Caught in a maze with Covid-19, Cognizant rejigs top brass pay

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

CEO Brian Humphries and other top leaders receive fixed components like basic pay as well as non-fixed ones like performance-based pay. Humphries earned a total annual compensation of about $16.5 million in 2019.

Former CEO Francisco D’Souza, who stepped down from its board in February, earned around $29.2 million including a $750,000 bonus and stock awards accumulated during his time with the company.

Earlier, only Humphries’ performance-based payment was linked to a ‘relative’ Total Shareholder Returns (TSRs) metric. Unlike an absolute TSR metric, a relative TSR metric is measured against the S&P 500 Information Technology Index and also against direct competitors such as Infosys, TCS and Wipro. This metric will now apply to all top executives. This assigns top executive more direct responsibility for revenue growth, in what is forecast to be a difficult year for business hit by the Covid-19 pandemic.

Within performance-based pay, there are the two parts – annual cash incentive (ACI) and performance stock units (PSUs). In both, the weightage given to overall revenue of the company has been increased.

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

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