The annual RSU award is made on or as soon as practicable following the date of the annual meeting of shareholders with a grant date fair value as set out above. 100% of the RSUs vest on the one-year anniversary of the date of the award. | | Retirement Upon a director’s retirement while in good standing, the Board’s intent is to accelerate the vesting of such director’s outstanding equity awards. | | Advance Payment and Partial Year Service For new members of the Board or of a committee or a new Chair of the Board or a committee, compensation in the initial year of service is prorated based on the length of service during the 12-month period following the company’s most recent annual meeting. All cash retainers are paid in advance on an annual basis following the annual meeting or other triggering event. | | Stock Elections in lieu of Cash Retainers Non-employee directors may elect to have all or a portion of their cash retainers paid in fully vested common stock in lieu of cash. | | Payment Deferral Elections Cash retainers, annual RSU awards and common stock received in lieu of cash retainers may be eligible for payment deferral elections in accordance with applicable tax laws and, for annual RSU awards, the applicable Incentive Award Plan. |
Director compensation vs. peer group
Director compensation vs. peer group For purposes of establishing 2023 non-employee director compensation, the Compensation Committee engaged Pay Governance, LLC (“Pay Governance”), an independent executive compensation advisory firm, to review all elements of director compensation, benchmark such compensation in relation to other comparable companies with which we compete for board talent and provide recommendations to ensure that our director compensation program remains competitive. Pay Governance benchmarked our director compensation against the same group of technology-related firms used by Pay Governance in preparing its recommendations to the Compensation Committee for executive officers for 2023. See “Peer group review” on page 47. The Compensation Committee considered the benchmarking data and recommendations of Pay Governance in recommending to the Board the cash and stock-based compensation of non-employee directors that became effective following the 2023 annual meeting. Based on the 2023 analysis, the Board approved an increase to the annual RSU award for the members of the Board from $210,000 to $220,000 and for the Board Chair from $260,000 to $270,000.
Director compensation vs. peer group
| Director stock ownership guidelines Under our stock ownership guidelines, each non-employee director is required over time to hold a number of shares (including shares underlying deferred stock units and restricted stock units) with a value, measured as of the time a director joins the Board, equal to five times the annual cash retainer received by non-employee directors at the time they joined the Board (i.e., $500,000 in shares of common stock for non-employee directors who joined the Board after June 7, 2022). Compliance with the guidelines is required within five years of a director joining the Board. As of April 8, 2024, all of our directors who joined the Board prior to January 1, 2023 had satisfied the requirement under our stock ownership guidelines and the remaining directors are on track to do so within the required time period. | 5x annual cash retainer |
2023 director compensation developments
2023 director compensation developments
Dividend equivalent make-whole agreements with Mr. Rohleder and Ms. Wijnberg
| • | In 2021, the Board amended its non-employee director compensation guidelines to allow non-employee directors to elect to receive DSUs in lieu of cash retainers. At the time, such DSUs were not eligible to receive dividend equivalents. By comparison, non-employee directors who elect to defer their annual RSU awards do receive dividend equivalents on such deferred RSUs. The Board reconciled the discrepancy in how DSUs and deferred RSUs are treated in May 2023 so that DSUs would also receive dividend equivalents going forward, but did not retroactively apply dividend equivalents to DSUs that had already been issued. | | • | At the time the DSU dividend equivalent discrepancy was reconciled, Mr. Rohleder and Ms. Wijnberg were the only two directors who had received DSUs. Because the difference in treatment between DSUs and deferred RSUs was not intended, the Board authorized entry into dividend equivalent make-whole agreements with each of Mr. Rohleder and Ms. Wijnberg to provide them with credit for dividend equivalents on previously issued DSUs from the date of grant until the awards are ultimately settled. As of the date the company entered into the make-whole agreements with Mr. Rohleder and Ms. Wijnberg, they received credit in the amount of approximately $2,001 and $1,680, respectively for their previously issued DSUs, which are reflected as an additional cash award in the Director compensation table on page 43 and, going forward, each of Mr. Rohleder and Ms. Wijnberg will be entitled to receive future dividend equivalents on these DSU awards (i.e., they will accrue earnings on the awards equal to dividends paid on shares of our common stock). |
Director compensation table
Director compensation table The following table sets forth certain information regarding the compensation of each of our non-employee directors who served during 2023. The table also sets forth the aggregate number of RSUs and the aggregate number of stock options held by each such non-employee director on December 31, 2023. Maureen Breakiron-Evans did not stand for re-election at our 2023 annual meeting of shareholders and, accordingly, did not receive any compensation in 2023.
Director compensation table
| Name | 2023 Director Compensation | | | Director Stock and Option Awards Outstanding | | | | Fees Earned or Paid in Cash | Stock Awards | Total | Aggregate Number of Stock Awards | Aggregate Number of Stock Options | | Zein Abdalla | $135,000 | $219,957 | $354,957 | 3,552.58 | — | | Vinita Bali | $125,000 | $219,957 | $344,957 | 3,552.58 | — | | Eric Branderiz | $173,329 | $281,514 | $454,843 | 4,508.50 | — | | Maureen Breakiron-Evans (retired June 6, 2023) | — | — | — | 18,353.00 | — | | Archana Deskus | $142,459 | $219,957 | $362,416 | 3,552.58 | — | | John M. Dineen | $140,000 | $219,957 | $359,957 | 23,052.60 | — | | Nella Domenici | $160,753 | $281,514 | $442,267 | 4,508.50 | — | | Leo S. Mackay, Jr. | $155,000 | $219,957 | $374,957 | 8,077.15 | — | | Michael Patsalos-Fox | $130,000 | $219,957 | $349,957 | 9,153.56 | — | | Steve Rohleder | $359,987 | $290,058 | $650,045 | 15,934.39 | — | | Bram Schot | $138,959 | $257,884 | $396,843 | 4,173.12 | — | | Joseph M. Velli | $135,000 | $219,957 | $354,957 | 3,552.58 | — | | Sandra S. Wijnberg | $151,680 | $219,957 | $371,637 | 20,607.56 | — |
Director compensation table
Fees Earned or Paid in Cash. Mr. Rohleder and Ms. Wijnberg elected to receive DSUs in lieu of their 2023 Board and committee cash fees, resulting in grants of 4,745 and 2,412 DSUs, respectively, with a grant date fair value of $62.17 per share on June 6, 2023. The value of such shares is included in this column. For Mr. Rohleder, this also includes additional DSUs in lieu of pro rata cash fees for his service (i) as the Chair of the Board from the date of his appointment to the 2023 annual meeting of shareholders, resulting in a grant of 927 DSUs with a grant date fair value of $65.10 per share on January 12, 2023, and (ii) on the Governance Committee from the date of his appointment to the 2023 annual meeting, resulting in a grant of 41 DSUs with a grant date fair value of $62.61 per share on March 6, 2023. Mr. Schot elected to receive his annual cash retainer in the form of fully vested shares of common stock in lieu of cash, resulting in a grant of 1,849 shares with a grant date fair value of $62.17 per share on June 6, 2023. In addition, he received additional vested RSUs in lieu of pro rata cash fees for his service on (i) the Board from the date of his appointment to the 2023 annual meeting of shareholders, resulting in a grant of 294 RSUs with a grant date fair value of $61.37 per share on April 3, 2023, (ii) the Finance Committee from the date of his appointment to the 2023 annual meeting, resulting in a grant of 14 RSUs with a grant date fair value of $62.76 per share on May 17, 2023, and (iii) the Governance Committee, resulting in a grant of 70 RSUs with a grant date fair value of $70.33 per share on December 8, 2023. The number of shares reported herein for Mr. Schot do not reflect the withholding of shares for the payment of taxes. For Mr. Rohleder and Ms. Wijnberg, this also includes $2,001 and $1,680, respectively, that each received in May 2023 as credit for dividend equivalents they did not previously receive on their outstanding DSUs (see page 42 for additional information on these dividend equivalent payments). The Stock Awards column represents the aggregate grant date fair value of RSUs granted in the 2023 fiscal year under the company’s 2017 Incentive Award Plan for awards issued prior to June 6, 2023 and the company’s 2023 Incentive Award Plan (the “2023 Plan”) for all remaining awards, determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. All directors listed except Ms. Breakiron-Evans, who did not receive any compensation for 2023 due to her retirement, and Mr. Rohleder, received an award of 3,538 RSUs with a grant date fair value of $62.17 per share on June 6, 2023. As Board Chair, Mr. Rohleder received an award of 4,342 RSUs with a grant date fair value of $62.17 per share on June 6, 2023. Mr. Rohleder also received 309 RSUs awarded at the time of his appointment to the Chair of the Board with a grant date fair value of $65.10 per share on January 12, 2023. In addition, each of Mr. Branderiz and Ms. Domenici received an award of 952 RSUs at the time of their appointment to the Board with a grant date fair value of $64.66 on February 21, 2023. Mr. Schot also received an award of 618 RSUs at the time of his appointment to the Board with a grant date fair value of $61.37 on April 3, 2023. The reported dollar amounts do not take into account any estimated forfeitures related to continued service vesting requirements. For information regarding assumptions underlying the valuation of equity awards, see Note 17 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Annual Report”). The Aggregate Number of Stock Awards column includes the RSUs granted in 2023 which remained unvested as of December 31, 2023, including those with respect to which the settlement has been deferred for some directors, as set forth in “Deferral of restricted stock units” above. The column also includes deferred RSUs granted in prior years held by Mr. Dineen (19,420), Mr. Mackay (4,506), Mr. Patsalos-Fox (5,578), Mr. Rohleder (11,218) and Ms. Wijnberg (16,985) to be settled following the director’s termination of service on the Board in accordance with the previously elected deferral option. In addition, this column also includes the RSUs or DSUs received in lieu of dividend equivalents held by Mr. Abdalla (14.58), Ms. Bali (14.58), Mr. Branderiz (18.50), Ms. Deskus (14.58), Mr. Dineen (94.60), Ms. Domenici (18.50), Mr. Mackay (33.15), Mr. Patsalos-Fox (37.56), Mr. Rohleder (65.39), Mr. Schot (17.12), Mr. Velli (14.58) and Ms. Wijnberg (84.56) (see page 42 for additional information).
Key compensation program features
| What we do | | | What we don’t do | | | | Pay for performance, with high percentages of performance-based and long-term equity compensation | See page 49 | | No dividends or dividend equivalents paid until equity awards have vested | | | Use appropriate peer groups and market data when establishing compensation | See page 47 | | No repricing of underwater stock options | | | Retain an independent external compensation consultant (Pay Governance) | See page 47 | | No hedging, speculation, short sales, margin accounts or pledging of Cognizant securities | | | Set significant stock ownership requirements for executives | See page 66 | | No tax “gross ups” on severance or other change in control benefits | | | Maintain strong clawback policies that provide for recoupment of time-based and performance-based incentive compensation, including in the event of executive misconduct | See page 66 | | | | | Utilize “double trigger” change in control provisions in plans that only provide benefits upon qualified terminations in connection with a change in control | See page 78 | | |
2023-2025 PSUs
2023-2025 PSUs A substantial percentage of our NEO compensation is performance-based. The annual cash incentive (“ACI”) measures performance over a one-year period and rewards are tied to short-term company financial objectives. Performance stock units (“PSUs”) measure multi-year performance and reward the achievement of long-term company financial objectives, including relative TSR (see pages 49 and 50). 3
Long-term continued employment
Long-term continued employment Provide an incentive for long-term continued employment with our company A substantial percentage of our NEOs’ target direct compensation consists of long-term equity: (i) restricted stock units (“RSUs”), which vest quarterly over a 3-year period, to reward continued service and long-term performance of our common stock, and (ii) PSUs that have a 3-year performance period with vesting shortly thereafter (see pages 49 and 50). Actual compensation received by the NEOs may be higher or lower than target amounts due to the performance criteria in the PSUs. 4
Balanced mix
Balanced mix Create an appropriate balance between current and long-term compensation and between performance and non-performance-based compensation Our NEOs’ target direct compensation includes current compensation in the form of cash, divided between base salary and ACI, and long-term compensation in the form of equity, divided between PSUs and RSUs. Both current and long-term compensation are mixed between fixed (base salary) and at-risk (ACI, RSUs and PSUs) compensation (see pages 49 and 50). 5
Competitive
Competitive Provide competitive compensation packages in order to attract, retain and motivate top executive talent To ensure our compensation remains competitive, the Compensation Committee engaged Pay Governance as its independent consultant in 2023 and prior years to review and benchmark the compensation we provide relative to our peer group and other market data. Our 2023 peer group was comprised of 18 technology, software and professional service companies selected based on industry, comparable business operations and scale (see page 47). 6 No unnecessary risk-taking Ensure that compensation arrangements do not encourage unnecessary risk-taking We set stock ownership guidelines to help mitigate potential compensation risk and further align the interests of our NEOs with those of shareholders (see page 66). We also create a balance between performance and non-performance-based compensation and set performance targets that we believe are aspirational but achievable (see pages 49 to 54).
Compensation consultant
Compensation consultant For 2023, the Compensation Committee engaged Pay Governance to review all elements of our executive compensation, benchmark such compensation against the compensation packages of other comparable companies with which we compete for executive talent, and provide recommendations to ensure that our executive compensation program continues to enable us to attract and retain qualified executives through competitive compensation packages that incentivize the attainment of our short and long-term strategic objectives. Pay Governance also provides information to the Compensation Committee related to the compensation for new executives, including Mr. Kumar’s compensation when he was appointed in early 2023 and Mr. Dalal’s compensation as CFO when he was appointed in late 2023. Pay Governance reports directly to the Compensation Committee, regularly participates in committee meetings and advises the Compensation Committee with respect to compensation trends and best practices, plan design and the reasonableness of individual compensation awards. Pay Governance does not provide services to the company (directly or indirectly through affiliates) other than those provided to the Compensation Committee. In 2023, the Compensation Committee undertook its annual assessment of the independence of Pay Governance and concluded that no conflict of interest exists that would prevent Pay Governance from providing independent advice regarding executive and director compensation matters.
Peer group review
Peer group review On an annual basis, the Compensation Committee, with assistance from Pay Governance, reviews and determines the company’s peer group that will be used, together with other market data, for market comparisons and benchmarking of the compensation of executive officers in the next fiscal year. The 2023 target direct compensation and other compensation of our NEOs was set with reference to a peer group determined by the Compensation Committee in late 2022. This peer group was comprised of 18 technology, software and professional services companies selected based on industry, comparable business operations and scale, including with respect to revenue, market capitalization and headcount. The 2023 peer group as compared to the peer group for 2022 included the addition of Hewlett Packard Enterprises and Adobe and excluded Bread Financial (formerly Alliance Data), which was removed based on its low market capitalization. Data in the chart below was reviewed by the Compensation Committee in late 2022 for 2023 compensation decisions.
Peer group review
| * Trailing 12-months (as of last quarterly filing prior to September 2022) | | ** As of July 31, 2022 | | *** As of the end of the last completed fiscal year ended on or prior to July 31, 2022 |
Compensation design and target compensation levels for next year
Compensation design and target compensation levels for next year The Compensation Committee annually evaluates the executive compensation program with the goal of setting compensation at levels it believes are competitive with those of other companies that compete with us for executive talent. The Compensation Committee continues to strive to improve the executive compensation program and will seek on an annual basis from Pay Governance benchmark compensation data and/or review management’s recommendations for year-over-year compensation adjustments, including a review for general market competitiveness and competitiveness with the company’s peer group. The 2023 executive compensation program followed the same compensation structure as the 2022 executive compensation program.
Annual compensation evaluation and finalization of compensation
Annual compensation evaluation and finalization of compensation The Compensation Committee utilizes target direct compensation as the principal manner in which it reviews, evaluates and makes decisions with respect to executive compensation. Target direct compensation is the annual compensation that would be delivered to an NEO in a theoretical, steady-state environment where the same annual compensation was granted in multiple years and the company’s performance was at target across all such years. The Compensation Committee believes this approach is most appropriate for its decision-making, including evaluation against the compensation practices of comparable companies with which we compete for talent, as it is designed to capture the annual compensation an NEO would be expected to earn, assuming company performance at target, based on the decisions of the Compensation Committee made at the beginning of the performance period. The Compensation Committee reviews the target direct compensation of our NEOs on an annual basis and makes periodic adjustments based on individual performance and contributions, market trends and competitive environment for talent, peer group data, internal pay equity, the scope, responsibility and business impact of the individual’s position, the individual’s potential for increased responsibility and promotion over the award term, and the value of equity compensation that the individual has previously been awarded. No specific weight is assigned to any of the above criteria relative to the others, but rather the Compensation Committee uses its judgment in combination with market and other data. The Compensation Committee evaluates the total mix of cash versus equity-based compensation, short-term versus long-term compensation and performance-based versus fixed compensation with reference to market practices and compensation program objectives. Target direct compensation excludes additional awards that may be made from time to time for individual achievement. It also excludes new hire awards upon joining the company, such as sign-on bonuses or one-time equity grants, that are not intended to be recurring, that are designed to compensate a new hire for compensation being lost as a result of leaving a prior employer or additional costs of joining the company, or are needed as additional incentive for a new hire to join the company. Equity vesting acceleration upon retirement similarly is not included in target direct compensation. See pages 55 to 64 for additional details on target direct compensation and any excluded awards. Our CEO, aided by our Chief People Officer (“CPO”), among others, provides statistical data and makes recommendations to the Compensation Committee to assist it in determining compensation levels for other executive officers. The CEO and CPO recuse themselves from any matters dealing with their own compensation. In addition, our CEO provides the Compensation Committee and other non-employee directors with a review of the performance of other executive officers. While the Compensation Committee utilizes this information and values management’s observations with regard to compensation, it makes the ultimate decisions regarding executive compensation. The Compensation Committee finalizes the executive compensation program design and NEO compensation early in the year. For 2023, NEO target direct compensation included base salary, an ACI opportunity, and 2023-2025 PSUs and RSUs. Because the Board had already terminated Mr. Humphries from his role as CEO in January 2023 before annual target direct compensation amounts were established, the Compensation Committee did not set a 2023 target direct compensation amount for Mr. Humphries, and he did not receive a 2023 ACI award or new awards of RSUs or PSUs. As such, discussions of the Committee’s compensation-setting process in early 2023 through early 2024 generally do not apply to Mr. Humphries.
Determination of achievement of prior year performance for performance-based awards
| • | Annual bonus amounts under the 2023 ACI program |
Determination of achievement of prior year performance for performance-based awards
| • | PSUs as follows: | | | final achievement and payout for the 2021-2023 PSUs (3-year) granted in 2021 (payout at approximately 91.4%) | | | for in-cycle grants that have yet to pay out separately, the Compensation Committee determined payout/achievements for the 2022-2024 PSUs granted in 2022 with respect to the revenue and adjusted diluted EPS components for the 2023 performance year (0% and 0%, respectively) and 2023-2025 PSUs granted in 2023 with respect to the revenue and adjusted diluted EPS components for the 2023 performance year (approximately 0% and 76.2%, respectively) |
Determination of achievement of prior year performance for performance-based awards
| Our NextGen program and ACI and PSU achievement In the second quarter of 2023, we initiated the NextGen program aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. Our drive for simplification includes operating with fewer layers in an effort to enhance agility and enable faster decision making. In connection with the NextGen program, in 2023 we incurred costs totaling $229 million. While these costs negatively impacted our 2023 GAAP operating margin and GAAP diluted EPS, they were excluded from our 2023 adjusted operating margin and 2023 adjusted diluted EPS reported to investors. These adjusted metrics are included in the components we use to determine ACI and PSU payouts. Adjusted operating margin and adjusted diluted EPS are not measurements of financial performance prepared in accordance with GAAP. See “Forward-looking statements and non-GAAP financial measures” on page 98 for more information. |
Annual cash incentive (ACI)
Annual cash incentive (ACI)
Motivate and reward based on short-term company objectives
Motivate and reward based on short-term company objectives The Compensation Committee designed our 2023 ACI program to stimulate and support a high-performance environment by tying such incentive compensation to the attainment of short-term goals across four metrics aligned with our company’s objectives that it believes are valued by our shareholders:
Motivate and reward based on short-term company objectives
| • | revenue growth (measured as revenue adjusted for currency fluctuations and acquisitions; 55% weighting); | | • | adjusted operating margin (further adjusted for acquisitions; 35% weighting); | | • | two strategic objectives: |
Motivate and reward based on short-term company objectives
| • | gender diversity rate for employees at the senior manager level and above (5% weighting); and | | • | the percentage of revenue aligned with our strategic services delivery model (5% weighting). |
Motivate and reward based on short-term company objectives
For executives overseeing a business unit or integrated practice (including Mr. Gummadi and Mr. Ayyar), 60% of the award was based on performance of the applicable business unit – 35% business unit revenue and 25% business unit profit – and 40% of the award was based on overall company performance as described above. The maximum award each NEO could receive was 200% of target. Achieving target performance (before taking into account the adjustments described above) generally requires exceeding prior year results. For revenue growth, target reflected a 5.4% increase compared to 2022 actual results. For adjusted operating margin, target required maintaining 2022 actual results as the economic environment across the industry had begun to deteriorate. The targets for gender diversity and revenue from aligned services were set based on targeted improvements in the business. The Compensation Committee determines the level of achievement, if any, with respect to the performance metrics based on actual company results for the year. See page 52 for further details.
Restricted stock units (RSUs)
Restricted stock units (RSUs)
Reward continued service and long-term performance of our common stock
Reward continued service and long-term performance of our common stock We grant RSUs, which typically vest quarterly over a 3-year period, to reward continued service and long-term performance of our common stock. However, the awards made each year may also include transition grants. Our NEOs (other than our CEO) and other employees who receive annual RSU grants periodically receive transition grants. Transition grants are utilized to ensure that new employees receiving RSU grants begin to vest the full targeted quarterly compensation value of their awards one quarter after the initial grant date instead of having to wait for multiple annual award cycles and vesting periods to pass. As a result, the number of RSUs that vest under transition grants are higher in the initial year to cover a larger proportion of an employee’s target, and gradually taper off over time as subsequent annual RSU grants supplement the initial transition grant. Transition grants are also awarded in the case of an NEO (other than the CEO) or other employee who receives an increase in their annual targeted compensation value for RSUs due to promotion or salary increase. Transition grants do not increase the intended annual target amounts for RSU vestings or diminish the long-term nature of granting equity awards. We believe this approach of receiving a recipient’s full targeted quarterly value for RSU grants over the vesting period provides a competitive advantage as the structure is highly valued by our employees and serves to more quickly align senior leader and shareholder interests.
Performance stock units (PSUs)
Performance stock units (PSUs)
Incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock
Incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock Our Compensation Committee designed the 2023-2025 PSU awards granted to our NEOs to tie a substantial portion of executive compensation to the attainment of long-term goals across three metrics that it believes are valued by our shareholders:
Incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock
| • | revenue growth (measured as revenue adjusted for currency fluctuations and acquisitions; 50% weighting); | | • | adjusted diluted EPS (further adjusted for acquisitions; 25% weighting); and | | • | total shareholder return (TSR) (25% weighting) of our common stock on a relative basis as compared to a peer group comprised of the S&P 500 Index. |
Incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock
As further described on page 54, the 2023-2025 PSU awards have a 3-year performance measurement period. The Compensation Committee established all of the applicable growth targets for the revenue and adjusted diluted EPS components upfront in February 2023 as three separate 1-year goals, one for each fiscal year during the performance period (1/3rd weighting each), in each case measured as a percentage increase over prior year actuals. The Compensation Committee believes this approach of a 3-year performance measurement period (with corresponding 3-year service requirement) with one-year growth targets provides a balanced and steady approach between growth and strategic priorities while aligning with the company’s targeted performance over the longer period. The relative TSR component is measured over the full 3-year performance period, with payout with respect to the metric capped at target in the event the TSR of the company’s common stock on an absolute basis over the performance period is negative. The 2023-2025 PSUs have a payout range from 0% to 200% of the target. The Compensation Committee established the 2023-2025 PSU targets to incentivize the company’s management to prioritize continued growth in revenue, increased levels of adjusted diluted EPS and favorable TSR relative to other peer group companies comprising the S&P 500 Index. There was substantial uncertainty at the time the Compensation Committee established the targets as to the likelihood of the company’s attainment of the targeted levels of performance and vesting of the PSUs. For the 2023-2025 PSUs granted in March 2023, the 2023 targets (prior to the adjustments described above) were for 4.5% revenue growth and a 4.5% increase in adjusted diluted EPS as compared to 2022. Similarly, for the 2021-2023 PSU grants awarded in early 2021 and settled in March 2024, the 2023 targets were for 6% revenue growth and a 6% increase in adjusted diluted EPS as compared to 2022, which amounts reflected the more robust macroeconomic environment in which the targets were set. The relative TSR target was set at the 50th percentile vis-à-vis the peer group of companies comprising the S&P 500 Index. The Compensation Committee determines the level of achievement, if any, with respect to the performance metrics based on actual company results for the 2023, 2024 and 2025 fiscal years and relative TSR results for the full 2023-2025 period. See pages 51, 53 and 54 for further details.
New hire PSU awards to Mr. Kumar
New hire PSU awards to Mr. Kumar In connection with the January 12, 2023 appointment of Ravi Kumar S as the company’s CEO, the Board granted Mr. Kumar a CEO New Hire Award of PSUs. These PSUs have a target value of $3,000,000, a payout range from 0% to 250% of the target and a longer performance period than our regular annual PSU grants to strengthen alignment between shareholder interests and the new CEO. The PSUs are earned based on the company’s absolute total shareholder return (measured as a compound annual growth rate (“CAGR”)) over the four-year performance period starting on January 12, 2023. This design was selected to focus Mr. Kumar on continued and sustained year-over-year improvement in the return received by the company’s shareholders. The company must achieve a threshold stock price CAGR of 10% in order to earn 50% of the target amount, a target of 15% stock price CAGR in order to earn 100% of the target amount, an “above target” of 17% stock price CAGR in order to earn 200% of the target amount, and a greater than or equal to 20% stock price CAGR in order to earn 250% of the target amount. These amounts would correlate to an absolute growth rate for the company’s common stock across the four-year measurement period of 46% for threshold performance, 75% for target performance, 87% for above target performance and 107% for maximum performance.
Performance-based compensation – key performance metrics
Performance-based compensation – key performance metrics The graphs below show actual company performance versus the corresponding performance targets for the performance-based compensation elements making up the majority of the company’s awards paid in 2023 or early 2024. Note: In 2023 we incurred costs relating to our NextGen program totaling $229 million. While these costs negatively impacted our GAAP operating margin and GAAP diluted EPS, they were excluded from our adjusted operating margin and adjusted diluted EPS reported to investors, which form the basis for certain metrics in our performance-based compensation. Adjusted operating margin and adjusted diluted EPS are not measurements of financial performance prepared in accordance with GAAP. See “Forward-looking statements and non-GAAP financial measures” on page 98 for more information.
Relative total shareholder return (TSR)
Relative total shareholder return (TSR) To incentivize shareholder return, relative TSR is utilized as a performance metric for our PSU awards, although the peer groups for comparison of relative TSR vary. Shown below is the 3-year cumulative TSR on our common stock with the cumulative TSR of the S&P 500 Index and the S&P 500 Information Technology Index. The company recognizes that its relative TSR performance has not met expectations. In fact, our relative TSR under our 2020-2022 PSUs placed us at the 21.6th percentile and under our 2021-2023 PSUs placed us at the 22.4th percentile of the relevant peer groups, resulting in no payout for the relative TSR portion of each award. The Board recognized the need for Cognizant to make progress faster and accelerate revenue growth and, in January 2023, appointed Ravi Kumar S to succeed Brian Humphries as the company’s CEO. Because relative TSR is a 3-year measure in our PSUs, any benefits from the CEO change will take a period of time to result in improved performance relative to the TSR targets and higher payouts for our executives. However, we are encouraged by our one-year relative TSR for 2023 of the 81.4th percentile compared to the companies in the S&P 500 Index.
2023 Annual cash incentive (ACI)
2023 Annual cash incentive (ACI) ACI awards were granted by the Compensation Committee on April 5, 2023, cover a performance period of January 1 through December 31, 2023, and were paid on March 15, 2024 (except for Mr. Ayyar, who is based in Singapore, on March 27, 2024). Our 2023 ACI had the same design as the prior year with a large portion of the award tied to our revenue growth target. Information regarding the weighting, targets and performance on our 2023 ACI metrics is shown below. See pages 47 through 49 for further detail regarding how the targets for each metric were set. Prior to determining the company performance against the targets for 2023, the Compensation Committee (1) adjusted the revenue threshold, target and maximum levels to account for currency fluctuations in a manner intended to ensure that they do not impact, positively or negatively, the achievement of targets and (2) where applicable, adjusted both the revenue and adjusted operating margin threshold, target and maximum levels to account for the amount of revenue and operating margin derived from acquisitions completed during 2023 in a manner intended to ensure that acquisitions do not impact, positively or negatively, the achievement of targets. In connection with determining the ACI payout for 2023, the Compensation Committee exercised its judgment to include in the final payout percentage 5% for all recipients taking into consideration the company’s performance across its two strategic objectives collectively, which together are given 10% weighting under the ACI metrics. With respect to the gender diversity objective, the Compensation Committee took into consideration the fact that management continued to make progress on increasing the number of women at the senior manager level and above (moving from 17.2% actual result in 2022 to 17.8% in 2023) even though the company reduced its overall headcount throughout 2023. With regard to the revenue from strategic services objective, the Compensation Committee acknowledged that in the difficult economic environment of 2023, management was appropriately focused on maintaining the overall revenue of the company rather than the percentage of revenue attributed to its strategic services delivery model.
2023 Annual cash incentive (ACI)
| * In connection with determining the ACI payout for 2023, the Compensation Committee exercised its judgment to include in the final payout percentage 5% for all recipients in light of the company’s performance across its two strategic objectives collectively, which together are given 10% weighting under the ACI metrics. See the paragraph immediately preceding the above graphic for more detail. |
2023 Annual cash incentive (ACI)
Adjusted operating margin excludes costs related to our NextGen program and is not a measurement of financial performance prepared in accordance with GAAP. See page 98 for more information.
2021-2023 Performance stock units (PSUs)
2021-2023 Performance stock units (PSUs) 2021-2023 PSUs were granted by the Compensation Committee on February 23, 2021 and subsequently in 2021 in connection with promotions to executives, had a 3-year performance period of January 1, 2021 through December 31, 2023, and were settled at approximately 91.4% of target on March 15, 2024. Targets, which are set at the beginning of the 3-year performance period as a % increase over prior year results (assuming no acquisitions) included the following:
2021-2023 Performance stock units (PSUs)
| • | Revenue: Growth measured as increase in revenue adjusted for currency fluctuations and acquisitions; prior year actual revenue for each year of the performance period that is measured separately against a percentage growth target for such year; targets for all three years set upfront in February 2021 as a percentage increase over the prior year; each year is weighted equally | | • | Adjusted diluted EPS: Increase in adjusted diluted EPS over prior year adjusted diluted EPS for each year of the performance period that is measured separately against a percentage increase target for such year; targets for all three years set upfront in February 2021 as a percentage increase over the prior year; each year is weighted equally | | • | Relative TSR: Achievement determined after end of 3-year performance period against a peer group of companies in the S&P 500 Information Technology Index plus Capgemini, Tata Consulting Services, Infosys, Wipro, HCL, CGI, EPAM Systems and Genpact |
2021-2023 Performance stock units (PSUs)
Prior to determining the performance by the company against the revenue and adjusted diluted EPS targets for each year, the Compensation Committee adjusted (1) the revenue threshold, target and maximum levels to account for currency fluctuations in a manner intended to ensure that they do not impact, positively or negatively, the achievement of targets and (2) the revenue and adjusted diluted EPS targets by the amount of revenue and diluted EPS derived from acquisitions completed during the respective years in a manner intended to ensure that acquisitions do not impact, positively or negatively, the achievement of targets. Additionally, in early 2022 the Compensation Committee increased the 2021 adjusted diluted EPS target by the per-share impact of the 2021 class action settlement loss, net of tax, which was excluded from the company’s 2021 adjusted diluted EPS to ensure that the achievement against target reflected the impact of the loss. See “Forward-looking statements and non-GAAP financial measures” on page 98 for more information regarding the class action settlement loss. Adjusted diluted EPS is not a measurement of financial performance prepared in accordance with GAAP. See page 98 for more information.
Performance on outstanding PSUs
Performance on outstanding PSUs Our 2022-2024 and 2023-2025 PSUs are structured similarly to the 2021-2023 PSUs described above, with three year performance periods and similar metrics. The 2021-2023 PSUs and 2022-2024 PSUs also utilize the same peer group for relative TSR. In setting the performance targets for the 2023-2025 PSUs, in order to better align with market practices, the Compensation Committee approved a different peer group consisting of the S&P 500 Index. Except for relative TSR, targets are set at the beginning of the 3-year performance period as a percentage increase over prior year results (so the exact target is not known until after the end of the prior year). Prior to determining the performance by the company against the revenue and adjusted diluted EPS targets for each year, the Compensation Committee adjusted, and expects to adjust for 2024 and 2025, (1) the revenue threshold, target and maximum levels to account for currency fluctuations in a manner intended to ensure that they do not impact, positively or negatively, the achievement of targets and (2) the revenue and adjusted diluted EPS targets by the amount of revenue and diluted EPS derived from acquisitions completed during the respective years in a manner intended to ensure that acquisitions do not impact, positively or negatively, the achievement of targets. Performance on such awards for which at least a full calendar year of the performance period has been completed are tracking below target as follows:
Performance on outstanding PSUs
| | Metric | Year | Threshold | Target | Maximum | Achieved | % of Achievement Earned | | 2022-2024 PSUs | Revenue (in billions) | Year 1 (2022) | $19.3 | $19.7 | $20.1 | $19.4 | 61% | | | | Year 2 (2023) | $20.7 | $21.1 | $21.5 | $19.4 | 0% | | | | Year 3 (2024) | | | | | | | | Adjusted Diluted EPS | Year 1 (2022) | $4.44 | $4.53 | $4.61 | $4.40 | 0% | | | | Year 2 (2023) | $4.75 | $4.84 | $4.92 | $4.55 | 0% | | | | Year 3 (2024) | | | | | | | | Relative TSR | 3-year period | 30th %ile | 50th %ile | 80th %ile | 38.8th %ile as of 12/31/2023 | | | 2023-2025 PSUs | Revenue (in billions) | Year 1 (2023) | $20.0 | $20.4 | $20.8 | $19.4 | 0% | | | | Year 2 (2024) | | | | | | | | | Year 3 (2025) | | | | | | | | Adjusted Diluted EPS | Year 1 (2023) | $4.51 | $4.59 | $4.68 | $4.55 | 76% | | | | Year 2 (2024) | | | | | | | | | Year 3 (2025) | | | | | | | | Relative TSR | 3-year period | 30th %ile | 50th %ile | 80th %ile | 81.4th %ile as of 12/31/2023 | | | Adjusted diluted EPS is not a measurement of financial performance prepared in accordance with GAAP. See page 98 for more information. | | | | | | | |
Performance on outstanding PSUs
In addition to the PSU awards described above, Brian Humphries, our former CEO, received PSUs in connection with his April 2019 hiring that included performance criteria based on absolute and relative TSR. One-half of such PSUs were based on absolute TSR (with a threshold of 25% return) and one-half were based on relative TSR against the S&P 500 Information Technology Index (with a threshold of the 30th percentile), in each case over a four-year performance period from April 1, 2019 through March 31, 2023. These PSUs were tracking below threshold and would not have paid out even if they had not been forfeited in connection with the termination of Mr. Humphries’ employment effective as of March 15, 2023. Mr. Kumar received a CEO New Hire award of PSUs when he joined the company in January 2023. The payout is based on absolute TSR (measured by CAGR) of the company’s common stock over the four-year performance period. Based on CAGR performance through the portion of the performance period ending December 31, 2023 of 30.4%, Mr. Kumar’s PSUs are on pace for achievement of the maximum level of performance.
Performance on outstanding PSUs
| 2024 ACI and 2024-2026 PSUs In early 2024, the Compensation Committee considered how the uncertain economic environment across the technology professional services industry presented challenges in setting financial performance goals. To reflect these challenges while continuing to maintain goal rigor and the integrity of the company’s performance-based compensation programs, the Committee adopted an ACI payout design that provides less variability in payout for performance at or near target levels. In addition, the strategic initiatives were combined into an overall set of qualitative goals to be evaluated at the end of the performance year. These goals, which include a goal related to GenAI, a desire to improve female representation in mid-level and senior roles, and a skilling goal related to our Synapse Initiative, collectively comprise a total 10% of the ACI opportunity. Similarly, due to multi-year goal-setting challenges in the uncertain economic environment across the industry, the Compensation Committee approved a new design for the 2024-2026 PSUs that increases the emphasis on relative performance against peers (versus absolute performance). The new awards balance relative performance (relative revenue growth, with a 50% weighting, and relative TSR, with a 25% weighting) compared to peers and companies comprising the S&P 500 Index, respectively, with absolute EPS growth, with a 25% weighting. Each of these measures is based on a full three-year performance period. These changes are designed to continue to incentivize shareholder return and reward achievement of long-term company financial objectives and performance of the company’s common stock, while maintaining overall pay competitiveness, thereby attracting, retaining and providing stability of the executive leadership team. |
Three views of compensation
Three views of compensation To assist shareholders in understanding the compensation arrangements for our NEOs, we provide the following three views of compensation: Target Direct Compensation – The Compensation Committee utilizes target direct compensation to review, evaluate and make decisions, typically early in the year, with respect to the compensation of our NEOs. This view is intended to capture the annual compensation that would be delivered to an NEO in a theoretical, steady environment where the same annual compensation was granted in multiple years and the company’s performance was at target across all such years. The Compensation Committee believes this view is most appropriate for its decision-making, including evaluation against the compensation practices of comparable companies with which we compete for talent, as it is designed to capture the annual compensation an NEO would be expected to earn, assuming company performance at target, based on the decisions of the Compensation Committee in the year of such decision. Target direct compensation excludes additional cash and equity awards that are made for new hires, retention or other purposes that are not intended to be recurring. SEC Compensation – The SEC compensation view summarizes the compensation of an NEO consistent with the compensation calculated in accordance with SEC rules and set out in the “2023 Summary compensation table” on page 70. The SEC compensation view reflects the actual base salary and ACI earned by an NEO in a given year, any cash bonuses, the grant date fair value of all RSUs and PSUs granted in a given year (including equity awards that are made for new hires, retention or other purposes) and all other compensation, including perquisites, required to be reported under SEC rules. SEC compensation includes several items for which the NEOs do not actually receive the amounts during the year, such as equity grants that may not vest for several years (or at all). It also excludes items that may be paid during the year, but that are attributable to prior years. As such, the SEC compensation may differ substantially from the compensation actually realized by our NEOs. Realized Compensation – To supplement the SEC-required disclosure, we provide a realized compensation view that is designed to capture the compensation actually received by an NEO in a given year. We calculate realized compensation by using the reported W-2 income for an NEO (or, in the case of NEOs who are not resident in the U.S., the comparable information as if they had received a W-2) for a given year and substituting the actual ACI paid in such year (which relates to the prior year given such incentives are paid in the first quarter of the following year) with the ACI earned for such year. Realized compensation is not a substitute for the amounts reported as SEC compensation. See “Pay versus performance table” on page 83 for additional information on compensation actually paid to NEOs as compared to SEC compensation. Because the compensation elements of our NEOs may be calculated differently across the three views of compensation, these views can result in very different compensation outlooks for each NEO. In general, base salary tends to be stable across the three views (unless an NEO joins the company late, or departs the company early, in any given year such that their pro-rata actual base salary will be substantially lower than target annual base salary) but in the case of compensation elements that are tied to performance metrics, whether and how well the company achieves the performance targets can lead to wide discrepancies between the Target Direct Compensation view and the other two views of compensation. In addition, the differences in how equity-based compensation is presented across the three views can also lead to large differences across the various views. The table below, which summarizes the manner in which the various compensation elements for a given year are used to build target direct compensation, SEC compensation and realized compensation, denotes the differences in how the various compensation elements are calculated and credited to NEOs between the different views. See Executive Compensation Tables beginning on page 70 for additional information regarding these items.
Three views of compensation
| | Target Direct Compensation | SEC Compensation | Realized Compensation | | | Theoretical compensation utilized to review, evaluate and make decisions regarding NEO compensation | Compensation calculated as required by SEC rules, which may differ substantially from compensation actually realized by NEOs | Compensation designed to reflect compensation actually received by an NEO in a given year | | Base Salary | Target base salary for the year (generally equal to actual base salary) | Actual base salary for the year (and, for Mr. Humphries and Ms. Schmitt, cash paid in lieu of unused vacation at the time each left the company in March 2023 and May 2023, respectively) | Actual base salary for the year (and, for Mr. Humphries and Ms. Schmitt, cash paid in lieu of unused vacation at the time each left the company in March 2023 and May 2023, respectively) | | ACI | Target ACI for the year | Actual ACI earned for the year | Actual ACI earned for the year | | PSUs | Target value of the PSUs to vest each year, excluding additional awards | Grant date fair value of the PSUs granted during the year, calculated with respect to relative TSR as an award with a “market condition” under applicable accounting rules | Actual value as of the vesting date of PSUs that vested during the year | | RSUs | Grant date fair value of the RSUs targeted to vest each year, excluding additional awards | Grant date fair value of the RSUs granted during the year; may include transition grants that initially create compensation reported in excess of target amounts, but are designed to ensure receipt of target amounts annually | Actual value as of the vesting date of RSUs that vested during the year | | Bonus | | Kumar only: $750,000 as cash sign-on bonus Dalal only: $150,000 as initial portion of $300,000 cash sign-on bonus Gummadi only: $1,000,000 bonus for service as interim head of North America ($250,000 was paid in 2022 with the remaining paid in 2023) | Kumar only: $750,000 as cash sign-on bonus Dalal only: $150,000 as initial portion of $300,000 cash sign-on bonus Gummadi only: $1,000,000 bonus for service as interim head of North America ($250,000 was paid in 2022 with the remaining paid in 2023) | | Other | | All other compensation as required by SEC rules, including perquisites | |
Three views of compensation
Mr. Kumar was selected by the Board to serve as the company’s new CEO based on his experience gained from his 20-year career at Infosys where he held various leadership roles, most recently serving as President from 2016 to 2022. In connection with his appointment as CEO, the company provided Mr. Kumar with an offer letter and subsequently entered into an Executive Employment and Non-Disclosure, Non-Competition and Invention Assignment Agreement effective January 12, 2023, pursuant to which Mr. Kumar agreed to serve as the company’s CEO. The Compensation Committee reviewed and approved the compensation arrangements set forth in the offer letter and Mr. Kumar’s employment agreement after considering compensation information provided by Pay Governance for CEOs in the company’s peer group and other information on compensation arrangements for new CEOs. The Compensation Committee approved, and Mr. Kumar’s employment agreement provides for (by reference to the offer letter, where applicable), 2023 annual target direct compensation of $14,500,000 comprised of: (i) base salary of $1,000,000, (ii) ACI target of $2,000,000, (iii) PSUs of $6,900,000 and (iv) RSUs of $4,600,000.
SEC compensation
SEC compensation Mr. Kumar’s 2023 SEC compensation was substantially higher than his target direct compensation primarily due to the inclusion of the following one-time awards that he received upon becoming the CEO of the company: (a) his CEO New Hire Award of PSUs with a target value of $3,000,000 (see page 50 for more information); (b) an equity award consisting of RSUs with a grant date value of $5,000,000, which was a buyout award to replace forfeited equity awards from his previous employer, and (c) a cash sign-on bonus of $750,000. These one-time awards are partially offset by the 2023 ACI award payout being 30.3% of target and pro-rated for the partial year of service.
Realized compensation
Realized compensation Mr. Kumar’s realized compensation was significantly lower than his target direct compensation primarily because his 2023 PSU grants, including his CEO New Hire Award, are scheduled to vest, subject to the satisfaction of performance criteria, in future periods and because his 2023 ACI award payout amount was lower than the target amount. These were partially offset by the inclusion of the one-time cash sign-on bonus he received at the time of his appointment as CEO. His 2023 realized compensation consisted principally of his base salary, 2023 ACI award payout at 30.3% of target, and quarterly vestings of RSUs in the aggregate amount of approximately $4,911,000 and cash sign-on bonus of $750,000.
Realized compensation
Mr. Dalal was selected by the Board to serve as the company’s new CFO based on his experience gained from his long career at Wipro, where he held various positions of increasing responsibility since joining the company in 2002, most recently serving as President and CFO from 2019 to 2023. In connection with his appointment as CFO, the company provided Mr. Dalal with an offer letter and subsequently entered into an Executive Employment and Non-Disclosure, Non-Competition and Invention Assignment Agreement effective December 4, 2023, pursuant to which Mr. Dalal agreed to serve as the company’s CFO. The Compensation Committee reviewed and approved the compensation arrangements set forth in the offer letter and Mr. Dalal’s employment agreement after considering compensation information provided by Pay Governance for CFOs in the company’s peer group and other information on compensation arrangements for new CFOs. The Compensation Committee approved, and Mr. Dalal’s employment agreement provides for, 2023 annual target direct compensation of $5,200,000 comprised of: (i) base salary of $750,000, (ii) ACI target of $750,000, (iii) PSUs of $1,850,000 and (iv) RSUs of $1,850,000.
SEC compensation
SEC compensation Mr. Dalal’s 2023 SEC compensation was lower than his target direct compensation primarily because he received only a pro rata portion of his annual base salary based on his employment commencing in December 2023, the difference in value of his PSUs as reported for SEC compensation versus in target direct compensation and a much smaller ACI award payout of only 30.3% of the pro rata portion of his target ACI amount based on his employment start date. These lower amounts were partially offset by the receipt of a transition RSU award of approximately $2,300,000 at the time he began his employment (see page 50 for additional information on transition awards), the inclusion of certain other items of compensation not included in calculating his target direct compensation (see page 72 for more information on the other items of compensation) and the inclusion of the following one-time awards that he received upon becoming the CFO of the company: (a) an equity award consisting of RSUs with a grant date value of $765,000 and (b) payment of $150,000 as the first half of a $300,000 cash-sign on bonus.
Realized compensation
Realized compensation Mr. Dalal’s realized compensation was significantly lower than his target direct compensation primarily because (i) he received only a pro rata portion of his annual base salary based on his employment commencing in December 2023 as well as a much smaller ACI award payout compared to target and (ii) due to the timing of the start of his employment in December 2023, his realized compensation did not include any RSU or PSU vestings. His 2023 realized compensation consisted principally of his base salary of approximately $60,000, pro rata 2023 ACI award payout at 30.3% of target, cash sign-on bonus of $150,000 and certain other items of compensation not included in calculating his target direct compensation of approximately $48,000 (see page 72 for more information on the other items of compensation).
Realized compensation
The Compensation Committee, at its meeting in February 2023, evaluated Mr. Siegmund’s prior year performance and the updated information provided by Pay Governance for CFOs in the company’s peer group. Based on these considerations, the Compensation Committee determined that Mr. Siegmund’s target direct compensation for 2023 should remain consistent with a target annual amount of $6,600,000. The specific components of Mr. Siegmund’s 2023 target direct compensation were as follows: (i) base salary of $850,000, (ii) ACI target of $850,000, (iii) PSUs of $2,450,000 and (iv) RSUs of $2,450,000. In late summer 2023, Mr. Siegmund announced his plans to retire from the company. He subsequently ceased to be CFO, effective December 4, 2023. He remained an employee and special advisor to the company until March 31, 2024.
Realized compensation
Realized compensation Mr. Siegmund’s realized compensation was lower than his target direct compensation primarily because his PSU grants are largely expected to vest in future periods and because his 2023 ACI award payout amount was lower than the target amount. His 2023 realized compensation consisted principally of his base salary, 2023 ACI award payout at 30.3% of target, PSU vestings in the aggregate amount of $611,000 and quarterly vestings of RSUs in the aggregate amount of approximately $2,617,000.
Realized compensation
The Compensation Committee, at its meeting in February 2023, evaluated Mr. Gummadi’s prior year performance, his new role as EVP and President, Americas, the company’s Americas business performance and compensation information provided by Pay Governance for executives with similar responsibilities in the company’s peer group for 2023. Based on these considerations, the Compensation Committee determined that Mr. Gummadi’s target direct compensation for 2023 should be increased to $3,500,000 (57% increase vs. 2022), in connection with his promotion to serve as the EVP and President, Americas. The specific components of Mr. Gummadi’s 2023 target direct compensation were approved by the Compensation Committee as follows: (i) base salary of $650,000 (a 24% increase vs. 2022), (ii) ACI target of $650,000 (a 26% increase over his non-equity incentive bonus for 2022), (iii) PSUs of $1,100,000 (an 83% increase vs. 2022) and (iv) RSUs of $1,1,00,000 (an 83% increase vs. 2022). His ACI award was based 40% on the overall company ACI metrics and targets like the other NEOs, with the remaining 60% based on metrics and targets specific to the Americas business unit: (a) 35% based on constant currency revenue growth of the Americas business unit and (b) 25% based on Americas business unit profit.
Realized compensation
Realized compensation Mr. Gummadi’s realized compensation was slightly lower than his target direct compensation primarily because his PSU grants are largely expected to vest in future periods and because his 2023 ACI award payout amount was lower than the target amount. His 2023 realized compensation consisted principally of his base salary, 2023 ACI award payout at 15.8% of target (based on the company’s and his business unit’s 2023 performance), PSU vestings in the aggregate amount of $137,000, quarterly vestings of RSUs in the aggregate amount of approximately $1,598,000, and the remaining $750,000 of his bonus paid upon completion of his interim role of SVP, Americas.
SEC compensation
SEC compensation Mr. Kim’s 2023 SEC compensation was higher than his target direct compensation due primarily to the inclusion of the full grant date value of a special one-time RSU grant of approximately $500,000 related to his efforts in connection with the early 2023 CEO transition and his receipt of a transition grant of approximately $450,000 in RSUs in connection with his increased compensation (see page 50 for additional information on transition awards); this amount was largely offset by below target payment of the 2023 ACI.
Realized compensation
Realized compensation In 2023, Mr. Kim’s realized compensation was significantly lower than his target direct compensation primarily because his increased PSU grants are largely expected to vest in future periods and because his 2023 ACI award payout amount was lower than the target amount. His realized compensation for 2023 consisted principally of his base salary, 2023 ACI award payout at 30.3% of target, PSU vesting of approximately $138,000 and quarterly vesting of RSUs in the aggregate amount of approximately $1,188,000.
Realized compensation
The Compensation Committee, at its meeting in February 2023, evaluated Mr. Ayyar’s prior year performance, the company’s growth and transformation initiatives and strategic priorities, and the compensation information provided by Pay Governance for executives with similar responsibilities in the company’s peer group for 2023. Based on these considerations, the Compensation Committee determined that Mr. Ayyar’s target direct compensation for 2023 should be increased to approximately $3,126,000 (8% increase vs. 2022) to reflect the continued performance of the integrated practice area under his oversight. The specific components of Mr. Ayyar’s 2023 target direct compensation were as follows: (i) base salary of S$958,000 (Singapore dollar; approximately US$713,000; an 11% increase vs. 2022 USD salary), (ii) ACI target of S$958,000 (approximately US$713,000; an 11% increase vs. 2022 USD ACI), (iii) PSUs of $850,000 (a 6% increase vs. 2022) and (iv) RSUs of $850,000 (a 6% increase vs. 2022). His ACI award was based 40% on the overall company ACI metrics and targets like the other NEOs, with the remaining 60% based on metrics and targets specific to the Intuitive Operations and Automation business unit: (i) 35% based on constant currency revenue growth of the integrated practice and (ii) 25% based on integrated practice profit.
SEC compensation
SEC compensation Mr. Ayyar’s SEC compensation was lower than his target direct compensation primarily due to his 2023 ACI award payout being 44.9% of target, which was partially offset by his receipt of a transition grant of approximately $100,000 in RSUs in connection with his increased compensation (see page 50 for additional information on transition awards) and the higher value of the PSUs as reported for SEC compensation versus in target direct compensation.
Realized compensation
Realized compensation Mr. Ayyar’s 2023 realized compensation was lower than his target direct compensation primarily because many of his PSU grants are expected to vest in future periods and because his 2023 ACI award payout amount was lower than the target amount. His realized compensation for 2023 consisted principally of his base salary, 2023 ACI award payout at approximately 44.9% of target (based on the company’s and his integrated practice’s 2023 performance), PSU vesting of approximately $642,000 and quarterly vestings of RSUs in the aggregate amount of approximately $908,000.
Realized compensation
The Compensation Committee at its meeting in February 2023, evaluated Ms. Schmitt’s prior year performance and compensation information provided by Pay Governance for executives with similar responsibilities in the company’s peer group for 2023. Based on these considerations, the Compensation Committee determined that Ms. Schmitt’s target direct compensation for 2023 be set at $4,200,000. The specific components of Ms. Schmitt’s 2023 target direct compensation were as follows: (i) base salary of $700,000, (ii) ACI target of $700,000, (iii) PSUs of $1,400,000 and (iv) RSUs of $1,400,000. Ms. Schmitt voluntarily terminated her employment with the company effective May 5, 2023.
SEC Compensation
SEC Compensation Ms. Schmitt’s SEC compensation in 2023 was slightly higher than her target direct compensation primarily due to the inclusion of the full grant date value of a transition RSU award of approximately $2,500,000 (in addition to regular annual awards) to replace expiring off-cycle awards and ensure continued vesting of Ms. Schmitt’s annual targeted RSU amount (see page 50 for additional information on transition awards). This transition award was larger than typical for such awards because it replaced one of the last RSU awards that was granted on a three-year cycle by the company before it transitioned to the more typical practice of granting annual awards. The value of this transition award in SEC compensation was largely offset by (i) Ms. Schmitt’s forfeiture of her ACI award when she left the company and (ii) her receipt of only a pro rata portion of her annual base salary through the date of termination of her employment.
Realized Compensation
Realized Compensation Ms. Schmitt’s realized compensation in 2023 was substantially lower than her target direct compensation primarily because she only received a pro rata portion of her annual base salary through the date of termination of her employment and forfeited her ACI award payout and unvested stock awards (including the transition award discussed above) at the time she left the company in May 2023. Her 2023 realized compensation consisted principally of her base salary through May 2023, quarterly vesting of RSUs in the aggregate amount of approximately $622,000 and PSU vesting of approximately $1,145,000.
RETIREMENT, DEATH AND DISABILITY POLICY
| Our executive officers and certain other senior employees are eligible to participate in our retirement, death and disability policy. | | | | Eligibility | All employees at the vice president level and above | | | Retirement | Voluntary retirement upon: • At least 55 years of age; and • At least 10 years of service | | | Benefits | RSUs continue to settle on the originally scheduled vesting dates following departure (except in the event of (i) death, in which case the vesting and payment of RSUs accelerate and become immediately vested to the time of death, or (ii) disability, in which case RSUs eligible for the policy (as described below) settle on the originally scheduled vesting dates following departure and RSUs ineligible for the policy settle at the time of disability) • Applies only to equity awards granted on or after the adoption of the policy and at least 6 months before the individual’s termination of service PSU awards are prorated based on the portion of the performance measurement period during which the individual was employed before retirement, death or disability (actual performance continues to be assessed on the full original performance measurement period) ACI / annual bonus at the achieved level for the year during which the departure occurs for departures on or after July 1 of the year (prorated for portion of the year served) or for the prior year (if unpaid at the time of departure) Company-paid health benefits for a period of time following retirement or a departure due to disability | | | | • Executive vice president or above | 18 months | | | • Senior vice president | 12 months | | | • Vice president | 6 months | | Additional Conditions | 3 months’ notice before retirement to allow for succession planning, execution of a release and compliance with non-competition and non-solicitation restrictions (subject to administrator discretion and where permitted by law) | |
Equity grant practices
Equity grant practices The Compensation Committee or the Board approves the grant of stock-based equity awards, such as PSUs and RSUs, at its regularly scheduled meetings or by written consent (to be effective on the date of the meeting or receipt of all signed consents, or a later date). In addition, the Compensation Committee has authorized, subject to various limitations, a committee comprised of members of the executive management team to grant stock-based equity awards to certain newly hired and existing employees (including in certain cases employees hired through acquisitions), excluding executive officers and certain other senior employees. None of the Board, Compensation Committee, or executive management team committee engage in any market timing with regards to the stock-based equity awards made to executive officers or other award recipients. It is the company’s policy that all stock option grants, whether made by the Board, the Compensation Committee or the executive committee, have an exercise price per share equal to the fair market value of our common stock based on the closing market price per share on the grant date.
Risk assessment
Risk assessment The Compensation Committee believes that its approach to goal setting and setting of targets with payouts at multiple levels of performance assists in mitigating excessive risk-taking that could harm the company’s value or reward poor judgment by executives. Several features of the company’s compensation program reflect sound risk management practices. Notably, the Compensation Committee believes compensation has been allocated among cash and equity and short and long-term compensation elements in such a way as to not encourage excessive risk-taking, but rather to reward meeting strategic company goals that enhance shareholder value. In addition, the Compensation Committee believes that the mix of equity award instruments used under the company’s long-term incentive program (full value awards as well as the multi-year vesting of the equity awards) also minimize excessive risk-taking that might lead to short-term returns at the expense of long-term value creation. We also set stock ownership guidelines for our CEO and certain other members of senior leadership to help mitigate potential compensation risk (see page 66). Additionally, prior to determining the performance by the company against the targets for performance-based compensation (ACI and PSUs), the Compensation Committee adjusts the targets for the impact of acquisitions completed during the performance period in order to discourage excessive risk-taking with respect to M&A transactions. In sum, the Compensation Committee believes that the company’s compensation policies do not create risks that are reasonably likely to have a material adverse effect on the company.
Severance benefits
Severance benefits We have entered into executive employment and non-disclosure, non-competition and invention assignment agreements (collectively, the “Employment Agreements”) with each of Mr. Kumar, Mr. Dalal, Mr. Gummadi, Mr. Ayyar and Mr. Kim under which certain payments and benefits would be provided should such NEO’s employment terminate under certain circumstances, including in connection with a change in control (see page 78). While they were employed with the company, Mr. Humphries, Mr. Siegmund and Ms. Schmitt also had Employment Agreements with the company. We believe that the Employment Agreements achieve two important goals crucial to our long-term financial success, namely, the long-term retention of our NEOs and their commitment to the attainment of our strategic objectives. These agreements allow our NEOs to continue to focus their attention on our business operations and strategic plans without undue concern over their own financial situations during periods when substantial disruptions and distractions, including a potential change in control, might otherwise prevail. We believe that severance packages under the Employment Agreements are fair and reasonable in light of market practices for executives of a similar level of experience as our NEOs, the level of dedication and commitment of our NEOs, the contributions our NEOs have made to our growth and financial success and the value we expect to receive from retaining the continued services of our NEOs, including during challenging transition periods following a change in control.
Severance benefits
| SENIOR EXECUTIVE CASH SEVERANCE POLICY The Board has adopted a Senior Executive Cash Severance Policy, which provides that the company will not enter into any new employment agreement or severance or separation arrangement or agreement with any senior executive of the company, or establish any new severance plan or policy covering any senior executive of the company, in each case, that provides for cash severance benefits exceeding 2.99 times the sum of the senior executive’s base salary plus target bonus for the year of termination, without seeking shareholder approval or ratification of such agreement, arrangement, plan or policy. |
Severance benefits
| NO TAX GROSS-UPS ON SEVERANCE BENEFITS None of the NEOs is entitled to any tax gross-up payments for any tax liability they incur with respect to severance benefits or other change in control-related payments. The material terms of the NEOs’ Employment Agreements and post-employment compensation are described in “Potential payments upon termination or change in control” starting on page 78. |
Termination of Brian Humphries as CEO and related severance payments
Termination of Brian Humphries as CEO and related severance payments On January 12, 2023, the Board of Directors named Ravi Kumar S as CEO and member of the Board, effective immediately. Mr. Kumar succeeded Brian Humphries. Mr. Humphries’ separation was considered an involuntary termination without cause under his Executive Employment and Non-Disclosure, Non-Competition, and Invention Assignment Agreement dated April 1, 2019 (as amended by a letter agreement dated as of December 9, 2022, relating to the currency in which his 2023 base salary and corresponding ACI payments would be denominated, the “Humphries Employment Agreement”), which was further amended as part of the termination and related transition. The letter agreement provided that, to assist in facilitating the transition of the CEO role, Mr. Humphries would remain an employee of Cognizant Worldwide Limited, a subsidiary of the company, and continue to receive his existing base salary and vesting of outstanding equity awards pursuant to their terms through March 15, 2023, during which time he would serve as a special advisor to the company. In addition, subject to Mr. Humphries’ execution and non-revocation of a release of claims against the company and the Humphries Employment Agreement, subject to his continued employment with the company through March 15, 2023 he received the following:
Termination of Brian Humphries as CEO and related severance payments
| • | his annual cash incentive for 2022 based on the company’s actual performance, which was paid in March 2023, | | • | continued payment of his salary and benefits through March 15, 2023, | | • | continued vesting of outstanding equity awards in accordance with their terms through March 15, 2023, | | • | payment for his accrued but untaken vacation, and | | • | following March 15, 2023, the severance benefits to which he would have been entitled on the basis of an involuntary termination without Cause (as defined in the Humphries Employment Agreement) under the Humphries Employment Agreement, which included: |
Termination of Brian Humphries as CEO and related severance payments
| • | an amount equal to his annual base salary (1,150,000 CHF, or approximately $1.3 million), payable over a one-year period in installments, | | • | a lump-sum cash amount equal to his target annual cash incentive for 2023, (2,300,000 CHF, or approximately $2.6 million), and | | • | accelerated vesting of 47,369 RSUs with a total value of $2,780,812 that were scheduled to vest between March 15, 2023 and March 15, 2024, which were settled as of March 15, 2023, with all remaining unvested equity awards, including his 2019-2023 CEO new hire PSU award, forfeited. |
Termination of Brian Humphries as CEO and related severance payments
The payments and benefits received by Mr. Humphries were made to him, among other things, as additional consideration for the post-employment restrictive covenants contained in the Humphries Employment Agreement and, had he violated any such provisions, remaining severance payments could immediately cease and, at any time prior to March 15, 2024, the company could require that the 47,369 shares of common stock he received as a result of accelerated vesting be forfeited and Mr. Humphries be required to pay to the company any profits realized from the sale of such shares. Mr. Humphries was fully responsible for all federal, state, local or foreign taxes due with respect to all payments and awards received under this agreement, including any excise tax. Although the letter agreement was signed before adoption of the senior executive cash severance policy described on page 67, the severance amounts provided to Mr. Humphries complied with the limits of such policy. His severance payments also aligned with the severance provisions of the original, unamended Humphries Employment Agreement for an involuntary termination without cause and with generally applicable company policy. The foregoing severance payments were previously disclosed in the company’s 2023 proxy statement. The disclosure has been retained for this year because of Mr. Humphries’ continued status as an NEO for purposes of this proxy statement. There are no additional or new severance arrangements between the company and Mr. Humphries that have not been previously disclosed.
2023 Summary compensation table
2023 Summary compensation table The following 2023 Summary Compensation Table provides certain summary information concerning the compensation earned for services rendered in all capacities to us and our subsidiaries for the years ended December 31, 2021, 2022 and 2023 by our CEO, former CEO, CFO, former CFO, each of our three other most highly compensated executive officers who were serving as executive officers at the end of the 2023 fiscal year and one executive officer who would have been among the three most highly compensated executive officers for 2023 had she not left the company prior to the end of 2023 (collectively, the “NEOs”).
2023 Summary compensation table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Comp. | All Other Comp. | SEC Total | | Ravi Kumar Current CEO | 2023 | $966,036 | $750,000 | $20,252,245 | $585,224 | $9,900 | $22,563,405 | | Brian Humphries Former CEO | 2023 | $317,000 | — | — | — | $3,899,416 | $4,216,416 | | | 2022 | $1,144,855 | — | $14,761,593 | $1,767,978 | $269,469 | $17,943,895 | | | 2021 | $1,230,262 | — | $14,097,855 | $4,086,930 | $272,238 | $19,687,285 | | Jatin Dalal Current CFO | 2023 | $60,096 | $150,000 | $3,077,457 | $18,203 | $47,958 | $3,353,714 | | Jan Siegmund Former CFO | 2023 | $850,000 | — | $5,094,619 | $257,465 | $12,950 | $6,215,034 | | | 2022 | $850,000 | — | $5,322,032 | $656,320 | $9,150 | $6,837,502 | | | 2021 | $800,000 | — | $4,526,144 | $1,328,800 | — | $6,654,944 | | Surya Gummadi EVP & President, Americas | 2023 | $650,000 | $750,000 | $2,787,355 | $102,960 | $10,050 | $4,300,365 | | | 2022 | $522,417 | $647,989 | $3,256,748 | — | $7,000 | $4,434,154 | | John Kim EVP, Chief Legal Officer, Chief Administrative Officer and Corporate Secretary | 2023 | $700,000 | — | $3,220,248 | $212,030 | $12,950 | $4,145,228 | | | 2022 | $650,000 | — | $2,103,059 | $501,891 | $9,150 | $3,264,100 | | | 2021 | $654,615 | — | $2,671,429 | $1,079,650 | $8,700 | $4,414,394 | | Ganesh Ayyar EVP and President, Intuitive Operations and Automation and Industry Solutions | 2023 | $713,264 | — | $1,817,442 | $320,184 | $8,459 | $2,859,349 | | | 2022 | $641,636 | — | $1,947,476 | $938,041 | $7,403 | $3,534,556 | | Becky Schmitt Former Chief People Officer | 2023 | $260,244 | — | $4,161,155 | — | $9,556 | $4,430,955 |
2023 Summary compensation table
| Year. Under applicable SEC rules, we have excluded compensation for Mr. Gummadi and Mr. Ayyar prior to 2022 and for Mr. Kumar, Mr. Dalal and Ms. Schmitt for years prior to 2023, as they were not NEOs during those years. Salary. Salaries are paid in the local currency of the resident jurisdiction of each NEO. The local currency for Mr. Kumar, Mr. Dalal, Mr. Siegmund, Mr. Gummadi, Mr. Kim and Ms. Schmitt is US$. For purposes of this column, (a) Mr. Humphries’ salary has been converted to US$ from CHF at an exchange rate of approximately 1 CHF = $1.11, the 12-month average exchange rate for fiscal year 2023, and (b) Mr. Ayyar’s salary has been converted to US$ from SGD at an exchange rate of approximately S$1 = $0.74, the 12-month average exchange rate for fiscal year 2023. For Mr. Kim, the salary shown in 2021 includes $4,615 of cash paid in lieu of unused vacation (a one-time benefit provided to employees in 2021 in light of the COVID-19 pandemic). For Mr. Humphries and Ms. Schmitt, the salary shown in 2023 includes $49,566 and $13,462, respectively, of cash paid in lieu of unused vacation at the time they left the company. Mr. Humphries’ payment in lieu of unused vacation was made in accordance with the terms of his employment agreement and Ms. Schmitt’s payment was made in accordance with company policy. Bonus. From time to time, our Compensation Committee determines that a cash bonus is appropriate in light of an NEO’s individual circumstances. Mr. Kumar. The amount shown in this column represents a one-time cash sign-on bonus received upon his joining the company on January 12, 2023. Mr. Dalal. The amount shown in this column represents a one-time cash sign-on bonus awarded upon his joining the company on December 4, 2023, with $150,000 paid within 30 days of the start of his employment and the remaining $150,000 to be paid within 30 days after the six-month anniversary of the start of his employment with the company. Mr. Gummadi. The amount shown in this column for 2023 represents a cash bonus of $750,000 paid upon completion of his interim role of SVP, Americas, which occurred in connection with his promotion to his current position in January 2023. |
2023 Summary compensation table
| Stock Awards. Amounts shown in this column represent the aggregate grant date fair value of PSUs and RSUs determined in accordance with FASB ASC Topic 718 granted in each respective year. These amounts reflect the company’s accounting expense as required by SEC rules and do not correspond to the actual value that will be realized by the NEO. The reported dollar amounts do not take into account any estimated forfeitures related to continued service vesting requirements. See pages 50 to 64 for information on the terms of the RSUs and PSUs granted during 2023. For information regarding assumptions underlying the valuation of stock-based awards, see the notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the applicable fiscal year. The grant date fair value of stock awards granted in 2023 are set out below. The 2023-2025 PSUs were generally part of the target direct compensation (“TDC”) for all NEOs other than Mr. Humphries and Mr. Dalal. In addition, “transition grants” of RSUs with front-loaded vesting were granted as well to quickly align target compensation levels to an executive’s new role or to supplement expiring grants that were originally made off-cycle so that the executive would continue to receive the full targeted quarterly value of their awards; these transition grants may result in compensation for purposes of this table in excess of annual TDC amounts. See pages 50, 59 and 61 to 64 for information regarding transition grants of RSUs. In connection with their appointment as CEO and CFO, respectively, Mr. Kumar and Mr. Dalal each also received a one-time award of RSUs. Mr. Kumar also received his CEO New Hire Award of PSUs (see page 50) with a grant date fair value of $3,204,081. Mr. Kim received a special award in February 2023 acknowledging his efforts in connection with the early 2023 CEO transition. These additional one-time awards are reflected in this column but are not included in TDC for Mr. Kumar, Mr. Dalal and Mr. Kim. |
2023 Summary compensation table
| | Mr. Kumar | Mr. Humphries | Mr. Dalal | Mr. Siegmund | Mr. Gummadi | Mr. Kim | Mr. Ayyar | Ms. Schmitt | | 2023-2025 PSUs - annual grant | $7,448,282 | — | — | $2,644,674 | $1,187,416 | $1,295,344 | $917,534 | $1,511,201 | | CEO New Hire Award of PSUs | $3,204,081 | — | — | — | — | — | — | — | | RSUs | | | | | | | | | | Annual grant and transition grants | $4,599,942 | — | $2,312,487 | $2,449,945 | $1,599,940 | $1,424,948 | $899,908 | $2,649,954 | | Additional equity grants (not included in TDC) | $4,999,940 | — | $764,970 | — | — | $499,956 | — | — | | The grant date fair value of the portion of the 2023-2025 PSUs relating to relative TSR (see pages 49 to 53) and the grant date fair value of the CEO New Hire Award of PSUs shown above are determined in accordance with FASB ASC Topic 718 as an award with a “market condition,” meaning the value is based on the probable outcome of the performance conditions at the time of grant. The grant date fair values of PSUs granted to our NEOs during 2023, assuming maximum performance (200% for the 2023-2025 annual grant of PSUs and 250% for the CEO New Hire Award of PSUs, in each case based on the closing price on the date of grant), would be as set out below. | | | | | | | | | | PSUs, settlement at maximum | Mr. Kumar | Mr. Humphries | Mr. Dalal | Mr. Siegmund | Mr. Gummadi | Mr. Kim | Mr. Ayyar | Ms. Schmitt | | 2023-2025 PSUs - annual grant | $13,799,995 | — | — | $4,899,984 | $2,199,990 | $2,399,967 | $1,699,987 | $2,799,919 | | CEO New Hire Award of PSUs | $7,499,846 | — | — | — | — | — | — | — |
2023 Summary compensation table
| Non-Equity Incentive Plan Compensation. Amounts shown in this column represent cash incentive awards earned for each respective fiscal year and paid in the first quarter of the following year under our ACI program (see pages 49 to 64). ACI is paid in the local currency of the resident jurisdiction of each NEO. The local currency for Mr. Kumar, Mr. Dalal, Mr. Siegmund, Mr. Gummadi and Mr. Kim is US$. For purposes of this column, Mr. Ayyar’s ACI has been converted to US$from SGD at an exchange rate of approximately S$1 = $0.74, the 12-month average exchange rate for fiscal year 2023. Mr. Humphries’ ACI award payout is included in All Other Compensation under Incentive payment at target (see below). Ms. Schmitt forfeited her 2023 ACI award when she terminated her employment with the company. |
2023 Summary compensation table
| All Other Compensation. We provide our NEOs with other benefits that we believe are reasonable, competitive and consistent with our overall executive compensation program. The costs of these benefits for 2023 are shown in the table below. |
2023 Summary compensation table
| | Mr. Kumar | Mr. Humphries | Mr. Dalal | Mr. Siegmund | Mr. Gummadi | Mr. Kim | Mr. Ayyar | Ms. Schmitt | | Corporate apartment(a) | — | $58,385 | — | — | — | — | — | — | | Home security services | — | $2,355 | — | — | — | — | — | — | | Pension allowance(b) | — | $26,053 | — | — | — | — | — | — | | CPF matching contribution | — | — | — | — | — | — | $8,459 | — | | 401(k) matching contribution | $9,900 | — | — | $12,950 | $10,050 | $6,300 | — | $9,556 | | CSRP matching contribution | — | — | — | — | — | $6,650 | — | — | | Monthly severance in lieu of base salary(c) | — | $1,066,457 | — | — | — | — | — | — | | KPMG tax preparation and filing fees | — | $153,774 | — | — | — | — | — | — | | Incentive payment at target(c) | — | $2,559,497 | — | — | — | — | — | — | | Moving expenses | — | $32,895 | — | — | — | — | — | — | | Temporary accommodations(d) | — | — | $28,776 | — | — | — | — | — | | Airline tickets(d) | — | — | $12,482 | — | — | — | — | — | | NY orientation tour(d) | — | — | $900 | — | — | — | — | — | | School assistance for child(d) | — | — | $4,500 | — | — | — | — | — | | EY India and US tax briefing(d) | — | — | $1,300 | — | — | — | — | — |
2023 Summary compensation table
| *The values of pension allowances and KPMG tax preparation and filing fees provided to Mr. Humphries are converted to US$from GBP at an exchange rate of approximately £1 = $1.24, the 12-month average exchange rate for fiscal year 2023. The values of monthly severance in lieu of base salary and incentive payment at target (also a portion of the severance benefits) and home security services provided to Mr. Humphries are converted to US$from CHF at exchange rate of approximately 1 CHF = $1.11, the 12-month average exchange rate for fiscal year 2023, and the value of the CPF matching contribution provided to Mr. Ayyar is converted to US$from SGD at an exchange rate of approximately S$1 = $0.74, the 12-month average exchange rate for fiscal year 2023. (a) The company provided Mr. Humphries with a corporate apartment in New York during the term of his employment with the company (see page 66 for further details). (b) The value of the pension allowance represents the amount of employer contributions under the U.K. group personal pension plan in excess of the statutory annual allowance limit that is paid to Mr. Humphries as a cash allowance, subject to applicable income tax (see page 65). (c) The amount shown reflects separation payments provided to Mr. Humphries, which are described in further detail on page 80. (d) The company provided these services to Mr. Dalal to assist with his relocation to the U.S. from India, which was necessitated by his appointment as the company’s new CFO. |
2023 Grants of plan-based awards table
2023 Grants of plan-based awards table The following table provides certain summary information concerning each grant of an award made to an NEO in the 2023 fiscal year under a compensation plan.
2023 Grants of plan-based awards table
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards: Number of Shares of Stock or Units | | | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Equity Awards | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Ravi Kumar | 4/5/2023 | $966,036 | $1,932,071 | $3,864,142 | | | | | | | | 1/12/2023 | | | | 23,041 | 46,082 | 115,205 | | $3,204,081 | | | 3/6/2023 | | | | 55,103 | 110,206 | 220,412 | | $7,448,282 | | | 1/12/2023 | | | | | | | 76,804 | $4,999,940 | | | 2/16/2023 | | | | | | | 69,318 | $4,599,942 | | Brian Humphries | — | — | — | — | — | — | — | — | — | | Jatin Dalal | 12/4/2023 | $30,048 | $60,096 | $120,192 | | | | | | | | 12/4/2023 | | | | | | | 10,750 | $764,970 | | | 12/4/2023 | | | | | | | 32,497 | $2,312,487 | | Jan Siegmund | 4/5/2023 | $425,000 | $850,000 | $1,700,000 | | | | | | | | 3/6/2023 | | | | 19,565 | 39,131 | 78,262 | | $2,644,674 | | | 2/16/2023 | | | | | | | 36,919 | $2,449,945 | | Surya Gummadi | 4/5/2023 | $325,000 | $650,000 | $1,300,000 | | | | | | | | 3/6/2023 | | | | 8,784 | 17,569 | 35,138 | | $1,187,416 | | | 2/16/2023 | | | | | | | 9,041 | $599,961 | | | 2/16/2023 | | | | | | | 15,069 | $999,979 | | John Kim | 4/5/2023 | $350,000 | $700,000 | $1,400,000 | | | | | | | | 3/6/2023 | | | | 9,583 | 19,166 | 38,332 | | $1,295,344 | | | 2/16/2023 | | | | | | | 14,692 | $974,961 | | | 2/16/2023 | | | | | | | 7,534 | $499,956 | | | 2/16/2023 | | | | | | | 6,781 | $449,987 | | Ganesh Ayyar | 4/5/2023 | $356,632 | $713,264 | $1,426,528 | | | | | | | | 3/6/2023 | | | | 6,788 | 13,576 | 27,152 | | $917,534 | | | 2/16/2023 | | | | | | | 12,055 | $799,970 | | | 2/16/2023 | | | | | | | 1,506 | $99,938 | | Becky Schmitt | 4/5/2023 | $123,391 | $246,782 | $493,564 | | | | | | | | 3/6/2023 | | | | 11,180 | 22,360 | 44,720 | | $1,511,201 | | | 2/16/2023 | | | | | | | 2,260 | $149,974 | | | 2/16/2023 | | | | | | | 37,673 | $2,499,980 |
2023 Grants of plan-based awards table
Estimated Future Payouts Under Non-Equity Incentive Plan Awards. For all NEOs, represents the range of ACI that can be earned by the NEO if the threshold, target and maximum performance targets are achieved. The ACI is prorated if performance levels are achieved between the threshold and target levels or between the target and maximum levels. Performance below the threshold results in no payout to the NEO. See pages 49 and 52 for information regarding the methodology and performance criteria applied in determining these potential cash incentive amounts. The actual ACI paid to each NEO for his or her 2023 performance is reported as “Non-Equity Incentive Plan Comp.” in the 2023 Summary compensation table on page 70. For Mr. Ayyar, such amounts were converted to US$ for purposes of the table above based on the 12-month average exchange rate for fiscal year 2023 of approximately S$1 = $0.74. Estimated Future Payouts Under Equity Incentive Plan Awards. Represents the range of shares that could vest pursuant to PSU awards. The values set out above are for the 2023-2025 PSUs awarded to such individuals in 2023 and included in TDC which are eligible to vest based on revenue growth (measured by revenue adjusted for currency fluctuations and acquisitions), adjusted diluted EPS and relative TSR over the 3-year performance period beginning January 1, 2023 and ending December 31, 2025. See pages 49 to 64 for a description of the terms of the PSUs and the awards to the NEOs. In addition, for Mr. Kumar, includes the value of his CEO New Hire Award of PSUs granted on January 12, 2023 and not included in TDC, which are eligible to vest based on absolute total shareholder return (measured as a CAGR) of the company’s common stock over the four-year performance period beginning January 12, 2023 and ending January 12, 2027. See page 50 for a description of the terms of the CEO New Hire Award of PSUs. All Other Stock Awards. Represents RSUs granted in 2023. The RSUs granted on February 16, 2023 (other than the 15,069 RSUs granted to Mr. Gummadi, the 6,781 RSUs granted to Mr. Kim, the 1,506 RSUs granted to Mr. Ayyar and the 37,673 RSUs granted to Ms. Schmitt) vest in equal 1/12th installments over three years, commencing on May 16, 2023, and will be fully vested on February 16, 2026. For Mr. Kim, the 7,534 RSUs granted on February 16, 2023 represent a special award acknowledging his efforts in connection with the early 2023 CEO transition and are not included in his target direct compensation. The other RSUs granted on February 16, 2023 to Mr. Gummadi, Mr. Kim, Mr. Ayyar and Ms. Schmitt represent transition awards designed to replace expiring off-cycle awards and ensure continued vesting of targeted annual RSU amounts for each executive. They vest in quarterly installments through February 16, 2026, with 1/8th vesting on each of the first four vesting dates, 2/3rds of 1/8th vesting on each of the next four quarters, 1/3rd of 1/8th vesting on each of the next three successive vesting dates and the remainder vesting on the 12th vesting date. See page 50, 59 and pages 61 to 64 for a description of the terms of the RSUs, including transition awards, and the awards to NEOs. For Mr. Kumar, this column also includes 76,804 RSUs granted January 12, 2023, which was a one-time award in connection with his appointment as CEO, vesting in equal 1/4th installments over four successive quarters commencing on April 12, 2023, with full vesting occurring on January 12, 2024. For Mr. Dalal, this column includes (1) 10,750 RSUs granted December 4, 2023, which was a one-time award in connection with his appointment as CFO, vesting in equal 1/4th installments over four successive quarters commencing on March 4, 2024, with full vesting occurring on December 4, 2024 and (2) 32,497 RSUs representing a transition award designed to ensure the vesting of his full RSU target compensation amounts beginning in 2024, vesting in nine successive quarterly installments through March 4, 2026, with 1/5th vesting on the first vesting date, 2/3rds of 1/5th vesting on each of the four successive vesting dates, 1/3rd of 1/5th vesting on each of the next three successive vesting dates and the remainder of such RSUs vesting on the ninth vesting date. See page 50 for a description of our transition awards. Grant Date Fair Value of Equity Awards. Represents the grant date fair value of the PSUs and RSUs determined in accordance with FASB ASC Topic 718, assuming target achievement for PSUs and, for PSUs relating to relative TSR, based on the probable outcome of the performance conditions at the time of grant. For information regarding assumptions underlying the valuation of stock-based awards, see Note 17 to the Consolidated Financial Statements in our 2023 Annual Report.
Outstanding equity awards at fiscal year-end 2023
Outstanding equity awards at fiscal year-end 2023 The following table provides certain summary information concerning outstanding equity awards held by the NEOs as of December 31, 2023. Our NEOs did not hold any outstanding option awards as of December 31, 2023.
Outstanding equity awards at fiscal year-end 2023
| Name | Grant Date | Stock Awards | | | | | | | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Ravi Kumar | 1/12/2023 | 19,201(2) | $1,450,252 | | | | | 2/16/2023 | 51,989(2) | $3,926,729 | | | | | 1/12/2023 | | | 115,205(3) | $8,701,434(3) | | | 3/6/2023 | | | 55,103(6) | $4,161,930(6) | | Brian Humphries | — | — | — | — | — | | Jatin Dalal | 12/4/2023 | 10,750(2) | $811,948 | | | | | 12/4/2023 | 32,497(2) | $2,454,498 | | | | Jan Siegmund | 2/23/2021 | 2,573(2) | $194,339 | | | | | 3/1/2022 | 12,093(2) | $913,384 | | | | | 2/16/2023 | 27,690(2) | $2,091,426 | | | | | 2/23/2021 | 28,224(4) | $2,131,759(4) | | | | | 3/1/2022 | | | 14,277(5) | $1,078,342(5) | | | 3/6/2023 | | | 19,565(6) | $1,477,744(6) | | Surya Gummadi | 2/23/2021 | 415(2) | $31,345 | | | | | 5/17/2021 | 19(2) | $1,435 | | | | | 3/1/2022 | 2,977(2) | $224,853 | | | | | 7/1/2022 | 2,572(2) | $194,263 | | | | | 11/15/2022 | 16,894(2) | $1,276,004 | | | | | 2/16/2023 | 16,200(2) | $1,223,586 | | | | | 2/23/2021 | 2,194(4) | $165,713(4) | | | | | 5/17/2021 | 2,910(4) | $219,792(4) | | | | | 3/1/2022 | | | 3,496(5) | $264,053(5) | | | 3/6/2023 | | | 8,784(6) | $663,456(6) | | John Kim | 3/29/2021 | 882(2) | $66,617 | | | | | 3/1/2022 | 4,007(2) | $302,649 | | | | | 11/15/2022 | 1,250(2) | $94,413 | | | | | 2/16/2023 | 20,909(2) | $1,579,257 | | | | | 2/23/2021 | 1,880(4) | $141,996(4) | | | | | 3/29/2021 | 9,954(4) | $751,826(4) | | | | | 3/1/2022 | | | 5,827(5) | $440,113(5) | | | 3/6/2023 | | | 9,583(6) | $723,804(6) | | Ganesh Ayyar | 3/1/2022 | 583(2) | $44,034 | | | | | 11/15/2022 | 5,835(2) | $440,718 | | | | | 2/16/2023 | 9,984(2) | $754,092 | | | | | 2/23/2021 | 8,780(4) | $663,153(4) | | | | | 3/1/2022 | | | 4,662(5) | $352,121(5) | | | 3/6/2023 | | | 6,788(6) | $512,698(6) | | Becky Schmitt | — | — | — | — | — |
Outstanding equity awards at fiscal year-end 2023
1 Market value was determined utilizing the closing price of our common stock of $75.53 on December 29, 2023, and the performance level for each award as indicated in footnotes 3 through 6 below. 2 Amounts shown represent the following with respect to RSUs: Mr. Kumar. Awards shown are time-based RSUs that were granted on January 12, 2023 and February 16, 2023, respectively, and vest on specified dates if Mr. Kumar is still employed by the company. A total of 42,307 shares are scheduled to vest in January, February, May, August and November of 2024; a total of 23,106 shares are scheduled to vest in February, May, August and November of 2025; and a total of 5,777 shares are scheduled to vest in February of 2026. Mr. Dalal. Awards shown are time-based RSUs that were granted on December 4, 2023 and vest on specified dates if Mr. Dalal is still employed by the company. A total of 30,249 shares are scheduled to vest in March, June, September and December of 2024; a total of 10,831 shares are scheduled to vest in March, June, September and December of 2025; and a total of 2,167 shares are scheduled to vest in March of 2026. Mr. Siegmund. Awards shown are time-based RSUs that were granted on February 23, 2021, March 1, 2022 and February 16, 2023, respectively, and would vest on specified dates if Mr. Siegmund was still employed by the company. As of December 31, 2023, a total of 24,592 shares are scheduled to vest in February, March, May, June, August, September, November and December of 2024; a total of 14,687 shares are scheduled to vest in February, March, May, August and November of 2025; and a total of 3,077 shares are scheduled to vest in February of 2026. Mr. Gummadi. Awards shown are time-based RSUs that were granted on February 23, 2021, May 17, 2021, March 1, 2022, July 1, 2022, November 15, 2022 and February 16, 2023, respectively, and vest on specified dates if Mr. Gummadi is still employed by the company. A total of 21,503 shares are scheduled to vest in each month of 2024; a total of 16,191 shares are scheduled to vest in January, February, March, April, May, July, August and November of 2025; and a total of 1,383 shares are scheduled to vest in February of 2026. Mr. Kim. Awards shown are time-based RSUs that were granted on March 29, 2021, March 1, 2022, November 15, 2022 and February 16, 2023, respectively, and vest on specified dates if Mr. Kim is still employed by the company. A total of 15,079 shares are scheduled to vest in February, March, May, June, August, September, November and December of 2024; a total of 9,833 shares are scheduled to vest in February, March, May, August and November of 2025; and a total of 2,136 shares are scheduled to vest in February of 2026. Mr. Ayyar. Awards shown are time-based RSUs that were granted on March 1, 2022, November 15, 2022 and February 16, 2023, respectively, and vest on specified dates if Mr. Ayyar is still employed by the company. A total of 9,930 shares are scheduled to vest in February, March, May, June, August, September, November and December of 2024; a total of 5,404 shares are scheduled to vest in February, March, May, August and November of 2025; and a total of 1,068 shares are scheduled to vest in February of 2026. 3 2023-2026 CEO PSUs (New Hire). Based on performance through December 31, 2023, the number of units and the payout value shown above assume a payout at maximum. Represents the number of unearned shares not vested equal to the maximum number of shares to be settled under the award for PSUs granted in 2023 with a market condition, as described in FASB ASC Topic 718, and a four-year performance measurement period beginning January 12, 2023. See page 50 for additional information. 4 2021-2023 PSUs. The number of units and the payout values are based on actual payout at approximately 91.4% of target, as certified by the Compensation Committee, and such shares vested on March 15, 2024 (after compliance with the requirement of continued employment through such date). See pages 50 to 53 for additional information on these PSUs. 5 2022-2024 PSUs. Based on performance through December 31, 2023, the number of units and the payout values shown above assumed a payout at threshold. Represents the number of unearned shares not vested equal to the threshold number of shares to be settled under the award for PSUs granted in 2022 with a 3-year performance measurement period (combined performance of the company for 2022, 2023 and 2024). See pages 50 to 54 for additional information. After the Compensation Committee determines, based on the performance for fiscal 2022, 2023 and 2024, the number of shares that may vest, such shares are expected to vest no later than March 15, 2025 (subject to continued employment through such date). 6 2023-2025 PSUs. Based on performance through December 31, 2023, the number of units and the payout values shown above assumed a payout at threshold. Represents the number of unearned shares not vested equal to the threshold number of shares to be settled under the award for PSUs granted in 2023 with a 3-year performance measurement period (combined performance of the company for 2023, 2024 and 2025). See pages 50 to 54 for additional information. After the Compensation Committee determines, based on the performance for fiscal 2023, 2024 and 2025, the number of shares that may vest, such shares are expected to vest no later than March 15, 2026 (subject to continued employment through such date).
2023 Option exercises and stock vested table
2023 Option exercises and stock vested table None of our NEOs held or exercised any options during 2023. The following table provides information about the value realized by the NEOs on stock award vestings during the year ended December 31, 2023.
2023 Option exercises and stock vested table
| Name | Stock Awards | | | | Number of Shares Acquired on Vesting Date | Value Realized on Vesting | | Ravi Kumar | 74,932 | $4,910,605 | | Brian Humphries | 160,187 | $9,647,319 | | Jatin Dalal | — | — | | Jan Siegmund | 48,649 | $3,227,720 | | Surya Gummadi | 26,020 | $1,735,284 | | John Kim | 19,871 | $1,325,541 | | Ganesh Ayyar | 24,129 | $1,548,625 | | Becky Schmitt | 27,857 | $1,767,536 |
2023 Option exercises and stock vested table
Stock Awards. The number of shares shown in the table reflects the gross number of shares each NEO was entitled to receive upon vesting of the underlying PSUs or RSUs. The company reduced the number of shares issued to each NEO by automatically withholding a number of shares with a fair market value as of the vesting date sufficient to satisfy required tax withholdings. Value realized on vesting is calculated by multiplying the number of shares acquired on vesting by the fair market value of the shares on the respective vesting dates, including any dividend equivalents payable on vesting.
2023 Pension benefits and non-qualified deferred compensation
2023 Pension benefits and non-qualified deferred compensation None of our NEOs were participants in any plan that provided payments or other benefits at, following, or in connection with retirement in 2023 other than the broad-based defined contribution plans. Further, none of our NEOs participate in any nonqualified deferred compensation plan.
Potential payments upon termination or change in control
Potential payments upon termination or change in control
Overview of potential payments
Overview of potential payments
Calculation of potential payments
Calculation of potential payments The following table shows potential payments to our NEOs under the employment agreements and our retirement, death and disability. Except with respect to Ms. Schmitt, potential payments are calculated assuming a (i) that the applicable triggering event occurred on December 31, 2023 as the Qualifying Termination date and, (ii) where applicable, using the closing price of our common stock of $75.53 on December 29, 2023, as reported on Nasdaq and (iii) COBRA premium rate applicable for 2024 based on 2024 election by each applicable NEO. For Mr. Humphries, the table shows the actual termination payments he became entitled to upon leaving the company in March 2023. Ms. Schmitt voluntarily terminated her employment with the company effective May 5, 2023 and was not entitled to any qualifying termination payment.
Calculation of potential payments
| Name | Trigger | Salary and Bonus | Benefits | Awards Acceleration/ Extension | Total | | Ravi Kumar | Qualifying Termination Prior to Change in Control | $3,000,000 | $30,547 | $3,195,448 | $6,225,995 | | | Qualifying Termination Following Change in Control | $6,000,000 | $30,547 | $18,768,978 | $24,799,525 | | | Death or Disability | $2,000,000 | — | $18,768,978 | $20,768,978 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | Jatin Dalal | Qualifying Termination Prior to Change in Control | $1,500,000 | $10,962 | $2,284,707 | $3,795,669 | | | Qualifying Termination Following Change in Control | $3,000,000 | $10,962 | $3,266,446 | $6,277,408 | | | Death or Disability | $750,000 | — | $3,266,446 | $4,016,446 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | Jan Siegmund | Qualifying Termination Prior to Change in Control | $1,700,000 | — | $3,989,192 | $5,689,192 | | | Qualifying Termination Following Change in Control | $3,400,000 | — | $7,603,303 | $11,003,303 | | | Death or Disability | $850,000 | — | $7,603,303 | $8,453,303 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | Surya Gummadi | Qualifying Termination Prior to Change in Control | $1,300,000 | $30,547 | $2,009,627 | $3,340,174 | | | Qualifying Termination Following Change in Control | $2,600,000 | $30,547 | $4,233,457 | $6,864,004 | | | Death or Disability | $650,000 | — | $4,233,457 | $4,883,457 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | John Kim | Qualifying Termination Prior to Change in Control | $1,400,000 | $30,547 | $2,032,739 | $3,463,286 | | | Qualifying Termination Following Change in Control | $2,800,000 | $30,547 | $4,000,144 | $6,830,691 | | | Death or Disability | $700,000 | — | $4,000,144 | $4,700,144 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | Ganesh Ayyar | Qualifying Termination Prior to Change in Control | $1,426,529 | — | $1,413,166 | $2,839,695 | | | Qualifying Termination Following Change in Control | $2,853,057 | — | $2,677,916 | $5,530,973 | | | Death or Disability | $713,264 | — | $2,677,916 | $3,391,180 | | | Retirement | — | — | — | — | | | Termination for Other Reasons | — | — | — | — | | Actual severance paid to former executives who departed during 2023 | | | | | | | Brian Humphries(1) | Qualifying Termination Prior to Change in Control | $3,625,955(2) | $186,669 | $2,780,812 | $6,593,436 |
Calculation of potential payments
1 Reflects the actual severance amount paid to Mr. Humphries during 2023 as a result of his involuntary termination without cause in March 2023. See “Termination of Brian Humphries as CEO and related severance payments” on page 68 for information on the actual severance benefits he became entitled to upon his termination. 2 Such payments have been converted to US$ from CHF at an exchange rate of approximately 1 CHF = $1.11, the 12-month average exchange rate for fiscal year 2023.
CEO pay ratio
CEO pay ratio We are required by SEC rules and regulations to disclose the annual total compensation for our current CEO, an estimate of the median annual total compensation for our worldwide employee population excluding our current CEO, and the ratio of annual total compensation for our current CEO to the annual total compensation for such median employee. As further described below, we have also included supplemental pay ratio information to show the ratios of the annual total compensation of our current CEO to the annual total compensation of our median employees in the United States. The following table provides information, based on our reasonable estimates, about the relationship between the annual total compensation of Mr. Kumar and the annual total compensation of our median employees for the year ended December 31, 2023. Mr. Kumar’s annual total compensation for 2023 is substantially higher than the annual total compensation of our former CEO, Mr. Humphries, for 2022 because of certain one-time equity awards that Mr. Kumar received when he assumed the CEO position in January 2023: (a) PSUs with a target value of $3,000,000, and a payout range from 0% to 250% of the target measured over a four-year performance cycle based on absolute total shareholder return of the company’s common stock (see page 50 for additional information on these PSUs) and (b) an equity award consisting of RSUs with a grant date value of $5,000,000, which was a buyout award to replace forfeited equity awards from his previous employer. Because the PSUs are subject to the performance condition described above, the actual payout may differ significantly from the target value attributed to them, including possibly no payout at all. See page 54 for information on the current performance of these PSUs.
CEO pay ratio
| Category | Median Employee Annual Total Compensation | CEO Annual Total Compensation | Pay Ratio (CEO: median employee) | | CEO Pay to Worldwide Median Employee Pay (SEC-required pay ratio disclosure) | $40,660 | $22,617,945 | 556 : 1 | | CEO Pay to U.S. Median Employee Pay (Supplemental pay ratio information) | $125,791 | | 180 : 1 |
CEO pay ratio
CEO Compensation. For the year ended December 31, 2023, the total compensation for our current CEO, Mr. Kumar, was $22,563,405 as reported in the “SEC Total” column of the Summary Compensation Table on page 70. Since Mr. Kumar was appointed CEO effective January 12, 2023, we annualized his Salary and Non-Equity Incentive Plan Compensation as disclosed in the Summary Compensation Table, and added the disclosed values of his Bonus, Stock Awards and 401(k) company contribution to arrive at a value of $22,617,945, used for the ratio of annual total compensation for our current CEO to the annual total compensation for our median employee. We annualized Mr. Kumar’s total compensation as follows:
CEO pay ratio
| Current CEO pay components | Compensation included in | | Rationale | | | Summary compensation table | Annual total compensation for CEO pay ratio | | | Salary | $966,036 | $1,000,000 | Annualized salary | | Bonus | $750,000 | $750,000 | Not annualized; one-time cash sign-on bonus | | Stock awards | $20,252,245 | $20,252,245 | Not annualized; comprised of: • annual grant of 110,206 PSUs with grant date fair value of $7,448,282 and 69,318 RSUs with grant date fair value of $4,599,942 and • one-time grant of 46,082 PSUs with grant date fair value of $3,204,081 and 76,804 RSUs with grant date fair value of $4,999,940 | | Non-equity incentive plan compensation | $585,224 | $605,800 | Annualized earned ACI | | All other compensation | $9,900 | $9,900 | Not annualized; maximum allowed 401(k) company contribution for 2023 | | Total | $22,563,405 | $22,617,945 | |
CEO pay ratio
Employees Included. The company had approximately 347,700 employees as of December 31, 2023, with 254,000 in India, 40,500 in North America, 16,300 in Continental Europe, 8,500 in the United Kingdom and 28,400 in various other locations throughout the rest of the world. In identifying the worldwide median employee, we included all such employees, except for Mr. Kumar and approximately 1,200 employees of OneSource Virtual and Mobica, which businesses we acquired during 2023 (collectively, the “2023 Acquired Companies”). In identifying the U.S. median employee, we included all employees in the United States except for Mr. Kumar and employees of the 2023 Acquired Companies. We did not include any independent contractors in either calculation. Compensation Included. In identifying the median employees, we used the actual salary, bonus and ACI for 2023 (in each case annualized for full-time employees who joined during 2023 and estimated where final bonus amounts had not yet been determined as of the date of this filing (approximately 850 employees’ bonuses)) and the grant date fair value of PSUs and RSUs awarded during 2023 for each applicable employee as of December 31, 2023. Where there were multiple employees with the resulting median compensation, we calculated each such employee’s annual total compensation in the same manner as the “SEC Total” of compensation shown for Mr. Kumar in the “2023 Summary compensation table” on page 70. We used such annual total compensation to identify the median of such employees and for disclosure of median employee pay herein (averaged where the median fell between two employees). Currency Conversion. For employees receiving their compensation in a currency other than US$, we converted such compensation to US$ based on the 12-month average exchange rates for 2023. Cost-of-Living Adjustment. We applied a cost-of-living adjustment to the compensation of each of our employees residing in a jurisdiction other than Mr. Kumar’s principal work location (the United States) in order to adjust the compensation of such employees to the jurisdiction of Mr. Kumar’s’ principal work location. In making such cost-of-living adjustments, we used the cost-of-living index for the country in which the employee was based for all employees not based in the United States. Each such cost-of-living index, including that for India (22.2), the location of the worldwide median employee, was used to adjust the applicable compensation of employees to the cost-of-living index for the United States (72.90). All cost-of-living indexes used were as published by Numbeo.com for full-year 2023. Without application of a cost-of-living adjustment, and after otherwise utilizing the same process described above to identify the worldwide median employee, the worldwide median employee would have been a full-time, salaried employee located in India with annual total compensation of $13,735. The ratio of the annual total compensation of Mr. Kumar to such median employee’s annual total compensation was 1,647 : 1. Supplemental U.S. Median Employee Pay Ratio. The form and amount of Mr. Kumar’s annual total compensation is largely influenced by prevailing compensation practices in the United States and the competitive market for senior executive talent. While the market for such talent is global, given that the company is a U.S.-headquartered, publicly traded company, we believe that it is useful to understand the relationship between the annual total compensation of Mr. Kumar and the annual total compensation of our median employees in the United States.
Pay versus performance table
Pay versus performance table The following table provides certain summary information concerning the relationship between executive “compensation actually paid” to our principal executive officer (“PEO”) and other NEOs and certain financial performance of the company. The “compensation actually paid” does not necessarily reflect the value received or realized by our NEOs or how the compensation committee evaluates compensation decisions in light of company performance. Information on the compensation realized by our NEOs can be found on pages 55 to 64. For further information concerning the company’s pay for performance philosophy and how the company aligns executive compensation with the company’s performance, see “Compensation -- Compensation Discussion and Analysis” beginning on page 45. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay versus performance table
| Year | Summary Compensation Table Total for PEO | | Compensation Actually Paid to PEO | | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On: | | Net Income (GAAP) ($M) | Revenue (GAAP) ($M) | | | Mr. Kumar | Mr. Humphries | Mr. Kumar | Mr. Humphries | | | Total Share- holder Return | Peer Group Total Share- holder Return | | | | 2023 | $22,563,405 | $4,216,416 | $23,063,570 | ($11,121,997) | $4,217,441 | $3,122,360 | $129.19 | $219.37 | $2,126 | $19,353 | | 2022 | — | $17,943,894 | — | ($949,565) | $4,263,584 | $808,056 | $96.15 | $138.98 | $2,290 | $19,428 | | 2021 | — | $19,687,285 | — | $22,375,791 | $5,654,584 | $6,736,685 | $146.87 | $193.55 | $2,137 | $18,507 | | 2020 | — | $13,807,940 | — | $21,897,726 | $7,511,754 | $8,998,439 | $133.96 | $143.88 | $1,392 | $16,652 |
Pay versus performance table
Summary Compensation Table Total for PEO. During 2023, Mr. Kumar and Mr. Humphries each served for a period of time as our CEO and Mr. Humphries was our CEO for 2020, 2021 and 2022. The dollar amounts shown in these two columns represent the “SEC Total” as set forth in the Summary Compensation Table. Compensation Actually Paid to PEO. The dollar amounts shown represent the amount of “compensation actually paid” to Mr. Kumar and Mr. Humphries for 2023, as computed in accordance with Item 402 (v) of Regulation S-K, and do not reflect the total compensation actually realized or received by Mr. Kumar or Mr. Humphries. In accordance with these rules, these amounts reflect “SEC Total” as set forth in the Summary Compensation Table for 2023, adjusted as shown below. Equity values are computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP. The methodology assumptions used to compute these values does not materially differ from those used at the time of grant. Mr. Kumar’s compensation actually paid includes certain one-time equity awards received when he assumed the CEO position in January 2023: (a) PSUs with a target value of $3,000,000, and a payout range from 0% to 250% of the target measured over a four-year performance cycle based on absolute total shareholder return of the company’s common stock (see page 50 for additional information on these PSUs) and (b) an equity award consisting of RSUs with a grant date value of $5,000,000, which was a buyout award to replace forfeited equity awards from his previous employer. Because the PSUs are subject to the performance condition described above, the actual payout may differ significantly from the target value attributed to them, including possibly no payout at all. See page 54 for information on the current performance of these PSUs.
Pay versus performance table
| Compensation actually paid to PEO in 2023 | Mr. Kumar | Mr. Humphries | | Summary Compensation Table Total | $22,563,405 | $4,216,416 | | Less, value of Stock Awards reported in Summary Compensation Table | ($20,252,245) | — | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | $15,841,805 | — | | Plus, fair value as of vesting date of equity awards granted and vested in the year | $4,910,605 | — | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | — | — | | Plus (less), year over year change in fair value of equity awards granted in prior years that vested in the year | — | $133,932 | | Less, prior year-end fair value for any equity awards forfeited in the year | — | ($15,472,345) | | Compensation actually paid to PEO | $23,063,570 | ($11,121,997) |
Pay versus performance table
Average Summary Compensation Table Total for Non-PEO NEOs. The dollar amounts shown represent the average of the amounts reported as “SEC Total” in the Summary Compensation Table for the company’s NEOs as a group (excluding Mr. Kumar and Mr. Humphries) in each applicable year. For 2023, our non-PEO NEOs are Mr. Dalal, Mr. Siegmund, Mr. Gummadi, Mr. Kim, Mr. Ayyar and Ms. Schmitt. For 2022, our non-PEO NEOs were Mr. Siegmund, Mr. Gummadi, Mr. Ayyar, Mr. Kim, Greg Hyttenrauch and Ursula Morgenstern. For 2021, our non-PEO NEOs were Mr. Siegmund, Mr. Hyttenrauch, Mr. Kim and Rajesh Nambiar. For 2020, our non-PEO NEOs were Mr. Siegmund, Karen McLoughlin, Ms. Schmitt, Malcolm Frank and Matthew Friedrich. Average Compensation Actually Paid to Non-PEO NEOs. The dollar amounts shown represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Kumar and Mr. Humphries) for 2023, as computed in accordance with Item 402 (v) of Regulation S-K, and do not reflect the total compensation actually realized or received by such NEOs. In accordance with these rules, these amounts reflect “SEC Total” as set forth in the Summary Compensation Table for 2023, adjusted as shown below. Equity values are computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP. The methodology assumptions used to compute these values does not materially differ from those used at the time of grant.
Pay versus performance table
| Average compensation actually paid to Non-PEO NEOs | 2023 | | Average Summary Compensation Table Total | $4,217,441 | | Less, average value of Stock Awards reported in Summary Compensation Table | ($3,359,713) | | Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | $2,335,383 | | Plus, average fair value as of vesting date of equity awards granted and vested in the year | $322,448 | | Plus (less), average year over year change in fair value of outstanding and unvested equity awards granted in prior years | ($121,768) | | Plus (less), average year over year change in fair value of equity awards granted in prior years that vested in the year | $121,144 | | Less, average prior year-end fair value for any equity awards forfeited in the year | ($392,575) | | Average compensation actually paid to non-PEO NEOs | $3,122,360 |
Pay versus performance table
Total Shareholder Return. Total Shareholder Return (TSR) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the company’s share price at the end of each fiscal year shown and the beginning of the measurement period, by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is December 31, 2019. Peer Group Total Shareholder Return. The peer group used for this column is the S&P 500 Information Technology Sector Index (S51NFT). Cognizant Reported Revenue per US GAAP. We have presented revenue, calculated in accordance with U.S. GAAP, since revenue, as adjusted for currency fluctuations and acquisitions, is the most significant performance metric in the Company’s ACI and annual PSU awards. In the presentation, we have not adjusted the revenue amounts for acquisitions because there are differences in acquisitions required to be adjusted for ACI and each of the annual PSU awards due to the timing of the target-setting process for each of the awards. Additionally, we have not adjusted the presented revenue amounts for impacts of currency as currency adjustments are relative to the applicable base year of measurement.
Relationship Between Compensation Actually Paid and Performance
Relationship Between Compensation Actually Paid and Performance The table below reflects the relationship between the PEO and the average Other NEO compensation actually paid and the performance measures shown in the Pay versus performance table annually from 2020 to 2023. For each column below, the amount shown represents the percentage increase or percentage decrease in such item annually from 2020 to 2023; amounts for the relevant years used in such calculations are shown in the Pay versus performance table on page 83.
Relationship Between Compensation Actually Paid and Performance
| Period | Compensation Actually Paid to Mr. Kumar | Compensation Actually Paid to Mr. Humphries | Average Compensation Actually Paid to Other NEOs | Company TSR | Peer Group TSR | Net Income | Revenue | | 2022 to 2023 | — | (1,071.3%) | 286.4% | 34.4% | 57.8% | (7.2%) | (0.4%) | | 2021 to 2022 | — | (104.2%) | (88.0%) | (34.5%) | (28.2%) | 7.2% | 5.0% | | 2020 to 2021 | — | 2.2% | (25.1%) | 9.6% | 34.5% | 53.5% | 11.1% |
Relationship Between Compensation Actually Paid and Performance
The change in Compensation Actually Paid from 2021 to 2022 (a reduction of 104.2% for Mr. Humphries and an average reduction of 88.0% for the other NEOs) is largely due to the impact of the significant reduction in the company’s stock price from $88.72 as of December 31, 2021 to $57.19 as of December 31, 2022 on the value of each NEO’s unvested equity awards. This reduction is reflected in the negative 34.5% company TSR over such period. In contrast, from December 31, 2022 to December 31, 2023, the company’s stock price increased from $57.19 to $75.53, as reflected in the company TSR of 34.4%. However, during such period the company’s revenue and net income suffered from macroeconomic challenges, resulting in relatively low ACI payouts. This reduced payout was offset by increases in the value of each NEO’s equity holdings, resulting in an average 286.4% increase in compensation actually paid to the non-PEO NEOs. In addition, the 1,071.3% decrease in Mr. Humphries’ compensation actually paid from 2022 to 2023 includes the impact of the forfeiture of approximately $15.5 million of equity grants in connection with the termination of his employment. As described in more detail in the section “Compensation – Compensation discussion and analysis,” the company’s executive compensation program reflects a variable pay-for-performance philosophy. While the company utilizes several performance measures to align executive compensation with company performance, all of those company measures are not presented in the Pay versus performance table. Moreover, the company generally seeks to incentivize long-term performance, and therefore does not specifically align the company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the company is providing the foregoing descriptions of the relationships between information presented in the Pay versus performance table.