COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION Proxy statement guide
About Cognizant
2023 Company snapshot
Meeting notice and voting roadmap
Corporate governance
Governance Highlights
Board composition and refreshment
Annual shareholder vote to elect directors
Assess Board composition and refreshment
Identify, evaluate and appoint director candidates
Chair and committee appointments
Annual Board self-evaluation
Annual Board nomination of directors for annual meeting Proxy access
Board qualifications
Proposal 1: Election of 12 directors
Director nominees
Committees of the Board
Board engagement activities
Shareholder engagement
Shareholder proposals at annual meeting
Employee engagement and global delivery operations review Keeping up-to-date with trends and legal developments
Sustainable outcomes
Supporting our people
Running a business with sustainable value
Investing in our communities through strategic philanthropy Cognizant Outreach and employee engagement
Share ownership
Common stock and total stock-based holdings table
Delinquent Section 16(a) reports
Related person transactions
Director compensation
Discussion and analysis
Director compensation vs. peer group
Deferral of restricted stock units
Director compensation table
Compensation (Say-on-pay)
Proposal 2: Advisory vote to approve executive compensation (say-on-pay)
Compensation discussion and analysis (CD&A)
Compensation program objectives
Compensation setting process
Primary compensation elements
Performance-based compensation - key performance metrics Performance-based compensation - performance by award Compensation by NEO
Other elements of compensation
Company policies impacting compensation
Compensation Committee report
4 | Executive compensation tables | 70 |
2023 Summary compensation table | 70 | |
5 | ||
2023 Grants of plan-based awards table | 73 | |
Outstanding equity awards at fiscal year-end 2023 | 75 | |
6 | 2023 Option exercises and stock vested table | 77 |
2023 Pension benefits and non-qualified deferred compensation | 77 | |
11 | ||
Potential payments upon termination or change in control | 78 | |
11 | Overview of potential payments | 78 |
12 | Calculation of potential payments | 80 |
12 | Equity compensation plan information | 81 |
12 | CEO pay ratio | 82 |
13 | Pay versus performance table | 83 |
13 | Relationship Between Compensation Actually Paid and | |
14 | Performance | 85 |
14 | Financial Performance Measures | 85 |
14 | Adoption of the company's Amended and | |
15 | ||
Restated Certificate of Incorporation | 86 | |
17 | ||
Proposal 3: Adoption of the company's Amended and | ||
17 | ||
Restated Certificate of Incorporation | 86 | |
31 | Audit matters | 88 |
34 | ||
34 Proposal 4: Ratification of appointment of independent
34 | registered public accounting firm | 88 |
Independent auditor | 88 | |
34 | ||
Review and engagement | 88 | |
35 | ||
Annual meeting attendance | 88 | |
35 | ||
Pre-approval policy and procedures | 88 | |
35 | ||
Auditor fees | 89 | |
37 | ||
Audit Committee report | 89 | |
38 | ||
38 | Shareholder proposal | 90 |
39 | ||
Proposal 5: Fair treatment of shareholder nominees | 90 | |
39 | ||
The Board's statement of opposition | 91 | |
40 | ||
Shareholder proposals and nominees for the 2025 annual | ||
40 | ||
meeting | 93 | |
41 | ||
Additional information | 94 | |
41 | ||
41 | Proxy statement and proxy solicitation | 94 |
42 | Annual meeting Q&A | 95 |
43 | Cognizant's Annual Report on Form 10-K | 97 |
44 Forward-looking statements and non-GAAP financial
measures | 98 | |
44 | Reconciliation to GAAP financial measures | 99 |
45 | Appendix A | 100 |
46 Amended and Restated Certificate of Incorporation of
47 | Cognizant Technology Solutions Corporation | 100 |
49 | Helpful resources | 103 |
51 | ||
Links | 103 | |
52 | ||
Contacts | 103 | |
55 | ||
65 | ||
66 | ||
69 |
1
Frequently requested information | |
Board refreshment process | 12 |
Committees of the Board | 31 |
Director attendance | 17 |
Director biographies | 19 |
Director diversity | 17 |
Director independence | 18 |
Director qualifications | 15 |
Director stock ownership guidelines | 41 |
Diversity and inclusion | 36 |
Human capital management | 35 |
Risk oversight | 31 |
Shareholder engagement | 34 |
CEO compensation assessment | 57 |
CEO pay ratio | 82 |
Clawback policies | 66 |
Compensation consultant | 47 |
Compensation mix | 49 |
Death benefits | 78 |
Executive stock ownership guidelines | 66 |
Peer group | 47 |
Perquisites | 66 |
Prohibitions on hedging, short sales, margin | 66 |
accounts and pledging | |
Retirement, death and disability policy | 65 |
Severance benefits | 67 |
Summary compensation table | 70 |
Auditor fees | 89 |
Auditor review and engagement | 88 |
Proxy access | 14 |
Why are we sending you these materials?
These materials are being made available to you (beginning on April 23, 2024) in connection with Cognizant's solicitation of proxies for our 2024 annual meeting of shareholders to be held via live webcast on June 4, 2024.
What do we need from you?
Please read these materials and submit your vote and proxy using the Internet, by telephone or, if you received your materials by mail, you can also complete and return your proxy by mail.
2
Stephen J. Rohleder
Chair of the Board of Directors
April 23, 2024
To our shareholders
2023 was a year of transition and transformation at Cognizant. In January 2023, the Board of Directors named Ravi Kumar S as the company's next CEO. Ravi quickly embedded himself with Cognizant's associates, clients, partners and shareholders while tapping into the company's entrepreneurial spirit and longstanding history of client centricity. He set out to recultivate a growth mindset within the company and identified three areas of strategic focus: accelerating growth to build and sustain momentum, becoming an employer of choice in our industry and simplifying operations to improve efficiency. The Board has worked closely with the entire leadership team to support the company's strategy and has been pleased with the company's early progress under Ravi's leadership in positioning Cognizant for the significant market opportunities ahead.
We finished the year by welcoming Jatin Dalal to the company as its next CFO, succeeding Jan Siegmund who announced his plans in late summer to retire. Jatin joined Cognizant with over 20 years of technology services experience and a proven track record of financial and operational success in a complex and ever evolving industry. We are confident that Jatin's experience will help reinforce the company's efforts to improve revenue growth in the years to come.
Strengthening fundamentals
In a challenging and uncertain industry demand environment, the company achieved full year 2023 revenue of $19.4 billion (which was down slightly from the prior year), outperformed its operating margins targets, increased bookings 9% year-over-year and increased the mix of its total contract value (TCV) of deals valued at $50 million or more from approximately 20% of total bookings in 2022 to approximately 30% in 2023 while bookings for deals with TCV above $100 million increased 42% year-over-year.
While we have a lot of work ahead, we also have much to be proud of across all three operational priorities. Regarding accelerating growth, the company has continued to invest in platform-centric approaches to further differentiate Cognizant in select industries. We also introduced platforms and tools to help speed clients' adoption of Generative AI (GenAI) and put us in a stronger position to capture the GenAI opportunity. Additionally, the company focused on large deal capabilities in 2023 by reorienting its teams to large deal demand generation and execution across all service lines. Second, regarding becoming an employer of choice, the company's employee engagement scores improved in 2023 while voluntary attrition declined throughout the year to levels that are now in-line with industry performance. We were also pleased to see a corresponding improvement in Cognizant's annual client net promoter score, which hit a historic high in 2023. This improvement underscores the interdependence of the employee and client experience and gives us confidence that the work we are doing today is having an impact and will help strengthen the business in the long run. And third, with respect to simplifying operations, the company further streamlined its operations, consolidated workspace, and reduced layers in the organization. These efforts, along with its cost management program, allowed the company to achieve a 2023 adjusted operating margin that exceeded our expectations from earlier in the year.
Board refreshment and shareholder engagement
The Board strives to optimize its balance of skills, knowledge, experiences and tenures to provide Cognizant with effective directors who can help navigate the company's, and the market's, changing business needs. In early 2023, Cognizant appointed three new independent directors who brought a wealth of knowledge and cross-industry experience to the Board. In January 2024, Nella Domenici resigned from the Board to pursue a nomination for the U.S. Senate for the State of New Mexico. The Governance Committee is evaluating potential candidates with a focus on women and is optimistic that we will be able to complete the search and appoint a new director before the end of the year. Despite the smaller size of our Board, which we expect to be temporary, we continue to have a diverse Board that is actively engaged with our employees and stakeholders. Between November 2023 and February 2024, Sandra S. Wijnberg, Leo S. Mackay Jr. and I met with top shareholders representing approximately 35% of the company's shares. We discussed, and received their feedback on, topics including our strategic positioning, large deal execution, GenAI, and human capital.
Sustainability and diversity
The Board maintains oversight of Cognizant's environmental, social and governance (ESG or sustainability) strategy, initiatives and policies. We are focused on topics such as Cognizant's corporate social responsibility programs, employee wellbeing, diversity and inclusion efforts and the journey to become a lower-carbon business.
One area of progress in 2023 that I want to highlight is Cognizant's ongoing efforts to foster a diverse and inclusive workforce, which we believe strengthens the company's ability to understand and meet clients' needs while reflecting the diversity of its clients and communities. In late 2023, Cognizant introduced Shakti, an initiative designed to unify our women-centric programs to further advance careers and boost women leadership in technology. Management also increased the percentage of women in leadership roles despite being in an economic environment in which the workforce was contracting for much of the year.
The Board invites you to attend the 2024 annual meeting of shareholders and thanks you for your continued support.
Sincerely,
3
About Cognizant
Cognizant is one of the world's leading professional services companies, with operations in major metro areas across nearly 50 countries around the world
Our purpose | Our vision |
Why we exist | What we aspire to achieve |
We engineer modern | To become the preeminent |
businesses to improve | technology services partner |
everyday life | to the Global 2000 C-Suite |
Our values
How we work
Start with a | Seek data, | Always strive, | Work | Create conditions | Do the right thing, |
point of view | build knowledge | never settle | as one | for everyone | the right way |
to thrive |
Our strategic priorities
How we measure our success
Accelerate | Become employer | Simplify our | ||
growth | of choice | operations | ||
Build and sustain | Attract, develop and | Improve the efficiency | ||
momentum to | retain top talent with | of our business with a | ||
recapture our place | an employee value | streamlined operating | ||
as a market leader | proposition that | model that frees | ||
in growth | aligns with our | resources to fund | ||
ambitions | further growth | |||
4
About Cognizant
2023 Company snapshot
2023 Company snapshot | ||||
Our global footprint | ||||
$19.4B | 347,700 | |||
Revenue* | Employees | |||
UK | Rest of world | |||
Continental Europe | $1.3B | 28,400 | ||
North | $1.9B | |||
$1.9B | Revenue | Employees | ||
America | Revenue | |||
$14.3B | 8,500 | Revenue | ||
Revenue | 16,300 | India | ||
40,500 | Employees | |||
Employees | 254,000 |
Employees | Employees | ||
Our business segments | |||
Financial services | Health sciences | Products and resources | Communications, |
30% | 29% | 24% | media and technology |
17% | |||
Revenue | Revenue | Revenue | Revenue |
* Revenues are attributed to geographic regions based upon client location, which is the client's billing address.
Our financial results
Revenue (in billions)
$19.4B
$18.5 $19.4 $19.4
2021 2022 2023
Diluted earnings per share
$4.21 GAAP
$4.55 Adjusted1
$4.05 $4.12 | $4.41 $4.40 | $4.21 $4.55 |
2021 | 2022 | 2023 |
Operating margin
13.9% | GAAP | ||
15.1% | Adjusted1 | ||
15.3% | 15.4% | 15.3% 15.3% | 13.9% 15.1% |
2021 | 2022 | 2023 |
Cash flow | Capital allocation | ||||
(in billions) | (in billions) | ||||
$2.3B | Net cash provided by | Acquisitions | |||
operating activities | $2.1B | Share repurchases | |||
$2.0B | |||||
Free cash flow1 | Dividend payments | ||||
$2.3 | $2.4 | $2.1 | ||||||
$0.4 | ||||||||
$2.6 | $0.4 | |||||||
$2.5 | $2.2 | $2.2 | $2.3 | $2.0 | $1.0 | $1.4 | ||
$1.1 | ||||||||
$0.8 | ||||||||
$0.5 | $0.6 | $0.6 | ||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 |
1. Adjusted diluted earnings per share, adjusted operating margin and free cash flow 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 and reconciliations to the most directly comparable GAAP financial measures.
5
Meeting notice and voting roadmap
April 23, 2024
John Kim
Corporate
Secretary
You are invited to participate in Cognizant's 2024 annual meeting. If you were a shareholder at the close of business on April 8, 2024, you are entitled to vote at the annual meeting. The agenda for the meeting and the Board's recommendation with respect to each agenda item are set out below. Even if you plan to attend, we encourage you to submit your vote as soon as possible through one of the methods below.
Logistics
Date | Tuesday, June 4, 2024 |
Time | Online check-in begins: 9:15 a.m. |
Meeting begins: 9:30 a.m. | |
(all times U.S. Eastern Time) | |
Place | Via live webcast - please visit |
www.virtualshareholdermeeting.com/CTSH2024 |
Voting
Who can vote Shareholders as of our record date,
April 8, 2024, are eligible to vote
Internet | www.proxyvote.com |
Telephone | +1-800-690-6903 (this phone number will work |
internationally but is only toll-free for callers within the U.S. | |
and Canada). | |
Sign, date and return the proxy card |
The 2024 annual meeting will be a virtual meeting of shareholders conducted via a live webcast. We designed the format of the virtual annual meeting to ensure that our shareholders who attend the virtual annual meeting will be afforded comparable rights and opportunities to participate as they would at an in-person meeting. During the virtual annual meeting, you may ask questions and will be able to vote your shares electronically. To participate in the virtual annual meeting and access the list of shareholders, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or on your proxy card. If your shares are held in street name and your voting instruction form or Notice of Internet Availability indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access, participate in, and vote at the annual meeting with the 16-digit access code indicated on that voting instruction form or Notice of Internet Availability. Otherwise, shareholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the annual meeting) and obtain a "legal proxy" in order to be able to attend, participate in or vote at the annual meeting.
A complete list of shareholders will also be available for examination by any shareholder during the ten days prior to the annual meeting for a purpose germane to the meeting by sending an e-mail to our corporate secretary at the e-mail address set out on page 103 stating the purpose of the request and providing proof of ownership of our common stock.
Voting matters and Board recommendations
Proposal 1
Proposal 2
Proposal 3
Proposal 4
Proposal 5
Election of 12 directors
Advisory vote to approve executive compensation (say-on-pay)
Adoption of the company's Amended and Restated Certificate of Incorporation
Ratification of appointment of independent registered public accounting firm
Shareholder proposal, if properly presented at the meeting
For
See page 17
For
See page 44
For
See page 86
For
See page 88
Against
See page 90
6
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.
Leadership roles / Committees | Key qualifications |
Zein Abdalla, 65 | • Chair, Governance and | |
Former President of PepsiCo | Sustainability Committee | |
Independent director since 2015 | • 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
Eric Branderiz, 59
Former EVP and CFO of Enphase Energy
Independent director since 2023
Archana Deskus, 58
EVP and Chief Technology Officer of PayPal Independent director since 2020
John M. Dineen, 61
Former President and CEO of GE Healthcare
Independent director since 2017
Ravi Kumar S, 52
CEO of Cognizant
Director since 2023
Leo S. Mackay, Jr., 62
SVP, Ethics and Enterprise Assurance of Lockheed Martin Independent director since 2012
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
- Governance and Sustainability Committee
- Audit Committee
- Compensation and Human Capital Committee
- Audit Committee
- Compensation and Human Capital Committee
- Finance and Strategy Committee
- Chair, Finance and Strategy Committee
- Audit Committee
- Chair, Compensation and Human Capital Committee
- Audit Committee
- Governance and Sustainability Committee
- Compensation and Human Capital Committee
- Finance and Strategy Committee
• Operations management |
• International business development |
• Public company leadership |
• Public company governance |
• Technology and consulting services |
• Operations management |
• International business development |
• Public company governance |
• Finance, accounting and risk management |
• Technology and consulting services |
• Security |
• Regulated industries |
• Operations management |
• International business development |
• Public company governance |
• Regulated industries |
• Operations management |
• International business development |
• Public company leadership |
• Public company governance |
• Technology and consulting services |
• Talent management |
• Operations management |
• International business development |
• Public company leadership |
• Public company governance |
• Technology and consulting services |
• Security |
• Regulated industries |
• Operations management |
• Public company governance |
• Finance, accounting and risk management |
• Technology and consulting services |
• Talent management |
• Security |
• International business development |
7
Stephen J. Rohleder, 66
Former Group Chief Executive, North America and Chief Operating Officer of Accenture plc
Independent director since 2022
Bram Schot, 62
Former Chairman and CEO of Audi AG
Independent director since 2023
Joseph M. Velli, 66
Former Senior EVP of The Bank of New York
Independent director since 2017
Sandra S. Wijnberg, 67
Former CFO of Marsh &
McLennan Companies and
Former CAO of Aquiline Holdings
Independent director since 2019
Leadership roles / Committees | Key qualifications |
• Chair of the Board of Directors | • Technology and consulting services |
• Audit Committee | • Talent management |
• Finance and Strategy Committee | • Regulated industries |
• Governance and Sustainability | • Operations management |
Committee | • International business development |
• Public company leadership | |
• Public company governance | |
• Finance and Strategy Committee | • Operations management |
• Governance and Sustainability | • International business development |
Committee | • Public company leadership |
• Audit Committee | • Technology and consulting services |
• Compensation and Human Capital | • Regulated industries |
Committee | • Operations management |
• International business development | |
• Public company leadership | |
• Public company governance | |
• Chair, Audit Committee | • Technology and consulting services |
• Finance and Strategy Committee | • Talent management |
• Regulated industries | |
• International business development | |
• Public company governance | |
• Finance, accounting and risk management |
Board recommendation: Vote FOR each director nominee.
- 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.
See our Board qualifications on pages 15-16 and our director nominees' biographies starting on page 19.
Qualified | Our Board's key qualifications |
Diverse
67% Technology and Consulting Services
33% Talent Management
25% Security
50% Regulated Industries
83% Operations Management
92% International Business Development
58% Public Company Leadership
83% Public Company Governance
25% Finance, Accounting and Risk Management
Our Board's demographics (see also our Board diversity matrix on page 17)
58% born outside the United States
50% worked overseas
42% racially/ethnically diverse
25% female
Independent
Engaged
Tenure
92% directors are independent with five of such directors appointed since January 2020
97% weighted average attendance of directors at 2023 Board and committee meetings
Average: 5 years
33% | 0-2 years |
33% | 3-6 years |
33% | 7-10+ years |
Age
Average: 63 years old
25% 50-60 years old
75% > 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.
8
Proposal 2: Advisory vote to approve executive compensation (say-on-pay)
Approve, on an advisory (non-binding) basis, the compensation of the company's named executive officers.
Board recommendation: Vote FOR the approval, on an advisory (non-binding) basis, of our executive compensation.
- Our compensation program ensures that incentives are aligned with our corporate strategies and business objectives.
- 61% of our current CEO's 2023 target direct compensation and 50% of our non-CEO NEOs' 2023 target direct compensation was performance-based.
See "Compensation discussion and analysis (CD&A)" on page 45.
Performance- driven and aligned with strategic priorities and shareholder interests
Cash
- Base salary provides a stable source of cash income at competitive levels
- Annual cash incentive (ACI)
motivates and rewards achievement of short-term company financial objectives
Equity
-
Performance stock units (PSUs)
incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock - Restricted stock units (RSUs) reward continued service and long-term performance of our common stock
2023 Target direct compensation
7% | |||||||||
32% | 14% | ||||||||
Current CEO | |||||||||
d | |||||||||
47% | e | ||||||||
s | |||||||||
a | |||||||||
b | |||||||||
- | |||||||||
e | |||||||||
c | |||||||||
n | |||||||||
a | |||||||||
m | |||||||||
or | |||||||||
61% Perf |
17% | ||||||||||
33% | ||||||||||
Non-CEO NEOs | 17% | |||||||||
(Average) | ||||||||||
d | ||||||||||
-b | a | s | e | |||||||
33% | e | |||||||||
c | ||||||||||
n | ||||||||||
a | ||||||||||
m | ||||||||||
r | ||||||||||
o | ||||||||||
rf | ||||||||||
e | ||||||||||
P | ||||||||||
50% |
Ambitious but attainable targets
Our performance-based compensation utilizes performance goals that are designed to be ambitious but attainable. In 2023, ACI was paid at 30.3% of target (for corporate leaders; a portion of the business unit leaders' results are derived from their business unit performance). Our 2021-2023 PSUs paid at approximately 91.4% of target.
In making its decisions regarding executive compensation for 2023, the Compensation Committee considered the significant level of shareholder support our executive compensation program received from shareholders in 2023 (92% support), 2022 (90% support) and prior years.
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Cognizant Technology Solutions Corporation published this content on 23 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2024 12:56:06 UTC.
