UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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| ☐ | Preliminary Proxy Statement | |
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| ☑ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Under Rule 14a-12 | |
Cognizant Technology Solutions Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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2020
Proxy
Statement
& Notice of
Annual Meeting
| Audit Matters | ||
| Independent Auditor | 58 |
Frequently Requested Information
| Board Refreshment | 6 |
| CEO Compensation Assessment | 40 |
| Clawback Policy | 47 |
| Compensation by NEO | 39 |
| Compensation Consultant | 32 |
| Compensation Mix | 29 |
| Death Benefits | 57 |
| Director Attendance | 10 |
| Director Biographies | 10 |
| Director Compensation | 26 |
| Director Diversity | 6 |
| Director Independence | 6 |
| Director Skills | 8 |
| Pay for Performance | 30 |
| Peer Group | 32 |
| Perquisites | 46 |
| Proxy Access | 7 |
| Related Person Transactions | 27 |
| Retirement Policy | 46 |
| Risk Oversight | 20 |
| Severance Benefits | 48 |
| Shareholder Engagement | 18 |
| Share Ownership | 25 |
| Shareholder Proposal Deadlines for 2021 | 61 |
| Sustainability | |
| Governance | 21 |
| Human Capital | 22 |
| Communities | 24 |
Cognizant Technology Solutions CorporationWhy are we sending you these materials?
On behalf of our board of directors, we are making these materials available to you (beginning on April 22, 2020) in connection with Cognizant’s solicitation of proxies for our 2020 annual meeting of shareholders to be held via live webcast on June 2, 2020.
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.
To Our Stockholders:
We cordially invite you to attend our 2018 Annual Meeting of Stockholders, which will be held at the Teaneck Marriott at Glenpointe, 100 Frank W. Burr Blvd., Teaneck, New Jersey 07666, on Tuesday, June 5, 2018, at 8:30 a.m. Eastern Time.
The digital marketplace is evolving quickly, with both exponential technical progress and an ever increasing rate of change. This context underscores why it is so important for Cognizant to have a diverse, fully engaged, and forward-looking board whose members bring deep knowledge of the many disciplines that are central to the company’s long-term growth. We have made a point of significantly refreshing our board, adding five independent directors over the last three years. These individuals are providing expertise in key enabling digital technologies, healthcare, corporate governance, and other areas.
Our newest director, Joseph M. Velli, joined the board last December. Mr. Velli served previously as Senior Executive Vice President and a member of the Senior Policy Committee of The Bank of New York (now BNY Mellon). His significant experience in creating, building and leading large-scale, technology and software platform businesses in the financial services industry is highly relevant to the company’s continuing expansion of digital services and solutions for banking and other clients.
We extend our deep gratitude to Robert E. Weissman, who retired from the board last December after 16 years of service to the company, its employees and stockholders. Instrumental in Cognizant’s formation, Mr. Weissman not only made our board stronger, he also helped to lead the company at every stage of its evolution through its current position of market leadership.
Cognizant operates with a commitment to align pay with performance to motivate and reward achievement of sustained strong financial and operational results. To that end, Cognizant’s executive officer total direct compensation packages, which consist of base salary, an annual cash incentive, and stock-based awards, reflect our strategic plan to drive higher levels of profitability while maintaining continued revenue growth. Accordingly, in 2017 the Compensation Committee shifted the weighting of non-GAAP EPS1as a performance measure to 50% for performance stock unit awards, with revenue accounting for the other 50%. (In 2016 the weighting was 25% non-GAAP EPS/75% revenue.)
Cognizant seeks to be a responsible and engaged corporate citizen, including in the communities in which it operates. We believe that the digital marketplace should create opportunities for all. Recognizing how often technological progress leaves some people behind, Cognizant has long believed that it has an obligation to enable a broader range of people to have the science, technology, engineering, and math (STEM) education and skills they need to thrive in today’s digital era. To augment its global STEM education efforts, which go back more than a decade, in February 2018 the company announced its intent to form Cognizant U.S. Foundation. This 501(c)(3) non-profit organization, to be established with an initial grant of $100 million, will support STEM and digital education and skills training for U.S. workers and students. This initiative is but one example of the company’s resolve to perform with purpose.
We encourage you to read the enclosed Notice of 2018 Annual Meeting and Proxy Statement, which include instructions on how to vote your shares by proxy and/or attend the meeting and vote in person.
We thank you for your continued support.
Sincerely,
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April 22, 2020
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The last year has been one of transition and transformation at Cognizant. Brian Humphries joined the company as CEO on April 1, 2019, and a number of other new executives have been added since then. Management and the board have worked diligently to refine the company’s strategy and focus and make the changes and investments needed to reposition the company for accelerated growth and leadership in today’s advanced digital technologies.
Joining the company after the disappointing first quarter of 2019, Brian wasted no time in launching a transformation office to look for ways to get the company back on track from both a revenue growth and margin perspective. He and the management team, working closely with the board, set about refining the company’s strategy and developing the 2020 Fit for Growth Plan, both of which were reviewed by the board in detail at its annual strategy session held in September 2019. The company’s strategy has at its core two key strategic objectives: (i) protecting and optimizing Cognizant’s traditional business while scaling the business internationally where we believe there is significant growth potential; and (ii) winning across the four digital battlegrounds of artificial intelligence (AI) and analytics, digital engineering, cloud and Internet of Things (IoT) that are needed by clients to become fully digital businesses. Seepage 8. To achieve those strategic objectives, the 2020 Fit for Growth Plan involves, among other things, streamlining the company’s operating model and eliminating costs to fund investments in sales, branding, talent and automation to fuel future growth. The board has actively monitored the many changes being undertaken and the progress in executing the plan. In late 2019 that involved significant decisions like headcount reductions and the exit from certain content-related work as we seek to | free up funds for reinvestment and In February 2020, the board spent a week at Cognizant’s facilities in India, home to two-thirds of its associates. India is the delivery engine for many of the |
2018 Proxy Statement
To Our Stockholders:
You are invited to attend the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of Cognizant Technology Solutions Corporation (“Cognizant” or the “Company”). This notice includes important information about the meeting.
Agendacompany’s services worldwide. Since the world began to be impacted by the COVID-19 pandemic in early 2020, the board has received frequent updates on the impact to Cognizant’s employees, operations and clients and reviewed with management the various measures being undertaken to protect people’s health and maintain continuity of service for clients.
Shareholder Engagement
Executive Compensation In parallel with the refinement of our strategy, the compensation committee undertook a reevaluation of the company’s executive compensation program with the goal of ensuring that it was well aligned with the refined strategy as well as market practices and shareholder preferences. For 2020, significant changes in the program have been implemented, including a greater emphasis on revenue growth and, for the performance-based equity compensation, the inclusion of a relative total shareholder return metric and a shift to a 3-year performance period. Seepages 34 to38. | Board Composition Since last year’s annual meeting, we have welcomed three highly qualified female directors who expand the cognitive diversity of our board and, among other things, bring deep expertise in finance, technology, large professional services organizations and India-based businesses: Sandra S. During the same period, three long-serving directors who made great contributions to the board and the company retired: Francisco D’Souza, a co-founder of the company and its highly successful CEO from 2007 until 2019; John Klein, a director since 1998 and my predecessor as chairman of the board from 2003 until 2018; and Jonathan Chadwick, __________________ On behalf of my fellow board members, we welcome you to attend the |  | shareholders and thank you for your continued support.
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Stockholders also will transact such other business as may properly come before the Annual Meeting.
Logistics
How To Vote
Your vote is very important. You may vote using any one of the following methods:
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Q&A
Who can vote at the Annual Meeting?Stockholders as of our record date, April 9, 2018.
How many shares are entitled to vote?585,898,388 shares of common stock.
May I change my vote?Yes, by delivering a new proxy with a later date, revoking your proxy, or voting in person at the Annual Meeting.
How many votes do I get?One vote on each proposal for each share you held as of April 9, 2018.
Where can I find more information?See “Additional Information” on page 61.
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By Order of the Board of Directors,
Matthew W. FriedrichSecretaryTeaneck, New JerseyApril 20, 2018
Cognizant Technology Solutions Corporation
CORPORATE GOVERNANCE
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2018 Proxy Statement2020 PROXY STATEMENT 1
Proxy Statement SummaryNotice of 2020 Annual Meeting
Director Nominee Experience
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Online check-in begins: 9:15 a.m. Eastern Time Meeting begins: 9:30 a.m. Eastern Time | ||
Place | Via live webcast – please visitwww.virtualshare holdermeeting. com/CTSH2020 | |
| As in 2019, the 2020 annual meeting will be a virtual meeting of shareholders conducted via a live webcast that provides shareholders the same rights and opportunities to participate as they would have at an in-person meeting. We believe that a virtual meeting provides expanded shareholder access and participation and improved communications. During the virtual meeting, you may ask questions and will be able to vote your shares electronically. To participate in the 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. Online check-in will begin at 9:15 a.m. Eastern Time. | ||
| Your vote is very important. You may vote using any of the following methods. | ||
 | Use the Internet Vote over the Internet atwww.proxyvote.com. |
 | Call Vote by telephone by calling +1-800-690-6903. |
 | Mail Your Proxy Card Vote by signing, dating and returning the proxy card. |
 | You are invited to participate in Cognizant’s 2020 annual meeting. If you were a shareholder at the close of business on April 6, 2020, 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.  MATTHEW W. FRIEDRICH Secretary |
Agenda | |||||
| 1 | Elect the following eleven directors to serve until the 2021 annual meeting of |  | FOReach director nominee. See page 10 ► | ||
Zein Abdalla Vinita Bali Maureen Breakiron-Evans Archana Deskus John M. Dineen John N. Fox, Jr. | Brian Humphries Leo S. Mackay, Jr. Michael Patsalos-Fox Joseph M. Velli Sandra S. Wijnberg | ||||
| 2 | Approve, on an advisory (non-binding) basis, the compensation of the company’s named executive officers. | | See page 33 ► | ||
| 3 | | FORthis proposal. | |||
| 4 | Consider a shareholder proposal requesting that the board of directors take action as necessary to permit shareholder action by written consent (if properly presented). |  | this proposal. See page 60 ► | ||
Q&A | ||
Who can vote at the annual meeting? Shareholders as of our record date, April 6, 2020. How many shares are entitled to vote? 541,055,494 shares of common stock. May I change my vote? Yes, by delivering a new proxy with a later date, revoking your proxy, or voting at the annual meeting. | How many votes do I get? One vote on each proposal for each share you held as of April 6, 2020. Where can I find more information? See “Additional Information” onpage 62. | |
2 Cognizant Technology Solutions CorporationCOGNIZANT
Proxy Statement SummaryAbout Cognizant
COMPENSATIONWho We Are
Cognizant is one of the world’s leading professional services companies, helping clients become data-enabled and data-driven in the digital era. Our industry-based, consultative approach helps companies evolve into modern businesses. By leading clients in leveraging technologies essential to modern enterprises, such as artificial intelligence (AI) and analytics, digital engineering, cloud and Internet of Things (IoT), we enable new business and operating models that unlock new value in markets around the world. Cognizant’s unwavering focus on our clients is led by our over 290,000 associates, who deliver services and solutions tailored to specific industries and the unique needs of the organizations we serve. |
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Executive Compensation Program Highlights
Key Program Features
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OUR | We engineer modern businesses to improve everyday life |
OUR | To become the pre-eminent technology services partner to the Global 2000 C-Suite |
The Value We Create
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| REVENUE1 (in billions) | DILUTED EARNINGS PER SHARE1 |
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| OPERATING MARGIN1 | CASH FLOW1 (in billions) |
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| 1 | Constant currency revenue growth (“CC”), adjusted operating margin, adjusted diluted earnings per share and free cash flow are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” onpage 66for more information and, where applicable, reconciliations to the | |
CAPITAL RETURN
(in millions)
returned to our shareholders throughshare repurchasesanddividendsin 2017, 2018 and 2019
(in millions)
invested inacquisitionsin 2017, 2018 and 2019
2018 Proxy Statement2020 PROXY STATEMENT 3
Proxy Statement Summary
The Compensation Committee makes decisions on executive compensation from a total direct compensation perspective. Each element is considered by the committee in meeting one or more compensation program objectives. The following chart illustrates the balance of elements of 2017 target total direct compensation for our CEO and other NEOs, as described in this proxy statement.
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Historical ACI award achievements by year | ||
| 2015 | 2016 | 2017 |
| 142.0% | 79.8% | 114.8% |
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Historical PSU achievements by performance measurement period | ||
| 20151 | 20162 | 2016/172 |
| 122.9% | 38.2% | 85.5% |
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Note: The above presentation seeks to provide a view of 2017 total direct compensation as reviewed by the Compensation Committee. As such, it uses grant date share prices for RSUs and PSUs and the target level of achievement for the ACI and PSUs. The above presentation excludes additional grants of RSUs and PSUs to Mr. Mehta and Mr. Chintamaneni made in connection with the expansion of their roles in 2016 and the signing bonus and grants of RSUs and PSUs to Mr. Friedrich upon his joining the Company in 2017.
4 Cognizant Technology Solutions CorporationCOGNIZANT
Proxy Statement Summary
2017 Target Direct Compensation of Our Named Executive Officers
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2017 Compensation(in thousands)
| Name and Principal Position | Year | Salary | Cash Bonus | Annual Cash Incentive | PSU | RSU | All Other Pension and Deferred Comp. | All Other Comp. | SEC Total | Adjusted SEC Total | 1 | ||||||||||||||||||||
| Francisco D’Souza CEO | 2017 | $ | 669 | — | $ | 648 | $ | 7,220 | $ | 3,774 | — | $ | 167 | $ | 12,478 | $ | 12,478 | ||||||||||||||
| 2016 | $ | 664 | — | $ | 450 | $ | 7,019 | — | 1 | — | $ | 123 | $ | 8,257 | $ | 12,031 | |||||||||||||||
| Rajeev Mehta President | 2017 | $ | 630 | — | $ | 615 | $ | 4,604 | $ | 2,545 | — | $ | 56 | $ | 8,450 | $ | 8,450 | ||||||||||||||
| 2016 | $ | 574 | — | $ | 389 | $ | 3,584 | — | 1 | — | $ | 6 | $ | 4,554 | $ | 7,099 | |||||||||||||||
| Karen McLoughlin CFO | 2017 | $ | 500 | — | $ | 488 | $ | 1,967 | $ | 1,038 | — | $ | 8 | $ | 4,001 | $ | 4,001 | ||||||||||||||
| 2016 | $ | 427 | — | $ | 289 | $ | 1,876 | — | 1 | — | $ | 8 | $ | 2,599 | $ | 3,638 | |||||||||||||||
| Ramakrishna Prasad Chintamaneni EVP and President, Global Industries and Consulting | 2017 | $ | 475 | — | $ | 463 | $ | 1,042 | $ | 1,897 | — | $ | 8 | $ | 3,885 | $ | 3,885 | ||||||||||||||
| 2016 | $ | 417 | $ | 566 | — | $ | 831 | $ | 1,615 | — | $ | 8 | $ | 3,437 | $ | 3,437 | |||||||||||||||
| Matthew W. Friedrich EVP, General Counsel, Chief Corporate Affairs Officer and Secretary | 2017 | 2 | $ | 330 | $ | 500 | $ | 512 | $ | 1,252 | $ | 4,257 | — | $ | 132 | $ | 6,983 | $ | 6,983 | ||||||||||||
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2018 Proxy Statement 5
Proxy Statement Summary
Aligning Pay with Performance
The following graphs show Company performance across revenue, profitability and cash flow metrics for the last three years as compared to the performance targets for the annual cash incentives (ACIs) and PSUs with performance measurement periods covering such years. In addition, the Company’s share price performance, which impacts the performance of long-term equity grants and holdings of our common stock, is set forth below for the last five years.
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| 2015 ACI | 19.0% | 50% |  | ||||
| 2016 ACI | 11.0% | 50% | |||||
| 2017 ACI | 9.0% | 50% | |||||
| 2015 PSUs | 19.1% | 100% |  | ||||
| 2016 PSUs | 12.0% | 75% | |||||
| 2016/17 PSUs | 11.0% | 75% |
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| 2015 ACI | 14.8% | 40% |  | ||||
| 2016 ACI | 9.8% | 40% | |||||
| 2017 ACI | 8.9% | 40% |
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6 Cognizant Technology Solutions Corporation
Proxy Statement Summary
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| 2016 PSUs | 10.4% | 25% | |||||
| 2016/17 PSUs | 10.7% | 25% |
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2018 Proxy Statement2020 PROXY STATEMENT 7
Proxy Statement Summary
AUDIT
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ADDITIONAL PROPOSALS
Company Proposals
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8 Cognizant Technology Solutions Corporation
Proxy Statement Summary
Stockholder Proposals
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2018 Proxy Statement 9
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2018 Proxy Statement 11
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2018 Proxy Statement 13
Board Composition and Refreshment
Director Independence
Board Member Independence
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Determine Desired Director Qualifications In order to build an independent board with broad and diverse experience and judgment that is committed to representing the long-term interests of our | |||||
| RELEVANT SKILLS AND EXPERIENCE | … for a Fortune 200 public company, a global professional services and technology company and the company’s strategy Seepages 8 and9. | ||||
| DIRECTOR DIVERSITY | … including as to race, gender, age, national origin and cultural background ●Our board has committed to include women and persons with ethnically or racially diverse backgrounds in each pool of candidates from which we select new director nominees ●The board evaluates the effectiveness of its director diversity efforts through its annual self-evaluation process and on an ongoing basis through its director candidate search processes led by the | ||||
| DIRECTOR INDEPENDENCE | … and avoiding conflicts of interest ●Our board considers other positions a director or a director candidate has held or holds (including other board memberships) and any potential conflicts of interest to ●There are no family relationships among any of our ●Our board determines independence in accordance with the rules of The Nasdaq Stock Market LLC (“Nasdaq”). Board Member Independence.Each of our director nominees, other than our current CEO, Mr. Humphries, as well as each of the individuals who retired as a director since our 2019 annual meeting (other than our former CEO, Francisco D’Souza), has been determined by the board to be an “independent director” under the rules of Nasdaq, which require that, in the opinion of the | ||||
director.
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| ATTENTION AND FOCUS | … by each director in light of other obligations Our corporate governance guidelines provide that directors are: ●Required to offer to resign from the board following a material change in job responsibilities (other than retirement) ●Limited to service on no more than four other public company boards (two if the director is a public company CEO) | ||||
| BALANCE OF TENURES | … between knowledge of the company and fresh perspectives and insights  | ||||
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Identify Candidates GOVERNANCE COMMITTEE SEARCH ●The Governance Committee develops criteria for any search process, including any specific desired skills, experiences, characteristics or qualifications ●A subset of directors may be tasked by the committee with leading a search process ●The committee typically engages an independent director search firm Recent Director Appointments The three director nominees appointed to the board since the 2019 annual meeting (Vinita Bali, Archana Deskus and Sandra Wijnberg) were each identified and evaluated through a director search process overseen by the Governance Committee and undertaken with the assistance of an independent director search firm. | ||
SHAREHOLDER RECOMMENDATIONS Shareholders may recommend candidates to the Governance Committee by sending to the company’s secretary: ●The name(s) of the proposed director candidates ●Appropriate biographical information and background materials ●A statement as to whether the shareholder or group of shareholders making the recommendation has beneficially owned more than 5% of the company’s common stock for at least one year | ||
INTERNAL RECOMMENDATIONS Independent directors, management and others may recommend potential candidates | ||
6 COGNIZANT
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GOVERNANCE COMMITTEERECOMMENDATION PROCESS | ||||
Discuss, assess and interview candidates | ||||
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BOARD NOMINATION PROCESS | ||||
Interview, discuss and assess nominees recommended by the Governance Committee | ||||
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Process is substantially the same for any shareholder-proposed candidates | ||||
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Annual Shareholder Vote SHAREHOLDERS VOTE ON NOMINEES AT ANNUAL MEETING All directors are elected annually and subject to a majority voting standard Majority Voting Standard Our by-laws provide that the voting standard for the election of directors in uncontested elections is a majority of votes cast. Any director who does not receive a majority of the votes cast for his or her election must tender an irrevocable resignation that will become effective upon acceptance by the board. The Governance Committee will recommend to the board whether to accept the director’s resignation within 90 days following the certification of the shareholder vote. The board will promptly disclose whether it has accepted or rejected the director’s resignation, and the reasons for its decision, in a Current Report on Form 8-K. The Governance Committee and the board may consider any factors they deem relevant in deciding whether to accept a director’s resignation. Our corporate governance guidelines contain additional specifics regarding our director resignation policy. See “Helpful Resources” onpage 69. | Annual Board Self-Evaluation EVALUATION OF BOARD AND COMMITTEE EFFECTIVENESS In 2019, the board and each of its committees undertook a self-evaluation process with the assistance of a third party that conducted a series of interviews with each of our directors and certain members of management to gather input on individual director’s contributions, the effectiveness of the board and committee compositions and structure and the communication and reporting processes between management and the board. The third party reported its findings to the board, and provided feedback to individual directors and members of management. Feedback from the 2019 board self-evaluation has driven several changes in board operations in 2020, including: ●The format and timing of board agendas and materials; and ●The format and content of the director onboarding process. | ||||||
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PROXY ACCESS | ||||
3% for 3 years | One or more shareholders holding at least 3% of the company’s common stock for at least 3 years may submit director nominees for inclusion in the company’s proxy statement. | |||
25% | of the | Shareholder-submitted nominees may be submitted via proxy access for up to 25% of the board or 2 directors, whichever is greater. | ||
Shareholder-submitted proxy access nominees that satisfy the requirements in the company’s by-laws are included in the company’s proxy statement. See “Director Nominees Via Proxy Access” onpage 61. | ||||
2020 PROXY STATEMENT 7
8 COGNIZANT
 | PUBLIC COMPANY LEADERSHIP |  |
Directors who have served in a CEO, president or senior executive business role directing strategy and management at a large publicly-traded company or significant business unit of such a company bring valuable practical experience and understanding to the boardroom that is highly relevant to a large, global organization such as Cognizant. This includes experience addressing the challenges of large-scale operations and experience identifying and developing leadership qualities for the management team that takes on such challenges.
 | TECHNOLOGY AND CONSULTING SERVICES |  |
As a global professional services organization focused on providing technology and consulting services to many of the world’s leading companies, we benefit from having a number of directors who have extensive experience in senior leadership roles at companies in the technology and consulting fields.
 | TALENT MANAGEMENT |  |
As a global professional services organization, our people are our most important asset and the successful development and retention of our professionals is critical to our success. As such, we benefit from having directors with a deep understanding of the dynamics of a people-based business obtained from experience as a senior leader in a large, international professional services organization.
 | SECURITY |  |
Our business is critically dependent on our ability to maintain the confidentiality of sensitive business and personal data of our clients and our clients’ customers, in addition to our own such data. Having directors with expertise in information security is important to our business and our risk management strategy.
 | REGULATED INDUSTRIES |  |
We are highly dependent on customers concentrated in certain regulated industries such as financial services and healthcare. Directors with particular knowledge of these industries are beneficial to the board’s understanding of the unique challenges faced by clients in these industries and oversight of the company’s strategy and regulatory compliance.
 | OPERATIONS MANAGEMENT |  |
As we pursue continued growth and increased profitability for our business, having directors who have experience serving as a chief operating officer or similar position with operational oversight of a large organization provides valuable administrative and operational insights at the board level.
 | PUBLIC COMPANY GOVERNANCE |  |
We believe that having directors who currently serve on the boards of other U.S.-listed public companies is important to Cognizant maintaining good corporate governance practices as such directors are able to provide insight into current U.S. public company board practices, including with respect to board management, relations between the board and senior management, board refreshment, management succession planning, risk management and executive compensation.
 | INTERNATIONAL BUSINESS DEVELOPMENT |  |
We are continually focused on growing our business, including through acquisitions and geographic expansion. Directors who have experience overseeing corporate strategy and development or managing large non-U.S. organizations provide valuable insight into the challenges and risks, as well as the means of successfully overcoming such challenges and risks, with respect to acquiring and integrating other companies and undertaking continued international expansion of our business.
 | FINANCE, ACCOUNTING AND RISK MANAGEMENT |  |
As a large, publicly-traded company with a global footprint, we benefit from directors with financial accounting and reporting, regulatory compliance and risk management experience derived from serving in roles such as CFO, head of internal audit or chief risk officer of a large, global, publicly-traded company or as an audit partner at a public accounting firm.
In many instances other directors not appearing under a particular category may also have a significant level of experience in the area, as may be evident from their biographies, but were not included above due to this presentation’s focus on only those directors with the most significant levels of experience and expertise in the respective areas.
2020 PROXY STATEMENT 9
The board unanimously recommends a voteFORall the director nominees listed.
|
Weighted Average Attendance of | |||||||
| 98% | 98% | 91% | |||||
| B | Board of Directors | A | Audit Committee | F | Finance Committee | ||
| 100% | 97% | ||||||
| G | Governance Committee | C | Compensation Committee | ||||
Our corporate governance guidelines provide that directors are expected to attend the annual meeting of shareholders. For the 2019 annual meeting, Mr. Humphries acted as chairman and all of the other 10 then-current directors attended by teleconference. |
Zein Abdalla Former President of PepsiCo |  | ||
| Director Since2015 Age61 Independent | Committees | Birthplace | |
Key Qualifications  Decades of experience leading and shaping large scale operations across the world at PepsiCo (PEP), a Fortune 50, Nasdaq-listed multinational food, snack and beverage company, through various senior executive roles, most recently as President. Extensive global operations management experience having served as CEO of PepsiCo Europe and as a manager to several international business lines prior to that, including as General Manager of PepsiCo’s European Beverage Business and Franchise VP for Pakistan and the Gulf Region. Serves on the board of The TJX Companies (TJX), a retailer of apparel and home fashions (since 2012). Global strategic insight having led and shaped large scale operations across the world throughout his career at PepsiCo in his roles as President and as a senior executive responsible for Europe and the Gulf Region. |
Career Highlights ●President of PepsiCo, Inc. (PEP), a multinational food, snack and beverage company (2012 – 2014) ●Executive positions with PepsiCo Europe Region –Chief Executive Officer (2009 – 2012) –President (2006 – 2009) –Various senior positions with PepsiCo (1995 – 2006) Current Public Company Boards ●The TJX Companies, Inc. (TJX), a retailer of apparel and home fashions (since 2012) Select Other Positions ●Board member of Mastercard Foundation (since 2017) ●Board member of Kuwait Food Company K.S.C.P. (since 2017) ●Member of the Imperial College Business School Advisory Board (since 2016) ●Board Advisor, Mars, Incorporated (since 2016) |
Education ●B.S., Imperial College, London University |
| Key | Committees | |||
| A | Audit | C | Compensation Committee | |
| F | Finance Committee | G | Governance Committee | |
| CHAIR | Committee Chair | + | Audit Committee Financial Expert | |
10 COGNIZANT
| Vinita Bali | Maureen Breakiron-Evans | |||||||
| Former CEO and Managing Director of Britannia Industries and Former VP, Coca-Cola |  | Former CFO of Towers Perrin |  | |||||
| Director Since 2020 Age64 Independent | Birthplace India  | Director Since 2009 Age65 Independent | Committees | Birthplace USA  | ||||
Key Qualifications Experience directing and shaping strategy for international, publicly-listed corporations, including as CEO of India-based Britannia Industries, listed on the National Stock Exchange and Bombay Stock Exchange in India, and as VP and Head, Corporate Strategy of Coca-Cola (KO).Global operations management experience having led key divisions around the globe for Coca-Cola and Cadbury Schweppes, including as President, Andean Division for Coca-Cola and as a board member for Cadbury’s Nigeria and South Africa operations.Serves on the boards of Bunge (BG), an agribusiness and food company (since 2018), and Smith & Nephew (SNN), a global portfolio medical technology business (since 2014).Extensive experience leading large multinational corporations gained through her tenure as CEO of India-based Britannia Industries and through over two decades serving in senior business and marketing roles around the globe for Coca-Cola and Cadbury Schweppes. | Key Qualifications  Insight into the particular financial and operational challenges of a business like Cognizant where talent is a key asset gained through her role as CFO of Towers Perrin, a global professional services company. Expertise in information security matters across diverse industries, having overseen the information security function in her roles as EVP and CFO of Inovant (part of Visa (V)) and as VP of Control and Services and President of Transamerica Business Technologies, part of Transamerica, a financial services company. Expertise in both the healthcare and financial services sectors, having served as VP and General Auditor for CIGNA (CI), a health insurance services company, and in senior leadership roles at Inovant and Transamerica, along with board service at several banks: Ally Financial (ALLY), Federal Home Loan Bank of Pittsburgh and ING Direct. Serves on the boards of Ally Financial, an internet bank (since 2015), and Cubic (CUB), a provider of systems and services to transportation and defense markets worldwide (since 2017). Accounting and auditing experience across diverse industries gained through her roles as CFO of Towers Perrin, VP and General Auditor of CIGNA, EVP and CFO of Inovant and as a partner at Arthur Andersen. |
Career Highlights ●Chief Executive Officer and Managing Director, Britannia Industries, an India-based food company (2005 – 2014) ●Managing Principal and Head of Business Strategy Practice, USA, The Zyman Group (2003 – 2005) ●Executive-level business and marketing leadership roles at The Coca-Cola Company (KO), based in the United States and Chile (1994 – 2003) –Vice President and Head, Corporate Strategy –President, Andean Division –Worldwide Marketing Director ●Senior marketing roles at Cadbury Schweppes Plc across a number of geographies, including South Africa, Nigeria, India and the U.K. (1990 - 1994) Current Public Company Boards ●Bunge Ltd. (BG), an agribusiness and food company (since 2018) ●Smith & Nephew Plc (SNN), a global portfolio medical technology business (since 2014) ●Syngene International Ltd., a research and manufacturing company listed on the National Stock Exchange (“NSE”) and Bombay Stock Exchange (“BSE”) in India (since 2017) ●CRISIL Ltd., a global analytical company providing ratings, research and risk and policy advisory services listed on the NSE and BSE (since 2014) Select Other Positions ●Member of the Board of Governors of the Indian Institute of Management (Bangalore) | Career Highlights ●Chief Financial Officer of Towers Perrin, a global professional services company (2007 – 2008) ●Vice President and General Auditor of CIGNA Corporation (CI), a health insurance services company (2005 – 2006) ●Executive Vice President and Chief Financial Officer of Inovant, LLC, the captive technology development and transaction processing company of Visa, Inc. (V) (2001 – 2004) ●Various executive positions with Transamerica Corp., a financial services company (1994 – 1999) ●16 years in public accounting, ultimately as a partner at Arthur Andersen LLP through 1994 Current Public Company Boards ●Ally Financial Inc. (ALLY), an Internet bank (since 2015) ●Cubic Corporation (CUB), a provider of systems and services to transportation and defense markets worldwide (since 2017) Select Past Director Positions ●Federal Home Loan Bank of Pittsburgh, a private government-sponsored enterprise (2011 – 2014) ●Heartland Payment Systems, Inc., a provider of payment processing services (2012 – 2016) ●ING Direct, an Internet bank (2007 – 2008) |
Education ●B.A., University of Delhi, India ●M.B.A., Jamnalal Bajaj Institute of Management Studies in India | Education ●B.B.A., Stetson University ●M.B.A., Harvard Business School ●M.L.A., Stanford University | Certifications ●CPA in Florida ●Carnegie Mellon University NACD certificate in cybersecurity |
| Key Qualifications | |||||||
| Public Company Leadership | | Security | | Public Company Governance | ||
| Technology and Consulting Services | | Regulated Industries | | International Business Development | ||
| Talent Management | | Operations Management | | Finance, Accounting and Risk Management | ||
2020 PROXY STATEMENT 11
| Archana Deskus | John M. Dineen | |||||||
| Chief Information Officer of Intel |  | Former President and CEO of GE Healthcare |  | |||||
| Director Since 2020 Age54 Independent | Birthplace USA  | Director Since 2017 Age57 Independent | Committees | Birthplace USA  | ||||
Key Qualifications  Extensive experience as a senior leader of large, global technology companies gained through her CIO roles at companies including Intel (INTC), Hewlett-Packard Enterprise (HPE), Baker Hughes, Ingersoll Rand (IR), Timex and North American HVAC (part of Carrier Corporation (CARR)). Broad expertise across diverse industries in the information security space gained through her CIO roles at global companies in the technology, industrials, energy and consumer products industries, including Intel, Hewlett-Packard Enterprise, Baker Hughes, Ingersoll Rand, Timex and North America HVAC. Serves on the board of East West Bancorp (EWBC), the holding company for East West Bank, the largest independent bank in Southern California (since 2019). Extensive experience setting and leading technology strategy for large, global companies as CIO for Intel, Hewlett-Packard Enterprise, Baker Hughes, Ingersoll Rand, Timex and North America HVAC. | Key Qualifications  Broad-based experience managing several key business divisions of General Electric (GE), at the time a Fortune 20, NYSE-listed, global digital industrial company. Most recently, he was President and CEO of London-based GE Healthcare, a then $18 billion annual revenue enterprise with over 50,000 employees around the world. He was previously CEO of GE Transportation and President of GE Plastics. Expertise in the healthcare sector, having served as President and CEO of GE Healthcare, a leading provider of medical imaging, diagnostics and other health information technology. Diverse operating experience in healthcare, several other key industries and various geographies we serve from his background in operating executive roles at General Electric, including as President and CEO of GE Healthcare, CEO of GE Transportation and President of GE Plastics. Serves on the board of Syneos Health (SYNH), a biopharmaceutical solutions organization (since 2018). Valuable global expansion insight from having helped strengthen General Electric’s international reach during his 28 years in leadership roles in several GE industries around the world, including as President and CEO of London-based GE Healthcare and several international management roles based in Asia and Europe. |
Career Highlights ●Senior Vice President, Chief Information Officer, Intel Corporation (INTC), a technology company (since January 2020) ●Senior Vice President, Chief Information Officer, Hewlett-Packard Enterprise Company (HPE), an information technology company (2017 – 2020) ●Vice President, Chief Information Officer, Baker Hughes Incorporated, an oilfield services company acquired by General Electric in 2017 (2013 – 2017) ●Vice President, Chief Information Officer, Ingersoll Rand Inc. (IR), an industrial manufacturing company (2011 – 2012) ●Vice President, Chief Information Officer, Timex Group USA, Inc., a watch manufacturing company (2006 – 2011) ●Vice President, Chief Information Officer, North America HVAC, Carrier Corporation (CARR), a heating, air-conditioning and refrigeration solutions company (2003 – 2006) Current Public Company Boards ●East West Bancorp, Inc. (EWBC), the holding company for East West Bank, the largest independent bank in Southern California (since 2019) –Also on the board of East West Bank Select Other Past Positions ●Customer advisory board member for IBM Global Technology Services (2016 - 2017) ●Board member for the Junior Achievement of Southeast Texas (2014 - 2017) ●Advisory board member for the Data Science Institute of the University of Houston (2018 - 2020) | Career Highlights ●Operating Advisor of Clayton, Dubilier & Rice LLC, an investment firm (since 2015) ●Executive positions with 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) –Other leadership positions (1986 – 2005) Current Public Company Boards ●Syneos Health, Inc. (SYNH), a biopharmaceutical solutions organization (since 2018) Select Past Director Positions ●Merrimack Pharmaceuticals, Inc. (MACK), a pharmaceutical company specializing in the development of drugs for the treatment of cancer (2015 – 2019) |
Education ●B.S., Boston University. ●M.B.A., Rensselaer Polytechnic Institute | Education ●B.S., University of Vermont |
| Key | Committees | |||
| A | Audit Committee | C | Compensation Committee | |
| F | Finance Committee | G | Governance Committee | |
| CHAIR | Committee Chair | + | Audit Committee Financial Expert | |
12 COGNIZANT
| John N. Fox, Jr. | Brian Humphries | |||||||
| Former Vice Chairman of Deloitte & Touche and Global Director, Strategic Clients of Deloitte Consulting |  | CEO of Cognizant |  | |||||
| Director Since 2007 Age77 Independent | Committees | Birthplace USA  | Director Since 2019 Age46 | Birthplace Ireland  | ||||
Key Qualifications  Over 30 years of experience serving clients as a senior executive of Deloitte Consulting, a global consulting firm, most recently as Vice Chairman of Deloitte & Touche and Global Director, Strategic Clients of Deloitte Consulting. Insight into the challenges of talent management across a large professional services organization gained from his many years as a senior leader at Deloitte. Insight into the cybersecurity space from having served for over a decade as a director of OneSpan (OSPN) (formerly VASCO Data Security International), a cybersecurity firm providing authentication, antifraud and e-signature services. Serves on the board of OneSpan (OSPN) (since 2005). Valuable global management expertise, having served as Global Director, Strategic Clients of Deloitte Consulting. | Key Qualifications  Extensive senior leadership experience at public companies in the technology sector, having served as CEO, Vodafone Business, for Vodafone Group (VOD), one of the world’s largest telecommunications companies, and in various senior roles for leading technology companies Dell Technologies (DELL) and Hewlett-Packard (HPQ). Leadership positions at some of the world’s most well-known, international technology companies, including CEO, Vodafone Business, President and COO, Infrastructure Solutions Group and President, Global Enterprise Solutions at Dell and SVP, Emerging Markets and SVP, Strategy and Corporate Development at Hewlett-Packard. Operations management experience from having served as CEO of Vodafone Business and as President and COO, Infrastructure Solutions Group for Dell.Significant experience managing global enterprises through his executive leadership roles with Vodafone Group and Dell, where he oversaw key business divisions with geographically diverse operations, such as Vodafone Business and Dell’s Infrastructure Solutions Group and Global Enterprise Solutions, and experience developing business in emerging markets through his roles with Dell and Hewlett-Packard, including as VP and General Manager, EMEA Enterprise Solutions for Dell, and SVP, Emerging Markets for Hewlett-Packard. |
Career Highlights ●Vice Chairman of Deloitte & Touche LLP, a global professional services firm, and Global Director, Strategic Clients of Deloitte Consulting (1998 – 2003) ●Member of Deloitte Touche Tohmatsu Board of Directors and the board’s Governance (Executive) Committee (1998 – 2003) ●Various senior positions with Deloitte Consulting (1968 – 2003) Current Public Company Boards ●OneSpan Inc. (OSPN) (formerly VASCO Data Security International, Inc.), a cybersecurity firm providing authentication, antifraud and e-signature services (since 2005) Select Other Positions ●Emeritus Trustee for Steppenwolf Theatre Company ●Trustee for Wabash College | Career Highlights ●Chief Executive Officer, Cognizant (since 2019) ●Chief Executive Officer, Vodafone Business (2017 – 2019) for Vodafone Group plc (VOD), one of the world’s largest telecommunications companies –Vodafone Business encompassed business-to-business fixed and mobile customers –Also led Vodafone’s Internet of Things (IoT) business, Cloud & Security and Carrier Services ●Executive positions at Dell Technologies Inc. (DELL), a leading technology company –President and Chief Operating Officer, Infrastructure Solutions Group (2016 – 2017) –President, Global Enterprise Solutions (2014 – 2016) –Vice President and General Manager, EMEA Enterprise Solutions (2013 – 2014) ●Senior positions at Hewlett-Packard (now HP Inc.) (HPQ), a leading technology company –Senior Vice President, Emerging Markets (2011 – 2013) –Senior Vice President, Strategy and Corporate Development (2008 – 2011) ●Various senior finance, investor relations and internal audit positions at technology companies Compaq Computer Corporation and Digital Equipment Corporation |
Education ●B.A., Wabash College ●M.B.A., University of Michigan | Education ●B.A., University of Ulster, Northern Ireland |
| Key Qualifications | |||||||
| Public Company Leadership | | Security | | Public Company Governance | ||
| Technology and Consulting Services | | Regulated Industries | | International Business Development | ||
| Talent Management | | Operations Management | | Finance, Accounting and Risk Management | ||
2020 PROXY STATEMENT 13
| Leo S. Mackay, Jr. | Michael Patsalos-Fox | Chairman | ||||||
| SVP, Ethics and Enterprise Assurance of Lockheed Martin |  | Former CEO of Stroz Friedberg and Former Chairman, the Americas of McKinsey & Company |  | |||||
| Director Since 2012 Age58 Independent | Committees | Birthplace USA  | Director Since 2012 Age67 Independent | Committees | Birthplace Cyprus  | |||
Key Qualifications Technology consulting experience specific to the healthcare industry, having served as COO of ACS State Healthcare (now part of Conduent), an information technology and business process outsourcing (“IT/BPO”) services company in the healthcare space.Over a decade of experience in the security sector as a senior executive for Lockheed Martin (LMT), a global security and aerospace company, where he currently serves as SVP, Ethics and Enterprise Assurance.Expertise in the government contracting space, having served in several leadership roles at Lockheed Martin, as well as expertise in the healthcare sector, having served as COO for ACS State Healthcare.Operating experience from having served as Deputy Secretary and COO of the U.S. Department of Veterans Affairs and President of Integrated Coast Guard Systems, a joint venture between global security and aerospace companies Lockheed Martin and Northrop Grumman (NOC).Auditing and compliance expertise acquired through his role as Chief Audit Executive for Lockheed Martin and his other senior roles at Lockheed Martin relating to internal audit, ethics and enterprise assurance. | Key Qualifications Decades of experience counseling clients in the technology and consulting space gained from his 32-year tenure with McKinsey & Company, a global management consulting company, where he served in various senior roles, most recently as Chairman, the Americas.Perspective on managing a global professional services business from his decades of experience in senior leadership at McKinsey & Company.Expertise and insight in the cybersecurity space from his experience as CEO of Stroz Friedberg, a global investigation and cybersecurity firm.Extensive experience developing a technology consulting business from his tenure at McKinsey & Company, during which time he led the European Telecoms practice and the firm’s new business growth opportunities around data, analytics and software, among his many senior leadership roles. |
Career Highlights ●Executive positions at Lockheed Martin Corporation (LMT), a 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) ●President, Integrated Coast Guard Systems LLC, a joint venture between Lockheed Martin and Northrop Grumman Corporation (NOC) (2005 – 2007) –Vice President and General Manager, Coast Guard Systems, Lockheed Martin’s entity in the joint venture ●Chief Operations Officer of ACS State Healthcare LLC (now part of Conduent), an IT/BPO services company in the healthcare space (2003 – 2005) ●Deputy Secretary and Chief Operating Officer of the United States Department of Veterans Affairs (2001 – 2003) ●Various positions with Bell Helicopter, a helicopter and tiltrotor craft manufacturer (1997 – 2001) Select Other Positions ●Director of Lockheed Martin Ventures ●Director of USAA Federal Savings Bank Select Past Director Positions ●Chairman of the Board of Visitors of the Graduate School of Public Affairs at the University of Maryland ●Center for a New American Security | Career Highlights ●Chairman and Chief Executive Officer of Vidyo, a cloud-based video conferencing services company (2017 – 2019) ●Chief Executive Officer of Stroz Friedberg, a global investigation and cybersecurity firm (2013 – 2017) ●Senior Partner and various other positions with McKinsey & Company, a global management consulting company (1981 – 2013) –Board of Directors (1998 – 2010) –Chairman, the Americas (2003 – 2009) –Member of the Operating Committee –Managing Partner of the New York and New Jersey offices, North American Corporate Finance and Strategy practice and European Telecoms practice –Leader of new business growth opportunities around data, analytics and software Select Other Positions ●Chairman of the Board of MIO Partners, Inc., an investment subsidiary of McKinsey & Company |
Education ●B.S., United States Naval Academy ●M.P.P., Harvard University ●Ph.D., Harvard University | Education ●B.S., University of Sydney ●M.B.A., International Institute for Management Development, Lausanne, Switzerland |
| Key | Committees | |||
| A | Audit Committee | C | Compensation Committee | |
| F | Finance Committee | G | Governance Committee | |
| CHAIR | Committee Chair | + | Audit Committee Financial Expert | |
14 COGNIZANT
| Joseph M. Velli | Sandra S. Wijnberg | |||||||
| Former Senior EVP of The Bank of New York |  | Former Partner, Aquiline Holdings |  | |||||
| Director Since 2017 Age62 Independent | Committees | Birthplace USA  | Director Since 2019 Age63 Independent | Committees | Birthplace USA  | |||
Key Qualifications Significant experience in creating, building and leading large-scale technology, processing and software platform businesses as a Senior EVP for The Bank of New York (now BNY Mellon) (BK), a Fortune 200, NYSE-listed financial services institution, and as CEO of Convergex Group, a provider of software platforms and technology-enabled brokerage services.Experience in creating, building and leading large-scale technology, processing and software platform businesses as a Senior EVP for The Bank of New York and as CEO of Convergex Group.Expertise in the financial services industry gained through his decades of senior leadership experience with The Bank of New York.Operating experience specific to the financial services industry, having led several key business lines for The Bank of New York, including heading Global Issuer Services, Global Liquidity Services, Pension and 401(k) Services, Consumer and Retail Banking, Correspondent Clearing and Securities Services.Serves on the board of Paychex (PAYX), a provider of payroll, human resource and benefits outsourcing services (since 2007).Expertise managing large, global enterprises gained through his senior leadership roles at The Bank of New York. | Key Qualifications A wealth of experience managing a technology and consulting company gained through her role as CFO of Marsh & McLennan Companies (MMC), a global professional services company.Experience running a large, global professional services business from her role as CFO at Marsh & McLennan Companies.Expertise in the insurance and investment management sectors, having served as CFO of Marsh & McLennan Companies, and expertise with registered investment company regulations, having served in executive and advisory capacities for Aquiline Holdings, a registered investment advisory firm.Serves on the boards of T. Rowe Price Group (TROW), a global asset management firm (since 2016), and Automatic Data Processing (ADP), a provider of human resources management software and services (since 2016).Expertise managing large, global enterprises gained through her roles as CFO of Marsh & McLennan Companies and interim CFO of YUM! Brands, a global operator and franchisor of quick service restaurants.Finance, accounting and risk management expertise having served as CFO of Marsh & McLennan Companies, a leading professional services firm in the areas of risk, strategy and people, and interim CFO of YUM! Brands. |
Career Highlights ●Advisory Council Member of Lovell Minnick Partners, LLC, a private equity firm (since 2016) ●Chairman and CEO of Convergex Group, LLC, a provider of software platforms and technology-enabled brokerage services (2006 – 2013) ●Executive positions with The Bank of New York (now BNY Mellon) (BK), a Fortune 200, NYSE-listed financial services institution –Senior Executive Vice President and member of the Senior Policy Committee (1998 – 2006) –Executive Vice President (1992 – 1998) –Other leadership positions (1984 – 1992) Current Public Company Boards ●Computershare Limited, a global provider of corporate trust, stock transfer, employee share plan and mortgage servicing services listed on the Australian Securities Exchange (since 2014) ●Paychex, Inc. (PAYX), a provider of payroll, human resource and benefits outsourcing services (since 2007) Select Past Director Positions ●E*Trade Financial Corporation | Career Highlights ●Deputy Head of Mission, Jerusalem, Office of the Quartet, recruited by the U.S. Department of State to advance the Quartet’s Palestinian economic development mandate (2014 – 2016) ●Executive and advisory roles with Aquiline Holdings, LLC, a registered investment advisory firm –Executive Advisor (2015 – 2019) –Partner, Chief Administrative Officer (2007 – 2014) ●Senior Vice President and Chief Financial Officer of Marsh & McLennan Companies, Inc. (MMC), a global professional services company (2000 – 2006) ●Executive-level finance roles in the food and beverages industry –Senior Vice President, Treasurer and ultimately interim Chief Financial Officer of Yum! Brands, Inc., a global operator and franchisor of quick service restaurants (1997 – 1999) –Chief Financial Officer, KFC Corporation at PepsiCo, Inc. (PEP) (1996 – 1997) –Vice President and Assistant Treasurer, PepsiCo, Inc. (1994 – 1996) Current Public Company Boards ●T. Rowe Price Group, Inc. (TROW), a global asset management firm (since 2016) ●Automatic Data Processing, Inc. (ADP), a provider of human resources management software and services (since 2016) Select Past Director Positions ●Tyco International, Inc. (now Johnson Controls International plc) (2003 – 2016) ●Tyco Electronics Ltd. (now TE Connectivity Ltd.) (2007 – 2009) |
Education ●B.A., William Paterson University ●M.B.A., Fairleigh Dickinson University | Education ●B.A., University of California, Los Angeles ●M.B.A., University of Southern California, Marshall School of Business |
| Key Qualifications | |||||||
| Public Company Leadership | | Security | | Public Company Governance | ||
| Technology and Consulting Services | | Regulated Industries | | International Business Development | ||
| Talent Management | | Operations Management | | Finance, Accounting and Risk Management | ||
2020 PROXY STATEMENT 15
Audit Committee Number of meetings in 2019:9 | Chair | Other Members |
Key Responsibilities
Oversight of: ●The contents and integrity of the company’s financial information reported to the public and the adequacy of the company’s internal controls ●The appointment, qualifications, independence and performance of the company’s independent registered public accounting firm ●The performance of the company’s internal audit and ethics and compliance functions ●The review and evaluation of the company’s enterprise risk management program ●The review and evaluation of the company’s management of third party and contractual risks | 2020 changes ✚Added responsibilities of assisting the board with respect to the review and evaluation of the company’s management of security (including cybersecurity) and data privacy risks (moved from Governance Committee) ✚Added responsibility of reviewing and evaluating the company’s tax planning and strategy (moved from Finance Committee) Notable Recent Activities ●Oversight of our U.S. Foreign Corrupt Practices Act matter, which we resolved with the U.S. Department of Justice and U.S. Securities and Exchange Commission (“SEC”) in February 2019 | Additional Independence Requirements All members of the Audit Committee ●May not accept any direct or indirect consulting, advisory or other compensatory fee from the ●May not be affiliated with the
|
Finance and Strategy Committee Number of meetings in 2019:5 | Chair | Other Members |
Key Responsibilities In 2019 Oversight of certain financial and operations matters, including: ●Operating margins ●Capital structure and allocation ●Dividend policies and stock repurchase programs ●Talent supply chain ●Business continuity planning ●Scalability of corporate processes and systems ●Assisting the board with respect to M&A program strategy and execution ●Tax strategy and planning ●Treasury matters, including hedging strategies | 2020 changes ✚Added responsibility of assisting the board with respect to the development of the company’s corporate plans, strategies and objectives −Tax strategy and planning responsibility moved to the Audit Committee | Notable Recent Activities ●Oversight of M&A program, with $695 million in capital deployed for acquisitions in 2019 (seepage 3) ●Oversight of capital allocation program, with $2.2 billion in share repurchases undertaken in 2019 (seepage 3) and an increase in the company’s quarterly dividend implemented in Q1 2020 |
16 COGNIZANT
Management Development and Compensation Committee Number of meetings in 2019:11 | Chair | Other Members |
Key Responsibilities In 2019 and 2020 Oversight of: ●The evaluation and compensation of the CEO and other executive officers ●Director compensation recommendations to the board ●Incentive compensation arrangements (including an annual review of whether any such compensation arrangements are reasonably likely to have a material adverse effect on the company) ●Equity-based compensation plans ●Employment and severance agreements and other arrangements with executive officers ●The company’s management development program for senior executives ●Assessment of shareholder “Say-on-Pay” and “Say-on-Pay” frequency votes ●The company’s stock ownership guidelines and clawback policy | Notable Recent Activities ●Undertook a detailed review of our executive compensation program and approved the changes for 2020 described inpages 35 to38 ●Revised peer group for 2020 ●Developed and recommended to the board the new retirement policy adopted by the board in March 2020 (seepage 46) ●Annual management development review undertaken with external leadership consultancy | Additional Independence Requirements All members of the Compensation Committee satisfy the Nasdaq ●All sources of compensation of the director, including any consulting, advisory or other compensation paid by the ●Whether the Compensation Committee member is affiliated with the Compensation Committee Interlocks and Insider Participation During the year ended December 31, 2019, Messrs. Fox, Mackay, Patsalos-Fox and Velli and Mr. John Klein, who served on our board through March 1, 2020, served on the Compensation Committee. No member of the Compensation Committee was or is a current or former officer or employee of the company or any of its subsidiaries. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of Cognizant’s board or Compensation Committee. |
Director Recruitment and Selection Process
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In 2019 Oversight of: ●Nominations to the board and board committees, including evaluation of any shareholder nominees ●Director independence recommendations to the board ●The company’s corporate governance structure and practices, including its corporate governance guidelines ●Succession planning for the CEO and other senior executives ●Public affairs and corporate responsibility matters, including environmental, social and governance matters | ●Certain enterprise risks: −Security (including cybersecurity) risks −Data privacy risks −Geo-political and immigration risks −Legal and regulatory risks −Intellectual property risks ●Annual board self-evaluation process 2020 changes −Oversight of security (including cybersecurity) and data privacy risks moved to the Audit Committee | Notable Recent Activities ●Led CEO succession planning to recruit and hire our current CEO, Mr. Humphries, who was hired in late 2018 and joined Cognizant on April 1, 2019 ●Recruited three new female directors since the 2019 annual meeting (Vinita Bali, Archana Deskus and Sandra Wijnberg) ●Recommended new political activity policy to the board following shareholder political spend proposal that received majority support (seepage 19 ●Oversaw 2019 board and committee self-evaluation process (seepage 7) |
In 2016 and 2017, the Company engaged a third party director search firm to assist the Governance Committee in identifying and evaluating director candidates. In February 2017, the Company and Elliott Management agreed to each identify and propose one new independent director for election to the Board, subject to the consentEach of the other, prior toboard’s four standing committees — the filing of the proxy statement for the 2017 Annual Meeting. Ms. AtkinsAudit Committee, Finance and Mr. Dineen were elected to the Board in April 2017 through this process. As part of the February 2017 agreement, the CompanyStrategy Committee (“Finance Committee”), Management Development and Elliott also agreedCompensation Committee (“Compensation Committee”) and Nominating, Governance and Public Affairs Committee (“Governance Committee”) — operates under a charter that the Company would propose one additional new independent director for election to the Board, subject to the consent of Elliott, prior to the filing of the proxy statement for the 2018 Annual Meeting. Mr. Velli was identifiedhas been approved by the Company, consented to by Elliottboard and joined the Board in December 2017.
14 Cognizant Technology Solutions Corporation
Important Factors in Assessing Board Composition
The Governance Committee strives to maintain an independent board with broad and diverse experience and judgment that is committed to representing the long-term interests of our stockholders. The committee considers a wide range of factors when selecting and recruiting director candidates, including:
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2018 Proxy Statement 15
As part of the Governance Committee’s annual self-assessment process, it assesses its performance as to all aspects of the selection and nomination process for directors, including diversity.
Basedavailable on the experience, qualifications, attributes and skills of our Director nominees as highlighted herein, our Governance Committee has concluded that such Director nominees should continue to serve on the Board.
Majority Voting Standard in Director Elections
Our By-laws provide that the voting standard for the election of directors in uncontested elections is a majority of votes cast. Any Director who does not receive a majority of the votes cast for their election must tender an irrevocable resignation that will become effective upon acceptance by the Board. The Governance Committee will recommend to the Board whether to accept the Director’s resignation within 90 days following the certification of the stockholder vote. The Board will promptly disclose whether it has accepted or rejected the Director’s resignation, and the reasons for its decision, in a Form 8-K. The Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a Director’s resignation. Our Corporate Governance Guidelines contain additional specifics regarding our Director resignation policy.company’s website. See “Helpful Resources” onpage 74.
How Stockholders Can Propose Director Candidates
Recommendations to Governance Committee
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16 69Cognizant Technology Solutions Corporation.
2020 PROXY STATEMENT 17
Board RoleBeyond the Boardroom
Shareholder Engagement
Our board values the input of our shareholders. It receives quarterly or more frequent updates on shareholder communications and is directly involved in responding to communications where appropriate.
Fall 2019 Engagement
In the fall of 2019, we commenced a formal governance-focused shareholder engagement process to solicit the input of shareholders on a more proactive basis.
 | ||||||
Outreach | Meetings | |||||
Attendance One or more of the following: | Topics Discussed At each meeting, notable topics discussed included: | |||||
Also in attendance was a representative from each of the company’s legal and investor relations functions. Format | Business Strategy | Executive Compensation | Board Composition and Refreshment | Sustainability | ||
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Feedback
INTEGRATED INTO 2020 PLANNING
We solicited feedback from our shareholders during these meetings. Much of the feedback we received related to the structure of our executive compensation program. We took this feedback into account in the design of our 2020 executive compensation program, which incorporates a number of the suggested changes.
Shareholder Feedback on Compensation Program | Changes We Made in 2020 | ||
Compensation design needs to align with strategy | For both of our performance-based compensation components (annual cash incentive (“ACI”) and performance stock units (“PSUs”)), we increased the weighting of revenue as compared to adjusted income from operations (in the ACI) and adjusted diluted earnings per share (in the PSUs) to reflect our strategic emphasis on revenue growth. Seepages 35and38. | ||
A PSU performance measurement period covering three years is market standard and preferable | We changed our PSU design to include a performance measurement period covering three years instead of two. Seepage 38. | ||
Adding a total shareholder return (“TSR”) metric would help align management and shareholder interests, and relative TSR is preferable to absolute TSR | We adopted a PSU design for all our executive officers that includes a relative TSR metric (25% weighting) in addition to revenue (50% weighting) and adjusted diluted earnings per share (25% weighting). We did not utilize absolute TSR as we did for the PSUs awarded our current CEO upon his joining the company in 2019. Seepage 38. |
18 COGNIZANT
Employee Engagement
1-on-1 Meetings
At our quarterly in-person board meetings, our directors engage in 1-on-1 meetings, typically over breakfast or lunch, with members of management and high performing employees to better understand our day-to-day operations and challenges.
Travel to India
As 2/3rdsof our employees and the core of our delivery operations are located in India, our board travels to India every other year to meet with employees, tour facilities and engage in a more in-depth review of our people and operations in India.
Keeping Up-to-Date with Trends and Legal Developments
| ● | The company maintains a subscription for board members to the National Association of Corporate Directors (“NACD”), a recognized authority focused on advancing board leadership and establishing leading boardroom practices. Our board members frequently attend programs sponsored by the NACD as well as events and summits sponsored by various universities, accounting firms, law firms and other governance firms, and speak on various topics at these events. |
| ● | Certain of our board members are actively involved in shaping policy around public company governance. For example, Ms. Breakiron-Evans, the chair of our Audit Committee, sits on the NACD Audit Committee Chairs Advisory Board, a group of Fortune 500 audit committee chairs that meets with Public Company Accounting Oversight Board (“PCAOB “) members, the SEC Chief Accountant and the head of the Center for Audit Quality. |
| ● | Our board members receive periodic updates on corporate governance and executive compensation developments, accounting standards changes and various legal and other topics from internal and external counsel, our independent accounting firm and third-party advisors. |
Responses to 2019 Shareholder Proposals
The following sets out the shareholder proposals received for the 2019 annual meeting of shareholders (both of which were advisory to our board), the for / against vote split indicating the level of shareholder support and the actions taken by our board with respect to the matter voted upon.
| PROPOSAL 1 | |
Political Spend Policies and Disclosure
Proposal requested increased company disclosure regarding:
53.6% | |
46.4% | |
New Policy and Disclosures Adopted
Our board adopted a new political activity policy that sets out guidelines for the making and disclosing of political contributions (including those to trade associations) and the oversight of all political activity by the company. Under the policy, the Governance Committee is responsible for:
The committee also approves the company’s political spend report that is posted to the company’s website semi-annually. Information regarding the policy and the company’s political spend reports can be found on our public policy webpage. See “Helpful Resources” onpage 69.
| PROPOSAL 2 | |
Separate Chairman and CEO
Proposal requested that our board adopt a policy, and amend our governing documents as necessary, to require that the chairman of the board, whenever possible, be an independent member of the board.
35.8% | |
64.2% | |
No Action
Our board continues to believe that it is in the best interests of shareholders that flexibility be maintained with respect to this matter. Our board’s commitment to independence is evidenced through its historic practice of having an independent board chair for the past 16 years and the company’s corporate governance guidelines already providing for a lead independent director were our board to ever appoint a non-independent board chair.
2020 PROXY STATEMENT 19
OBJECTIVE Maintain an effective risk oversight process to enable the board to monitor, evaluate and take action with respect to the company’s most important business risks. |
HOW WE GET THERE Management reporting of key enterprise risks to the board and its committees on a regular basis and distribution of oversight among the board and its committees to ensure appropriate time and attention is devoted to each risk. |
Management |
Management is responsible for the day-to-day management of enterprise risks, including through management of the company’s enterprise risk management (“ERM”) program. As part of the ERM program and committee oversight responsibilities under the committee charters, management provides regular updates to the board and relevant committees. |
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Our business faces various risks, including strategic, financial, legal, regulatory, operational, accounting, data / cyber security and reputational risks. Board
The Boardboard has primary responsibility for overseeing risk management and exercises its oversight responsibility for risk management both directly and through its committees. We believe this divisionThe board is directly responsible for certain risks and addresses other risks referred to it by its committees. The board believes that its role in the oversight of responsibilities optimizes the Board’s ability to addresscompany’s risks incomplements our current board leadership structure, with a focused and proactive manner, assess interrelationships among the various risks we face and make informed cost-benefit decisions. In addition, we believe this divisionstrong independent chair, as well as our committee structure, as it allows our independent Directors, through our fully independent Audit Committee, Compensation Committee and Governance Committee and our majority independent Financial Policy Committee,four standing board committees to exercise effectiveplay an active role in the oversight of the actions of management in identifying risks and implementing effective risk management policies and controls. Management provides regular
| 1 | The risks listed include those formally monitored at a board or committee level as part of the company’s ERM program or pursuant to our committee charters. The risks listed do not represent an exhaustive list of all enterprise risks that we face or that are considered and addressed from time to time by the board and its committees. For more information on risks that affect our business, please see our most recent Annual Report on Form 10-K and other filings we make with the SEC. |
Significant Enterprise Risks1 |
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| Organizational culture and change management |  | B | |||||||||
Corporate plans, strategies and objectives (joint withF) | |||||||||||
Security (including cybersecurity) (joint withA) | |||||||||||
| Accounting and internal controls |   |  | A | ||||||||
| Third party and contractual risks | |||||||||||
| Compliance and ethics program | |||||||||||
Security (including cybersecurity) (joint withB) | |||||||||||
| Data privacy | |||||||||||
| Tax planning and strategy | |||||||||||
Leadership pipeline Compensation policies and practices |  | C | |||||||||
Corporate plans, strategies and objectives (joint withB) |  | F | |||||||||
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| Dividend policies and stock repurchase programs | |||||||||||
| Talent supply chain | |||||||||||
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| Treasury matters, including hedging strategies | |||||||||||
| Succession planning |  | G | |||||||||
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| Sustainability | |||||||||||
| Key | B | Board | A | Audit Committee | Compensation Committee | Finance Committee | G | Governance Committee |
20 COGNIZANT
We are committed to fostering a sustainable future for our company and the communities we serve. Our sustainability initiatives are focused on the following |
Running a Responsible Business |
● |
Supporting Our People |
●Talent Development ● ●Diversity and Inclusion ●Employee Wellness |
Supporting Our Communities |
●Corporate Foundations ●Volunteering ●Corporate Philanthropy |
“The Cognizant community brings together our employees, clients, prospects, business partners, and investors, along with |
-Brian Humphries,Performing and Leading with Purpose (August 27, 2019) |
Running a Responsible Business
Good Corporate Governance
BOARD AND MANAGEMENT OVERSIGHT
Our board takes an active role in oversight of our ethics and compliance, risk management and sustainability initiatives, and our management promotes and monitors implementation of such initiatives and provides regular progress reports to the board. Each of the board’s committees is involved and regularly reports to the board. See “Risk Oversight” onpage 20.
ETHICS AND COMPLIANCE
Our commitment to customers, employees, shareholders and society is to act with integrity at all times. This guides everything we do — the way we serve our clients and the work we do to help them build better businesses. We believe it is critical to maintain the highest ethical standards. Our code of ethics applies to all of our directors, officers and employees and promotes the following cultural values:
| Transparency | Collaboration | Passion |
| Customer Focus | Empowerment | Integrity |
Our code of ethics is available on our website. See “Helpful Resources” onpage 69. We post on our website all disclosures that are required by law or Nasdaq rules concerning any amendments to, or waivers from, any provision of our code of ethics. In order to foster a culture of ethics and compliance, we conduct annual trainings for employees on regulatory compliance topics such as global data privacy and anti-bribery. We also make a compliance hotline available to our employees. The hotline is serviced by a third party provider that is available by phone or online 24 hours a day, 7 days a week to help ensure any compliance concerns can be reported and addressed in a timely and appropriate manner.
| KEY GOVERNANCE PRACTICES | |||||||||||
| Shareholder Rights and Engagement | Board of Directors | ||||||||||
 Annual director elections / no classified boardProxy accessShareholder right to call a special meetingAnnual vote to ratify selection of independent registered public accounting firm | Majority of Regular executive sessions of independent directorsA director who experiences a material change in job responsibilities (other than retirement) is required to offer to resignAnnual review of skills, expertise, diversity and | ||||||||||
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2018 Proxy Statement2020 PROXY STATEMENT 1721
Committees of the BoardSupporting Our People
Talent Development
As a professional services company, our continued success depends on our ability to attract, develop and retain top talent. The Board has four standingboard is actively involved in overseeing our talent management and development as an integral part of its oversight of our business and strategy. Our focus on talent management and development stretches from the board level to our over 290,000 associates through programs overseen by management and reported on to the board and its committees — the Audit Committee, Compensation Committee, Financial Policy Committeethat are designed to identify, train and Governance Committee — each of which operates under a charter that has been approved by the Board. See “Helpful Resources” on page 74.grow future leaders.
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● ● | ●CEO, CFO and Chief People Officer, as appropriate, participate in and assist the | ||||
SENIOR LEADERSHIP | |||||
●Board annually reviews senior leadership (~100 top senior leaders), including hiring, diversity, development and ● | ●Executive Committee (consisting of our ● | ||||
LEADERSHIP PIPELINE AND PROFESSIONALS | |||||
●Board receives updates on a broad range of topics, including hiring, development and ● | ●Executive Committee includes talent management and development as an agenda item at its monthly meetings, which includes deep dives on talent of the director level and above, managed and unmanaged attrition, areas of talent for investment, performance management and meritocracy, diversity and inclusion and driving high performing teams. ● ● | ||||
SPOTLIGHT ON LEADERSHIP IN THE DIGITAL AGE Cognizant + MIT Study | In a first ever thought leadership piece of its kind, Cognizant, in conjunction with MIT Sloan Management Review, released a study on leadership in the | |
 | ||
1822 Cognizant Technology Solutions CorporationCOGNIZANT
Training and Education
PACE WITH THE DIGITAL ERA AND TO WIN IN FOUR DIGITAL BATTLEGROUNDS | |||
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LEADERSHIP SKILLS | We offer targeted development programs in key priority areas intended to advance leadership capabilities in our associates. In 2019 we invested in leadership development for over 6,400 associates at senior manager level or above to strengthen and accelerate our leadership pipeline. Several programs for digital leadership were rolled out in the last couple of years for our senior leaders covering close to 1,000 leaders. In 2019 we also launched GMAP for approximately 100 top senior leaders as noted under “Talent Development” on page 22. To support our leaders in winning the war for talent in the digital age, we rolled out a talent summit for our global delivery leadership team and their business partners in the human resources department. | ||
Diversity and Inclusion
With a sharpened focus on accelerating gender diversity globally in our leadership pipeline, in 2020 Cognizant pledged to put 1,000 high performing women in leadership roles through Propel by the end of 2021. |
One of the ways we are elevating the experience of work for women is through our global Women Empowered (“WE”) program. WE is committed to developing more women leaders at all levels of our company, providing career growth and leadership development opportunities, and building a community of women across all industries in business and technology. For example, our women’s global leadership development program, Propel, is designed to help shape and mobilize the careers of women in leadership roles across our organization. In 2018, as part of WE, Cognizant publicly pledged to employ at least 100,000 women around the world by 2020. This milestone was reached in the early fall of 2019, with 100,000 women in 48 countries.
We strive to provide our diverse talent with the support and tools needed to thrive through affinity groups in our organization. Cognizant EMBRACE focuses on providing a positive, supportive environment for lesbian, gay, bisexual, transgender and other (“LGBT+”) colleagues to be their authentic selves at work and creating a strong community among LGBT+ associates and allies, including by connecting with our clients’ LGBT+ networks to strengthen our client relationships. Cognizant’s African American & Latino Group fosters the success of its members through programming and initiatives that promote career development, mentoring, recruitment, retention and community building. Cognizant Veterans Network is committed to hiring and helping to prepare transitioning service members, veterans and military spouses for new jobs. We participate in national and local partnerships, job fairs, career conferences and sponsorships, and have an internal network of military employees and veterans. Cognizant Unite works to bring together people with disabilities and elevates the dialogue amongst the disabled and caregivers.
Employee Wellness
We respect our associates’ work-life balance and are committed to helping associates’ families think about their future.
| Select Wellness Benefits | ||
| Paid Parental Leave | ||
 | ||
There were 9 meetings of the Board during 2017. Each Director standing for election at the Annual Meeting attended at least 95% 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.
Our Corporate Governance Guidelines provide that Directors are expected to attend the annual meeting of stockholders. For the 2017 Annual Meeting, Mr. D’Souza acted as Chairman and all but two of the 11 then current Directors attended (participating by teleconference).
Strong Director Engagement
Average Director nominee attendance at 2017 meetings
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| Counseling and Relationship Support |  |  | |
2018 Proxy Statement2020 PROXY STATEMENT 1923
Supporting Our Communities
At Cognizant, we know that our success depends on delivering value to all of our stakeholders. Contributing to the progress and prosperity of communities across the globe through our corporate foundations and philanthropy and the volunteering of our associates, we are working to improve lives by supporting education, workforce, and health and well-being programs in many of the communities in which we do business.
Corporate Foundations
UNITED STATES | ||
Cognizant U.S. Foundation has awarded$30 millionto organizations working to educate and train the next generation of workers. | In 2018, we launched Cognizant U.S. Foundation with an initial $100 million grant to support STEM (science, technology, education and math) education and technical skills training to help communities thrive in today’s digital economy. The foundation has awarded $30 million to date to organizations working to educate and train the next generation of workers in communities across the United States. Through research, partnerships, workforce and education efforts, the foundation’s investments to date are designed to impact the lives of 30,000 people in more than 30 cities. Please visit the foundation’s website atwww.cognizantusfoundation.orgfor more information. | |
INDIA | ||
Cognizant Foundation has partnered with over270not-for-profit organizations and designed and implemented over380projects aimed at access to quality education and healthcare and improved livelihood. | Cognizant Foundation, launched in 2005, focuses on fulfilling the education, healthcare and livelihood needs of the under-privileged in India. Since its inception, the foundation has partnered with over 270 not-for-profit organizations and designed and implemented over 380 projects aimed at access to quality education and healthcare and improved livelihood. It has impacted over 3.5 million lives across India. ●Education.The foundation focuses on enabling access to quality education for students from under-served communities through scholarships for higher education, digital learning and STEM and vocational-technical education. ●Healthcare.The foundation enables access to quality healthcare for the under-privileged, with a focus on preventing avoidable blindness and promoting the health of women and children. ●Livelihood.The foundation’s initiatives in livelihood empower and enable disadvantaged youth, women and persons with disabilities for gainful employment through short-term skills training programs. Please visit the foundation’s website atwww.cognizantfoundation.orgfor more information. | |
Corporate Philanthropy The company makes additional grants through initiatives that support STEM education and technology that better the world. For example, through our Making the Future program launched in 2011, Cognizant has underwritten a variety of programs as part of the Clinton Global Initiative commitment to train and place over 1,000 “Maker Corps” members who design and implement summer Maker education programming across all 50 states, has sponsored FIRST Robotics STEM Equity Community Innovation Grants to support K-12 robotics programs, and has provided college scholarships for students interested in pursuing STEM careers. Additionally, in October 2019, we announced a $5 million grant to fund research aimed at increasing the level of sophistication of algorithms and automation that can help eliminate objectionable content on the Internet. | COVID-19 Response In April 2020, we announced an initial $10 million philanthropic commitment to support communities around the world in addressing the immediate and long-term impacts of the COVID-19 pandemic. Under this commitment, Cognizant and its U.S. and India-based foundations will provide critical resources to strengthen public health systems, education and workforce institutions, and the economic outlook of communities worldwide. |
Volunteering | ||
In 2019, over73,000of our associates across27countries contributed over600,000volunteer hours. | Launched in 2007, the Cognizant Outreach program provides an official and integrated platform for Cognizant associates to volunteer, leveraging their passion and varied professional skills to enhance the quality of education, conserve and protect the environment, participate in community welfare initiatives and deliver pro bono consulting services through their volunteering efforts. For example, Cognizant Outreach has partnered with over 200 schools in India to improve learning and infrastructural conditions, where volunteers act as adjunct faculty for approximately 100 classroom sessions every week. Since 2012, the Cognizant Outreach Scholarship program in India has supported the education of over 2,100 students based on merit, 72% of whom were women. Over 90% of the program participants are first-time graduates in their families, and most have now secured careers at companies, including Cognizant. Globally, Cognizant Outreach volunteers have conducted initiatives to help youth become STEM-confident and support environmental conservation initiatives, several paralympic sports, employability training and livelihood opportunities for people with disabilities and economically disadvantaged communities to improve quality of life. |
24 COGNIZANT
Common Stock and Total Stock-Based Holdings Table
The following table sets forth the Cognizant stock-based holdings of our directors, named executive officers for fiscal 2019 (“NEOs”), and directors and executive officers as a group as of March 31, 2020, as well as the stock-based holdings of beneficial owners of more than 5% of our common stock as of December 31, 2019. Unless otherwise indicated, the address for the individuals below is our address. Each of our directors and NEOs owns less than 1% of the total outstanding shares of our common stock.
| Common Stock | ||||||
| Directors | Stock | Options | Total | |||
| Zein Abdalla | 6,231 | 11,294 | 20,961 | |||
| Vinita Bali | - | - | 868 | |||
| Maureen Breakiron-Evans | 3,063 | 21,764 | 54,380 | |||
| Archana Deskus | - | - | 880 | |||
| John M. Dineen | - | 1,827 | 11,525 | |||
| John N. Fox, Jr. | 34,924 | 21,764 | 67,746 | |||
| Leo S. Mackay, Jr. | 18,267 | 7,797 | 34,006 | |||
| Michael Patsalos-Fox | 44,367 | 33,324 | 86,705 | |||
| Joseph M. Velli | 6,643 | - | 10,079 | |||
| Sandra S. Wijnberg | - | - | 2,827 | |||
| Total | 113,495 | 97,770 | 289,977 | |||
| Common Stock | ||||||
| Named Executive Officers | Stock | Options | Total | |||
| Brian Humphries | 28,581 | - | 337,525 | |||
| Francisco D’Souza | 150,772 | - | 150,772 | |||
| Karen McLoughlin | 69,585 | - | 237,266 | |||
| Malcolm Frank | 32,924 | - | 188,890 | |||
| DK Sinha | 62,740 | - | 153,958 | |||
| Santosh Thomas | 105,422 | - | 157,198 | |||
| Total | 450,024 | - | 1,225,609 | |||
| Current Directors and Executive Officers | Common Stock | Total | ||||
| Stock | Options | |||||
| As a group (20 people) | 503,314 | 97,770 | 1,670,323 | |||
| 5% Beneficial Owners | Common Stock | % Outstanding | ||
| BlackRock, Inc. | 50,881,436 | 9.3% | ||
| The Vanguard Group | 42,816,261 | 7.8% |
Common Stock.This column shows beneficial ownership of our common stock as calculated under SEC rules. Except to the extent noted below, each person included in the table has sole voting and investment power over the shares reported. None of the shares is pledged as security by the named person, although standard brokerage accounts may include non-negotiable provisions regarding set-offs or similar rights. TheStocksubcolumn includes shares directly or indirectly held and shares underlying RSUs that will vest within 60 days of March 31, 2020. TheOptionssubcolumn includes shares that may be acquired under stock options that are currently exercisable or will become exercisable within 60 days of March 31, 2020.
Total.This column shows the individual’s total Cognizant stock-based holdings, including securities shown in theCommon Stock column (as described above), plus non-voting interests that cannot be converted into shares of Cognizant common stock within 60 days of March 31, 2020, including, as appropriate, PSUs and RSUs.
Current Directors and Executive Officers as a Group.This table includes shares of our current directors and executive officers as of the date of this proxy statement and, as such, does not include Mr. Thomas’ shares as he was no longer an executive officer of the company after February 14, 2020. This table includes: (i) 12,012 RSUs that vest within 60 days of March 31, 2020 (Stocksubcolumn andTotal column), (ii) 800 shares of common stock over which there is shared voting and investment power by Robert Telesmanic, our Senior Vice President, Controller and Chief Accounting Officer, through family trusts or other accounts (Stocksubcolumn andTotal column), and (iii) 97,770 shares that may be acquired under stock options that are or will become exercisable within 60 days of March 31, 2020 (Optionssubcolumn andTotal column). The current directors and executive officers as a group do not own more than 1% of the total outstanding shares.
5% Beneficial Owners.This table shows shares beneficially owned by BlackRock, Inc. and affiliated entities, 55 East 52nd Street, New York, NY 10055, and The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, as follows:
| (# of shares) | BlackRock | Vanguard | ||
| Sole voting power | 43,627,774 | 817,138 | ||
| Shared voting power | 0 | 184,093 | ||
| Sole dispositive power | 50,881,436 | 41,867,612 | ||
| Shared dispositive power | 0 | 948,649 |
The information in this table is based solely on a Schedule 13G/A filed by BlackRock with the SEC on February 5, 2020 and a Schedule 13G/A filed by Vanguard with the SEC on February 12, 2020.
2020 PROXY STATEMENT 25
Discussion and Analysis
The Company usesWe use cash and stock-based compensation to attract and retain qualified individuals to serve on the Board. The Company setsboard. We set compensation for Directors who are not our employees or the employees of any of our subsidiaries (“non-employee Directors”)directors taking into account the time commitment and experience level expected of its Directors.our directors. A Directordirector who is an employee of the Company or any of its subsidiariescompany receives no cash or stock-based compensation for serving as a Director.director.
Engagement of2019 Non-Employee Director Compensation ConsultantStructure
| ANNUAL RETAINER1 | ADDITIONAL CHAIR RETAINERS1 | COMMITTEE MEETING FEES | ||
 |  |  | | $1,500 |
| 1 | Paid in advance following the annual meeting of shareholders. All amounts are in cash excluding RSUs. Directors joining mid-year receive prorated amounts. |
| 2 | Upon a director’s retirement while in good standing, the board’s intent is to utilize its discretion to accelerate the vesting of such director’s outstanding stock-based awards. |
Director Compensation vs. Peer Group
For purposes of establishing 2019 non-employee Directordirector compensation, the Compensation Committee engaged Pay Governance, LLC (“Pay Governance”), an independent executive compensation advisory firm, in 2017 to review all elements of non-employee Directordirector compensation, benchmark such compensation in relation to other comparable companies with which we compete for Boardboard talent and provide recommendations to ensure that our non-employee Directordirector compensation program remains competitive. Pay Governance benchmarked our non-employee Directordirector compensation against the same group of technology-related firms used by Pay Governance in preparing its recommendations to the Compensation Committee in determining stock-based awards for executive officers.officers for 2019. See “Compensation Committee and Engagement of Compensation Consultant” and “Peer Group and Market Data”Group” onpage 28.
Director Compensation Analysis and Changes for 201732.
The Compensation Committee considered the benchmarking data and recommendations of Pay Governance in settingrecommending to the board the cash and stock-based compensation of non-employee Directorsdirectors that became effective following the 2017 Annual Meeting.2019 annual meeting. Based on the 2019 analysis:
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| ● | Our additional annual board and committee chair retainers, provided in recognition of the increased workload and responsibilities associated with such positions, and our meeting fees were in the range of peer group practices. | ||
The additional annual Board and committee chair retainers, providedNo changes were made to certainthe compensation of the chairsour non-employee directors in recognition of the increased workload and responsibilities associated with the positions, and the meeting fees were left unchanged in 2017. Both the retainers and meeting fees were analyzed by Pay Governance and, in the case of the retainers, revised in 2016.
2017 Director Compensation Structure
| Annual Non-Employee Director Compensation1 | Additional Annual Board and Committee Chair Retainers1 | Meeting Fees for Non-Employee Directors | |||||
| Annual Cash Retainer | $90,000 | Board | $150,000 | Board Meetings | No meeting fees | ||
| RSUs | $210,000 | Audit | $25,000 | ||||
●Fair market value on grant date ●100% vesting on the first anniversary of the grant date | Compensation | $15,000 | Committee Meetings | $1,500 per meeting (excluding telephonic meetings of 30 minutes or less) | |||
| Financial Policy | — | ||||||
| Governance | $15,000 | ||||||
| Total | $300,000 | ||||||
|
Upon a Director’s retirement while in good standing, the Board’s intent is to utilize its discretion to accelerate the vesting of such Director’s outstanding stock-based awards.
20 Cognizant Technology Solutions Corporation
Director Stock Ownership Guidelines2019.
| 5x | Under our stock ownership guidelines, |
NO HEDGING, SHORT SALES, MARGIN ACCOUNTS OR PLEDGING All directors are subject to the same insider trading policies of the company that apply to employees and No hedging or speculation with respect to Cognizant No short sales of Cognizant No margin accounts with Cognizant No pledging of Cognizant See “Hedging, Short Sale, Margin Account and Pledging Prohibitions” onpage 47for additional information on these restrictions. 26 COGNIZANT Director Tables The following tables set forth certain information regarding the compensation of each of our non-employee directors who served during 2019 (excluding our former CEO, Mr. D’Souza, for whom the information is included in the executive compensation tables starting onpage 49). The tables also set forth the aggregate number of RSUs and the aggregate number of stock options held by each such non-employee director at December 31, 2019. Stock Awards.Represents the aggregate grant date fair value of RSUs granted in the 2019 fiscal year under the 2017 Incentive Award Plan approved by shareholders, determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. All directors listed except Ms. Wijnberg received an award of 3,436 RSUs with a grant date fair value of $61.10 per share.Ms. Wijnberg received an award of 2,827 RSUs with a grant date fair value of $65.95 per share. 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, 2019 (“2019 Annual Report”). Aggregate Number of Stock Awards.Includes the RSUs granted in 2019 with respect to which the settlement has been deferred for some directors, as set forth in “Deferral of Restricted Stock Units” below. Also includes deferred RSUs granted in prior years held by Ms. Breakiron-Evans (26,117), Mr. Chadwick (6,162), Mr. Dineen (6,128), Mr. Fox (7,622), Mr. Klein (14,367), Mr. Mackay, Jr. (4,506) and Mr. Patsalos-Fox (5,578) to be settled upon the director’s termination of service on the board. Deferral of Restricted Stock Units Non-employee RSUs Deferred Until Earliest to Occur of In addition, our Brian Humphries Francisco D’Souza Karen McLoughlin Malcolm Frank DK Sinha Santosh Thomas Compensation Program Objectives The Compensation Committee designed the Alignment with Corporate Strategies We set performance metrics for our performance-based compensation program that align with our corporate operational goals and strategy. In 2019, the performance metrics included revenue, profitability, cash flow and/or shareholder return, on both a relative and absolute basis. For 2020, following shareholder engagement (seepage 18), we revised our program to align with the refined strategy developed by management and the board (seepage 8). Short-Term and Long-Term Performance Objectives A substantial percentage of our NEOs’ pay is performance-based. This is divided between (i) annual cash incentive (“ACI”), which measures performance over a one-year period and rewards achievement of short-term company financial and operational objectives, and (ii) performance stock units (“PSUs”), which measure performance over a multi-year period and reward more longer-term company financial and operational objectives and/or shareholder return (seepage 29). Long-Term Continued Employment A substantial percentage of our NEOs’ pay consists of long-term equity: (i) restricted stock units (“RSUs”), which vest quarterly over a three-year period, to reward continued service and long-term performance of our common stock, and (ii) PSUs that, for our current CEO, have a 4-year performance period with vesting thereafter, and, for our other NEOs, have a 2-year performance period with vesting at 30 months (1/3rd) and 36 months (2/3rds) from the start of the performance period (seepage 29). For 2020, following shareholder engagement (seepage 18), we revised the PSUs for all NEOs to have a 3-year performance period with vesting shortly thereafter (seepage 38). Balanced Mix We provide 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 stable (base salary and RSUs) and performance-based (ACI and PSUs) compensation (seepage 34). No Unnecessary Risk-Taking We create a balance between performance-based and non-performance-based compensation and set performance metric targets that we believe are aspirational but achievable (seepages 29to31). We also set stock ownership guidelines to help mitigate potential compensation risk and further align the interests of our NEOs with those of shareholders (seepage 47). Competitive To ensure our compensation remains competitive, the Compensation Committee engaged Pay Governance as its independent consultant in 2019 and prior years to review and benchmark the compensation we provide relative to our peer group and other market data (seepage 32). The Compensation Committee believes that the design of the compensation program, including having the appropriate mix of compensation elements and performance metrics and targets, has a significant impact on driving company performance. Compensation Stable source of cash income at competitive levels Motivate and Performance Metrics and Measurement Period Incentivize shareholder return and reward achievement of Current CEO Vesting:at end of performance period Performance Metrics and Weighting Measurement Period Other NEOs Vesting:1/3rdat 30 months and 2/3rdsat 36 months from start of measurement period Performance Metrics and Weighting Measurement Period Reward continued service and long-term performance of our common stock Grant Frequency:one-time grant as part of Transition Agreement (seepage 41) Vesting:¼th on March 31, 2019 and ¾ths on June 30, 2019 (seepage 41) Grant Frequency:annual in the case of Ms. McLoughlin and Mr. Frank; once-every-three-years awards for Mr. Sinha and Mr. Thomas Vesting:quarterly over 3 years Former CEO 2020 PROXY STATEMENT 29 Performance-Based Compensation Overview The following graphs show actual company performance versus the corresponding performance targets for the company’s performance-based compensation elements. PSU targets were based on the combined performance of 2019 revenue growth and profitability werebelow targets, resulting in a42.8% payoutfor 2019 ACI and0% payoutfor the 2018/19 PSUs REVENUE TOTAL SHAREHOLDER RETURN (TSR) 30 COGNIZANT NON-GAAP/ADJUSTEDINCOME FROM OPERATIONS3 NON-GAAP/ADJUSTEDDILUTED EARNINGS PER SHARE (EPS)3 DAYS SALES OUTSTANDING (DSO) 2020 PROXY STATEMENT 31 Compensation Compensation The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our NEOs. The To achieve the objectives of our executive compensation program, the Compensation Committee evaluates Since 2010, the Compensation Committee has engaged Pay Governance The Peer Group The Compensation Committee, with assistance from Pay Governance, established the company’s peer group that was used for market comparisons and benchmarking of the compensation for each of our NEOs for 2019 other than Mr. Frank, with respect to whom only other market data was used. The peer group is comprised of technology-related and consulting companies selected based on revenue, headcount and market capitalization. PEER GROUP POSITIONING Peer group positioning data is as of December 31, 2019 and excludes CA Technologies, Inc. with respect to market capitalization as it was acquired in November 2018. Other data for CA Technologies, Inc. was available and included. 32 COGNIZANT Role of Executive Officers in Determining Executive Compensation Our CEO, aided by our Chief People Officer, among others, provides statistical data and makes recommendations to the Compensation Committee to assist it in determining compensation levels. In addition, our CEO Role of Shareholder Say-on-Pay Votes The The votes solicited by the Say-on Pay proposal are advisory only, and Primary Compensation Elements The Compensation Committee Historical ACI award achievements by year Historical PSU achievements by performance measurement period BASE SALARY The base salary component of an NEO’s target direct compensation is included to provide financial stability and certainty to balance against the performance-based compensation elements. The Compensation Committee reviews the base salaries of our NEOs on an annual RESTRICTED STOCK UNITS (RSUs) We grant RSUs, which typically vest quarterly over a three-year period, to reward continued service and long-term performance of our common stock. Mr. D’Souza, Ms. McLoughlin and Mr. Frank have been on an annual RSU grant cycle, with the full amount of such grants included in target direct compensation in the year of the grant. Mr. Sinha and Mr. Thomas have historically received multiple once-every-three-year RSU awards, and the 2020 RSU AWARD CHANGES OTHER (CASH BONUS) As part of the Transition Agreement with Mr. D’Souza (seepage 41), the Compensation Committee determined to award Mr. D’Souza a cash bonus equal to 50% of Mr. D’Souza’s targeted level of ACI in 2018 to compensate Mr. D’Souza for his six months of service as an employee of the company during 2019 (as CEO through March 31, 2019 and as Executive Vice Chairman for the transition period from April 1, 2019 through June 30, 2019). The cash bonus was paid upon conclusion of the transition period. Performance-Based Compensation Components ANNUAL CASH INCENTIVE (ACI) Revenue 8.0% 4.8% Adjusted Income -3.6% Days Sales The Compensation Committee The The Compensation Committee established constant currency revenue growth and adjusted income from operations targets for 2019 at levels 8.0% and 11.6% above the company’s 2018 revenue and adjusted income from operations, respectively. These targets were established to incentivize the company’s management to prioritize a continued high level of growth in revenue as well as an increased level of adjusted operating margin. Meanwhile, the DSO component remained at the same targeted level as prior years as the committee viewed the target as appropriately incentivizing maintenance of a healthy cash flow level. These targets created substantial uncertainty at the time the committee established them as to the likelihood of the The Compensation Committee determined ACI achievement after the end of the fiscal year based upon the company’s actual performance. Prior to determining the performance by the 2020 ACI AWARD CHANGES For 2020, the Compensation Committee revised the performance-based compensation structure to better align with the company’s strategy as refined during 2019, peer group, competitor and industry practices, the recommendations of the committee’s independent compensation consultant and feedback from shareholders gathered through the company’s fall 2019 shareholder engagement process (see Target increase is as initially set by the Compensation Committee and assumes no acquisitions. Achieved increase is as reported less acquisitions (for comparability to target). Target and achieved revenue increases are based on constant currency revenue growth. 2020 PROXY STATEMENT 35 PSUs OUTSTANDING IN 2019 FOR CURRENT CEO OTHER NEOs Our Compensation Committee designed the 2019 PSU awards granted to our other NEOs to tie a substantial portion of executive compensation to achieving long-term performance objectives that it believes are valued by our shareholders: revenue growth and profitability. The 2019/20 PSUs granted in For the 2019/20 PSUs, adjusted diluted EPS replaced non-GAAP diluted EPS, which had historically been used as a PSU performance metric, to align with the revised non-GAAP financial metrics that the company began using to measure its financial performance starting in 2019. See “Forward-Looking Statements and Non-GAAP Financial Measures” onHedging, Short Sale, Margin Account Pledging ProhibitionsAll Directors are subject to the same insider trading policies of the Company that apply to employees that provide for:●
securities;securities●securities;securities●securities; andsecurities●securities.securitiesSee “Hedging, Short Sale, Margin Account and Pledging Prohibitions” on page 35 2019 Director Compensation Director Stock and Option
Awards OutstandingName Fees Earned or
Paid in Cash Stock
Awards Total Aggregate
Number
of Stock
Awards Aggregate
Number
of Stock
OptionsZein Abdalla $ 126,000 $ 209,940 $ 335,940 3,436 11,294 Maureen Breakiron-Evans $ 137,500 $ 209,940 $ 347,440 29,553 27,324 Jonathan Chadwick $ 111,000 $ 209,940 $ 320,940 6,162 7,924 John M. Dineen $ 118,500 $ 209,940 $ 328,440 9,698 1,827 John N. Fox, Jr. $ 124,500 $ 209,940 $ 334,440 11,058 21,764 John E. Klein $ 123,000 $ 209,940 $ 332,940 17,803 21,764 Leo S. Mackay, Jr. $ 120,000 $ 209,940 $ 329,940 7,942 13,297 Michael Patsalos-Fox $ 267,000 $ 209,940 $ 476,940 9,014 33,324 Joseph M. Velli $ 112,500 $ 209,940 $ 322,440 3,436 — Sandra S. Wijnberg $ 84,418 $ 186,441 $ 270,859 2,827 — Directorsdirectors may on a yearly basis elect to defer settlement of RSUs that are granted in the subsequent year. The following table sets forth for 2019 the two deferral options available and the Directorsdirectors that elected such deferral options, for 2017.options.Company Change Change in ControlDirector’s Death or
Permanent DisabilityDirector Leaves the Board Directors Electing Option Option 1 
100% settles on next July 1st Atkins, Dineen, WeissmanWijnbergOption 2 1/3rdsettles on each of next three July 1sts Breakiron-Evans, Fox,Chadwick, Klein Wendel= immediate settlement Director TablesThe following tables set forth certain information regarding the compensation of each of our Directors who served during 2017 and the aggregate number of stock awards and the aggregate number of stock options held by each of our Directors at December 31, 2017.2017 Director Compensation Director Stock and Option
Awards OutstandingName Fees Earned
or
Paid in Cash Stock
Awards1 Option
Awards1 All Other
Compensation Total Aggregate
Number of
Stock Awards2 Aggregate
Number of
Stock OptionsZein Abdalla $ 108,000 $ 209,987 — — $ 317,987 4,707 11,294 Betsy S. Atkins $ 112,993 $ 233,795 $ 23,863 — $ 370,651 3,536 1,827 Maureen Breakiron-Evans $ 133,000 $ 209,987 — — $ 342,987 23,391 73,324 Jonathan Chadwick $ 102,000 $ 209,987 — — $ 311,987 4,482 7,924 John M. Dineen $ 112,993 $ 233,795 $ 23,863 — $ 370,651 3,536 1,827 John N. Fox, Jr. $ 118,500 $ 209,987 — — $ 328,487 5,430 33,324 John E. Klein $ 265,500 $ 209,987 — — $ 475,487 11,641 21,764 Leo S. Mackay, Jr. $ 100,500 $ 209,987 — — $ 310,487 9,350 13,297 Lakshmi Narayanan3 — $ 154,639 $ 152,171 — $ 306,809 — — Michael Patsalos-Fox $ 123,000 $ 209,987 — — $ 332,987 10,422 53,324 Joseph M. Velli $ 43,397 $ 101,245 — — $ 144,642 1,417 — Robert E. Weissman4 $ 100,500 $ 557,763 $ 65,589 — $ 723,852 11,641 21,764 Thomas M. Wendel3 $ 7,500 $ 154,639 $ 152,171 — $ 314,309 5,671 — 1Represents the aggregate grant date fair value of RSUs and stock options granted in the 2017 fiscal year under the 2009 Plan and the 2017 Plan, determined in accordance with FASB ASC Topic 718. All Directors listed received an award of 3,136 RSUs with a grant date fair value of $66.96 per share, except for Messrs. Narayanan and Wendel, who did not stand for reelection to the Board at the 2017 Annual Meeting, and Mr. Velli, who received an award of 1,417 RSUs with a grant date fair value of $71.45 per share upon his joining the Board on December 12, 2017 (representing a pro-rated equity award for the portion of the year that he is expected serve prior to the 2018 Annual Meeting). Ms. Atkins and Ms. Dineen also received additional awards of 400 RSUs with a grant date fair value of $59.52 per share and 1,827 stock options with a grant date fair value of $13.06 per share upon their election to the Board on April 1, 2017 (representing pro-rated equity awards for the portion of the year they served prior to the 2017 Annual Meeting). 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 16 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2Includes the RSUs granted in 2016 and 2017 with respect to which the settlement has been deferred for some Directors, as described above. Also includes deferred RSUs granted in prior years held by Ms. Breakiron-Evans (18,547), Mr. Fox (586), Mr. Klein (6,797), Mr. Mackay, Jr. (4,506) and Mr. Patsalos-Fox (5,578) to be settled upon the Director’s termination of service on the Board. For Mr. Weissman, is comprised of 11,641 RSUs that will be settled on July 1, 2018. For Mr. Wendel, is comprised of 5,671 RSUs that will be settled in equal parts on July 1, 2018 and July 1, 2019.3Messrs. Narayanan and Wendel did not stand for re-election as Directors at the 2017 Annual Meeting held on June 6, 2017. The amounts shown under “Stock Awards” and “Option Awards” reflect the fair market value of unvested RSUs and stock options, respectively, held by Messrs. Narayanan and Wendel the vesting of which the Board, in its discretion, determined to accelerate immediately prior to the 2017 Annual Meeting.4Mr. Weissman retired from the Board on December 14, 2017. The amounts shown under “Stock Awards” and “Option Awards” include the fair market value of unvested RSUs ($347,776, reflected under “Stock Awards”) and stock options ($65,589, reflected under “Option Awards”) held by Mr. Weissman the vesting of which the Board, in its discretion, determined to accelerate upon his retirement.22 Cognizant Technology Solutions CorporationOther Board and Corporate Governance InformationCorporate Governance Policies and PracticesCorporate Governance GuidelinesThe Board has adopted Corporate Governance Guidelines to assist it in the exercise of its duties and responsibilities to the Company and its stockholders. The guidelines provide a framework for the conduct of the Board’s business and are integral to an effective corporate governance program. See “Helpful Resources” on page 74.Code of EthicsWe have a Code of Ethics that applies to all of our Directors, officers and employees. See “Helpful Resources” on page 74. We will post on our website all disclosures that are required by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of our Code of Ethics.Limits on Director Service on Other Public Company BoardsUnder our Corporate Governance Guidelines, service by Directors on public company boards is limited to no more than four, not including the Cognizant Board. For any Director who is also a public company CEO, the limit is two, not including the Cognizant Board. This practice is to ensure that our Directors have sufficient time to devote to Cognizant matters.Certain Relationships and Related Person TransactionsReview of Related Person TransactionsTheUnder the Audit CommitteeCommittee’s charter, the committee is responsible for reviewing and approving all transactions between the Companycompany and any related person that are required to be disclosed pursuant to Item 404404(a) of Regulation S-K. Related persons can include any of our Directors ordirectors and executive officers, certain of our stockholders,shareholders and any of their immediate family members. The Audit Committee will approve a related person transaction when, in its good faith judgment, the transaction is in the best interestsmembers of the Company.foregoing. The Company’scompany’s legal staff is primarily responsible for monitoring and obtaining information from our Directorsdirectors and executive officers with respect to potential related person transactions, and for then determining, based on the facts and circumstances, whether the related person has a direct or indirect material interest in any transaction with us. Each year, to help ourhelpour legal staff identify related person transactions, we require each of our Directors, Directordirectors, director nominees and executive officers to complete a disclosure questionnaire identifying any transactions with us in which the officerdirector or Directorofficer or their family members have an interest.Codecode of Ethicsethics requires all Directors,directors, officers and employees who may have a potential or apparent conflict of interest to, in the case of employees, notify our Chief Compliance Officer or General Counsel,chief compliance officer, or, in the case of Directorsdirectors and executive officers, notify our General Counsel or the Board.general counsel. See “Helpful Resources” onpage 74.2017 Transactions with Related Persons69.Brackett B. Denniston III, who served as our Interim General Counsel and an executive officer of the Company from December 2, 2016 until May 15, 2017, is, and was during such period, a Senior Counsel at the law firm of Goodwin Procter LLP (“Goodwin”). During the fiscal year ended December 31, 2017, Goodwin performed legal services for the Company for which it was paid approximately $4.3 million in the aggregate. Fees for the services of Goodwin attorneys, including Mr. Denniston, were paid by us at rates that were generally consistent with rates regularly charged by the firm to other clients. Mr. Denniston did not have a direct interest in the payment of such fees, but had an indirect interest in such fees as an employee of the law firm. Mr. Denniston did not review or approve any invoices for payments to Goodwin. The provision of legal services by Goodwin was reviewed and approved by the Audit Committee.Other than the matter described above and such other matters disclosed herein under “Compensation” starting on page 26, there have been no related person transactions since January 1, 2017.Communications to the Board from StockholdersHow you can communicate concerns to our DirectorsUnder procedures approved by a majority of our independent Directors, our Chairman and our General Counsel and Secretary are primarily responsible for monitoring communications from stockholders and, if they relate to important substantive matters and include suggestions or comments that our Chairman and General Counsel and Secretary consider to be important for the Directors to know, providing copies or summaries to the other Directors. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to receive repetitive or duplicative communications.The Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Stockholders who wish to send communications on any topic to the Board should address such communications to the Board or our General Counsel and Secretary. See “Helpful Resources” on page 74.2018 Proxy Statement2020 PROXY STATEMENT 23Common Stock and Total Stock-Based Holdings TableThe following table sets forth the Cognizant stock-based holdings of our Directors, NEOs, and Directors and executive officers as a group as of March 31, 2018, as well as the stock-based holdings of beneficial owners of more than 5% of our common stock as of December 31, 2017. Unless otherwise indicated, the address for the individuals below is our address.Common Stock Directors Stock Options Total % Outstanding Zein Abdalla 967 7,831 16,968 * Betsy S. Atkins — 913 5,363 * Maureen Breakiron-Evans 255 29,861 56,970 * Jonathan Chadwick 758 4,461 13,078 * John M. Dineen — 913 5,363 * John N. Fox, Jr. 35,590 18,301 62,784 * John E. Klein 597,859 18,301 631,264 * Leo S. Mackay, Jr. 6,797 9,834 29,444 * Michael Patsalos-Fox 16,797 49,861 80,543 * Joseph M. Velli 2,500 — 3,917 * Total 661,523 140,276 905,694 * Common Stock Named Executive Officers Stock Options Total % Outstanding Francisco D’Souza 462,425 — 918,999 * Rajeev Mehta 30,875 — 286,040 * Karen McLoughlin 43,070 — 170,779 * Ramakrishna Prasad Chintamaneni 19,430 — 105,456 * Matthew W. Friedrich — — 78,226 * Total 555,800 — 1,559,500 * Common Stock Current Directors and Executive Officers Stock Options Total % Outstanding As a group (28 people) 1,652,222 160,276 3,514,644 * 5% Beneficial Owners Common Stock % Outstanding The Vanguard Group 42,032,743 7.1% BlackRock, Inc. 36,121,482 6.1% *Less than 1% of the total outstanding shares of our common stock.24 Cognizant Technology Solutions CorporationCommon Stock.This column shows beneficial ownership of our common stock as calculated under SEC rules. Except to the extent noted below, everyone included in the table has sole voting and investment power over the shares reported. None of the shares is pledged as security by the named person, although standard brokerage accounts may include non-negotiable provisions regarding set-offs or similar rights. TheStocksubcolumn includes shares directly or indirectly held and shares underlying RSUs that will vest within 60 days. TheOptionssubcolumn includes shares that may be acquired under stock options that are currently exercisable or will become exercisable within 60 days.Total.This column shows the individual’s total Cognizant stock-based holdings, including securities shown in the Common Stock column (as described above), plus non-voting interests that cannot be converted into shares of Cognizant common stock within 60 days, including, as appropriate, PSUs, RSUs and stock options.Common Stock and Total.Both columns include the following shares over which the named individual has shared voting and investment power through family trusts or other accounts: Klein (137,872) and Mehta (30,523).Current Directors and Executive Officers.This row includes: (1) 2,976 RSUs that vest within 60 days, (2) 160,276 shares that may be acquired under stock options that are or will become exercisable within 60 days, and (3) 169,195 shares of common stock over which there is shared voting and investment power.5% Beneficial Owners.This table shows shares beneficially owned by BlackRock, Inc., 55 East 52nd Street, New York, NY 10055, and The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, as follows:(# of shares) BlackRock Vanguard Sole voting power 30,994,860 839,580 Shared voting power 0 134,708 Sole dispositive power 36,121,482 41,077,465 Shared dispositive power 0 955,278 The foregoing information is based solely on a Schedule 13G/A filed by BlackRock with the SEC on January 29, 2018 and a Schedule 13G/A filed by Vanguard with the SEC on February 9, 2018, as applicable.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our Directors, certain officers and stockholders who beneficially own more than 10% of any class of our equity securities registered pursuant to Section 12 of the Exchange Act (collectively, the “Reporting Persons”) to file initial statements of beneficial ownership of securities and statements of changes in beneficial ownership of securities with respect to our equity securities with the SEC. All Reporting Persons are required by SEC regulation to furnish us with copies of all reports that such Reporting Persons file with the SEC pursuant to Section 16(a). Based solely on our review of the copies of such forms received by us and upon written representations of the Reporting Persons received by us, we believe that there has been compliance with all Section 16(a) filing requirements applicable to such Reporting Persons with respect to the year ended December 31, 2017, except that one Form 4 for Mr. Chintamaneni, reporting a sale of shares, and one Form 4 for Srinivasan Veeraraghavachary, also reporting a sale of shares, were filed one day late and one charitable gift of shares by Ms. Breakiron-Evans in 2016 that should have been reported on a Form 5 in early 2017 was reported late on a Form 5 in early 2018.2018 Proxy Statement 2527Resolution Stockholders Are Being Asked to ApproveRESOLVED, that the stockholders of Cognizant Technology Solutions Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company’s definitive proxy statement for the 2018 Annual Meeting of Stockholders.BackgroundCompensation Discussion and Analysis94% votes cast“FOR”Say-on-Pay at2017 AnnualMeetingThe Dodd-Frank Act requires that our stockholders have the opportunity to cast an advisory vote on executive compensation at annual meetings, commonly referred to as a “Say-on-Pay” vote, at least once every three years. At the 2011 Annual Meeting and again at the 2017 Annual Meeting, the Company’s stockholders voted, on an advisory basis, on the frequency of the Say-on-Pay vote, in both instances voting in favor of the holding of a Say-on-Pay vote every year. A Say-on-Pay vote was first held at the 2011 Annual Meeting and has been held at each subsequent annual meeting. Holding the Say on Pay vote every year gives the stockholders the opportunity to provide direct and frequent feedback on our compensation philosophy, policies and procedures. The next Say-on-Pay vote will occur in 2019.The Say-on-Pay vote is a non-binding voteThis compensation discussion and analysis section describes the general objectives, principles and philosophy of the company’s executive compensation program, focused primarily on the compensation of our named executive officers for fiscal 2019 (“NEOs”).CURRENT CEO 
Current CEO (from April 1, 2019)FORMER CEO 
Former CEO
(through March 31, 2019)OTHER NEOS 
CFO
EVP and President,
Cognizant Digital Business
EVP and President, North America
Former EVP and President,
Global Growth Markets
(through February 14, 2020)Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in this proxy statement. Please read the “Compensation Discussion and Analysis” section starting on page 27 for a detailed discussion about our2019 executive compensation programsprogram with the objectives and compensation philosophy, including information about the fiscal 2017 compensation of our NEOs.The votes solicited by this Proposal 2 are advisory, and therefore are not binding on the Company, the Board or the Compensation Committee. However, the Board, including the Compensation Committee, values the opinions of our stockholders and,key features to the extent there is any significant vote against the NEO compensationmeet those objectives as disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate what actions, if any, may be appropriate to address those concerns.set out below:Program Objectives How We Get There
Ensure compensation program incentives are aligned with our corporate strategies and business objectives
Tie a substantial portion of compensation to achieving both short-term and long-term performance objectives that enhance shareholder value
Provide an incentive for long-term continued employment with our company
Create an appropriate balance between current and long-term compensation and between cash- and equity-based incentive compensation
Ensure that compensation arrangements do not encourage unnecessary risk-taking
Provide competitive compensation packages in order to attract, retain and motivate top executive talent
2628 Cognizant Technology Solutions CorporationCOGNIZANTDiscussion and AnalysisMixThis Compensation Discussion2019 TARGET DIRECT COMPENSATION
Base Salary Annual Cash Incentive (ACI) Analysis section describes the generalreward achievement of short-term company financial and operational objectives principlesphilosophyWeighting
Revenue (50%)
Adjusted income from operations (40%)
Days sales outstanding (DSO) (10%)
1 year (2019)Performance Stock Units (PSUs) the Company’s executive compensation program, focused primarily on the compensationlonger-term company financial and operational objectives and performance of our NEOs.common stock
Grant Frequency:one-time grant upon join date
Relative TSR (50%)
Absolute TSR (50%)
4 years (April 1, 2019 -April 1, 2023)
Grant Frequency:annual
Revenue (50%)
Adjusted diluted earnings per share (EPS) (50%)
2 years (2019 - 2020)Restricted Stock Units (RSUs) Former CEO Other NEOs Other (Cash Bonus)
Cash bonus paid on June 30, 2019 for the six months of 2019 during which Mr. D’Souza was employed by the company (seepage 41)Executive the company across multiple years. For presentation purposes, other than for TSR, the combined target was allocated between the applicable years in the same proportion as the actual results for such years such that the same level of achievement is reflected in both years.
(in billions)
Increase1 �� Target Achieved Weighting Payout Range 2019 ACI2 8.0% 4.8% 
2018 ACI 9.0% 7.7% 2017 ACI 9.0% 9.4% 2019/20 PSUs2 8.0% — 
2018/19 PSUs 8.7% 5.8% 2017/18 PSUs 9.0% 8.4% 2016/17 PSUs 11.0% 8.7% 
● Strong, consistent revenue growthis a key company objective ● Aspirational but achievable targets and significant weighting; revenue weighting for ACI increased to 60% for 2020 ● Low 2019 ACI payout and zero payout on 2018/19 PSUs with respect to the revenue performance metrics ● M&A-neutral– payout range adjusted by the amount of revenue derived from acquisitions completed during the applicable periods 
Component and Weighting Threshold
(50% earned)Target
(100% earned)Maximum
(200% earned)
Absolute TSR 
Relative TSR 
● To incentivize shareholder return,absolute TSR and relative TSR were utilized as performance metrics for the PSUs awarded to Mr. Humphries in 2019 (seepage 36) ● Relative TSR is measured against the S&P 500 Information Technology Index ● Relative TSR added as a PSU performance metric (25% weighting) for 2020for all executive officers 1 Target increase is as initially set by the Compensation Committee (compound annual growth for PSUs with a two-year performance period)and assumes no acquisitions. Achieved increase is as reported less acquisitions (for comparability to target). 2 Target and achieved revenue increases for the 2019 ACI and 2019/20 PSUs are based on constant currency revenue growth. 2019/20 PSU achievement will be determined in early 2021. Key GAAP or market or company metric Actual companyrevenue(GAAP),total shareholder return (TSR) (market metric) and days sales outstanding (DSO) (company metric)
(in millions)
Increase1 Target Achieved Weighting Payout Range 2019 ACI 11.6% -3.6% 
2018 ACI 15.1% 13.9% 2017 ACI 8.9% 10.4% ● Increased profitabilityis a key company objective ● Aspirational but achievable targets and significant weightingfor ACI ● Adjusted income from operations utilized for 2019 ACI awardsto align with the company’s revised non-GAAP financial metric ● Zero 2019 ACI payout with respect to this performance metricdue to actual 2019 adjusted income from operations falling below the threshold ● M&A-neutral– payout range adjusted by the amount of income from operations derived from acquisitions completed during the applicable periods 
Increase1 Target Achieved Weighting Payout Range 2019/20 PSUs4 9.4% — 
2018/19 PSUs 17.2% 13.2% 2017/18 PSUs 9.2% 12.6% 2016/17 PSUs 8.6% 10.7% 
● Increased profitabilityis a key company objective ● Aspirational but achievable targets and significant weightingfor PSUs ● Adjusted EPS utilized for 2019 awards(2019/20 PSUs) to align with the company’s revised non-GAAP financial metrics ● Zero payout on 2018/19 PSUs with respect to this performance metricdue to actual 2019 non-GAAP EPS falling below the threshold ● M&A-neutral– payout range adjusted by the amount of non-GAAP EPS derived from acquisitions completed during the applicable periods 
Target Achieved Weighting �� Payout Range 2019 ACI 68 73 
2018 ACI 70 75 2017 ACI 70 71 ● Timely collection of receivablesincentivized by this metric ● DSO has remained in the desired rangeover the past three years ● Neutralized for policy change– 2019 target adjusted by two days to account for a policy change with respect to the presentation of certain amounts due to customers, such as discounts and rebates, that had the effect of reducing DSO by two days in 2019 ● DSO eliminated as an ACI performance metric for 2020 3 Non-GAAP income from operations, adjusted income from operations, non-GAAP diluted earnings per share and adjusted diluted earnings per share are not measurements of financial performance prepared in accordance with GAAP. See “Forward-Looking Statements and Non-GAAP Financial Measures” onpage 66 for more information. 4 2019/20 PSU achievement will be determined in early 2021. Non-GAAP Adjusted Actual companynon-GAAP income from operationsandnon-GAAP diluted earnings per share (EPS)3 Actual companyadjusted income from operationsandadjusted diluted earnings per share (EPS)3 ProgramSetting ProcessCommitteeConsultantCompensation Committeecommittee operates under a written charter adopted by the Boardboard and is comprised entirely of independent, non-employee directors as determined in accordance with various Nasdaq and SEC rules.rules (seepage 17). The Compensation Committeecommittee has the authority to engage its own independent advisor to assist in carrying out its responsibilities under its charter.Key Program FeaturesThe following tables summarize key elements of our executive compensation program and where they are described in the Compensation Discussion and Analysis section.What We DoWhat We Don’t Do Pay for performance, with high percentages of performance-based and long-term equity compensationSee page 29 No hedging or speculation with respect to Cognizant securitiesSee page 35 Use appropriate peer groups and market data when establishing compensationSee page 28 No short sales of Cognizant securitiesSee page 35 Retain an independent external compensation consultantSee page 28 No margin accounts with Cognizant securitiesSee page 35 Set significant stock ownership guidelines for executivesSee page 34 No pledging of Cognizant securitiesSee page 35 Maintain a strong clawback policySee page 35 No tax “gross ups” on severance benefitsSee page 36 Utilize “double trigger” change in control provisionsSee page 42Program ObjectivesThe Compensation Committee has designed the executive compensation program to meet the following objectives:●Ensure executive compensation is aligned with our corporate strategies and business objectives and that potential realizable compensation is set relative to each executive’s level of responsibility and potential impact on our performance;●Tie a substantial portion of executive officer compensation to achieving both short-term and long-term performance objectives that enhance stockholder value;●Reinforce the importance of meeting and exceeding identifiable and measurable goals through superior awards for superior performance;●Provide total direct compensation that is competitive in markets in which we compete for management talent in order to attract, retain and motivate the best possible executive talent;●Provide an incentive for long-term continued employment with our Company; and●Reinforce our desired culture and unique corporate environment by fostering a sense of ownership, urgency and overall entrepreneurial spirit.Company Performance and Impact on Compensation ProgramThe Compensation Committee set 2017 executive compensation in March 2017, except with respect to Mr. Friedrich, who joined the Company in May 2017. The Compensation Committee’s decisions with respect to 2017 executive compensation were primarily based on:●The Company’s performance during 2017, 2016 and in previous years, including relative to its industry;●Anticipated and desired Company performance for 2017 and 2018 based on Company and industry projections and Company goals;●Individual executive performance and responsibility; and●The market for executive talent.The Compensation Committee believes that the design of the compensation program, including having the appropriate mix of compensation elements and performance metrics and targets, has a significant impact on driving Company performance.●The performance by the Company in 2015, 2016 and 2017 across the performance metrics and targets selected by the Compensation Committee is set forth under “Aligning Pay with Performance.” See page 6 for further information●Details of the compensation elements and performance by the Company in 2015, 2016 and 2017 against each of the performance-based compensation elements is set forth under “Direct Compensation of Named Executive Officers.” See page 29 for further information2018 Proxy Statement 27Role of Stockholder Say-on-Pay VotesThe Company provides its stockholders with the opportunity to cast an annual, non-binding advisory vote on executive compensation. At the 2017 Annual Meeting, approximately 94% of the votes cast on the Say-on-Pay proposal were voted “FOR” the proposal. In making its decisions regarding executive compensation for 2017, the Compensation Committee considered the significant level of stockholder support our compensation program has received from stockholders in past years and chose to generally retain the same structure of the executive compensation program. Nevertheless, there were two notable changes to the compensation structure for NEOs made by the Compensation Committee in 2017:●Increased non-GAAP EPS weighting in PSUsawarded in 2017 (from 25% to 50%), with weighting of revenue reduced (from 75% to 50%), to reflect increased Company focus on profitability; and●Annual RSU grant timing changedfor certain NEOs from the fourth quarter of 2016 to the first quarter of 2017 to align with the timing of the Company’s other annual equity grants and other annual compensation decisions by the Compensation Committee.See “Direct Compensation of Named Executive Officers” starting on page 29. The Compensation Committee will continue to consider the outcome of the Company’s Say-on-Pay votes when making future compensation decisions for the NEOs.The Compensation-Setting ProcessCompensation Committee and Engagement of Compensation Consultantour executive compensationthe program with the goal of setting compensation at levels the committee believes are competitive with those of other technology-related growthand consulting companies that compete with us for executive talent. The committee has periodically engaged an independent compensation consultant to provide additional assurance that the Company’scompany’s executive compensation program is reasonable and consistent with its objectives. The consultant reports directly to the Compensation Committee, periodicallycommittee, regularly participates in committee meetings and advises the committee with respect to compensation trends and best practices, plan design and the reasonableness of individual compensation awards. Although the Compensation Committeecommittee reviews the compensation practices of our peer companies and other market data, as described below, the committee does not adhere to strict formulas or survey data to determine the mix of compensation elements. Instead, as described below, the Compensation Committeecommittee considers various factors in exercising its discretion to determine compensation, including the experience, responsibilities and performance of each NEO, as well asinternal pay equity and the Company’scompany’s overall financial performance. This flexibility is particularly important in designing compensation arrangements to attract and retain executives in a highly-competitive, rapidly changing market.anas its independent executive compensation advisory firm,consultant to review all elements of our executive compensation, benchmark such compensation in relation toagainst 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-term and long-term strategic objectives. As part of the compensation-setting processes for 2015, 2016, 2017, 2018 and 2017,2019, the committee asked Pay Governance to provide 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’scompany’s peer group.Compensation Committeecommittee has assessed 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.2019 PEER GROUP Market Capitalization Revenue 
Headcount 
and our President provideprovides the committee with a review of the performance of other executive officers. While the Compensation Committeecommittee utilizes this information and values management’s observations with regard to compensation, the committee makes the ultimate decisions regarding executive compensation.Peer Group and Market DataSay-on-PayCompensation Committee, with assistance from Pay Governance, establishesDodd-Frank Wall Street Reform and Consumer Protection Act requires that our shareholders have the Company’s peer group that is used for market comparisons and benchmarkingopportunity to cast an advisory vote on executive compensation at annual meetings, commonly referred to as a “Say-on-Pay” vote, at least once every three years. At the 2017 annual meeting, the company’s shareholders voted, on an advisory basis, on the frequency of the compensation for Mr. D’Souza, Mr. Mehta and Ms. McLoughlin. The peer group usedSay-on-Pay vote, voting in favor of the compensation-setting process for 2017 is comprisedholding of a group of technology-related firms selected basedSay-on-Pay vote every year. A Say-on-Pay vote has been held at each subsequent annual meeting. Holding the Say-on-Pay vote every year gives shareholders the opportunity to provide direct and frequent feedback on revenue, headcountour compensation philosophy, policies and market capitalization.●Accenture Plc●Automatic Data Processing, Inc.●CA Technologies, Inc.●Computer Sciences Corporation●Convergys Corporation●Fidelity National Information Services, Inc.●Fiserv, Inc.●Leidos Holdings, Inc.●Mastercard Incorporated●NetApp, Inc.●Symantec Corporation●Visa, Inc.●Yahoo! Inc.Forprocedures. The next Say-on-Pay vote will occur at the other two NEOs, Mr. Chintamaneni2021 annual meeting.Mr. Friedrich,are therefore not binding on the company, the board or the Compensation Committee. However, the board and the Compensation Committee used market data thatvalue the Company obtained from third party benchmarking services for similar rolesopinions of our shareholders and, levels. The committee believes this approach is appropriate for the roles of these NEOs as it allows for the use of a broader market data view not limited to the Company’s peer group. Such market data was evaluatedextent there is any significant vote against NEO compensation, will consider our shareholders’ concerns and utilized byevaluate what actions, if any, may be appropriate to address those concerns. In making its decisions regarding executive compensation for 2019, the Compensation Committee withconsidered the assistancesignificant level of Pay Governance.shareholder support our executive compensation program received from shareholders in 2019 (88% support), 2018 (92% support) and prior years. The committee chose to generally retain the same structure for 2019 as was utilized in 2018 other than for Brian Humphries, who joined the company as CEO in 2019, and for former CEO Francisco D’Souza. Seepages 40and41and other portions of this “Compensation” section for additional details on the compensation structures utilized for Messrs. Humphries and D’Souza.28KEY COMPENSATION PROGRAM FEATURESWHAT WE DO 
Pay for performance, with high percentages of performance-based and long-term equity compensation Seepage 30 Use appropriate peer groups and market data when establishing compensation Seepage 32 Retain an independent external compensation consultant (Pay Governance) Seepage 32 Set significant stock ownership requirements for executives Seepage 47 Maintain a strong clawback policy Seepage 47 Utilize “double trigger” change of control provisions in plans that only provide benefits upon qualified terminations in connection with a change of control Seepage 56 WHAT WE DON’T DO 
No hedging or speculation with respect to Cognizant securities Seepage 47 No short sales of Cognizant securities Seepage 47 No margin accounts with Cognizant securities Seepage 47 No pledging of Cognizant securities Seepage 47 No tax “gross ups” on severance or other change of control benefits Seepage 48 Cognizant Technology Solutions Corporation2020 PROXY STATEMENT 33Direct Compensation of Named Executive Officers for 2017 – OverviewOur executive compensation program is designed to motivate, retain and engage our executive leadership and appropriately reward them for their contributions to the achievement of our business strategies and goals. In order to achieve our compensation objectives, the Company provides its executives with a total direct compensation package consisting of the elements listed in the chart below.makes decisions on executive compensation fromfirst establishes a totaltarget direct compensation perspective. Each element is considered byvalue to deliver to each NEO based on the perceived retention value of the total compensation package in light of the competitive environment. The 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 be importantmarket practices. The committee also generally takes into account factors such as increases in meeting one or morethe cost of living, the size of comparable awards made to individuals in similar positions within the industry, 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, the individual’s personal experience and performance in recent periods and the value of equity compensation program objectives. The following chart illustratesthat the balance of elements of 2017 target total direct compensation for our CEO and other NEOs.individual has previously been awarded.Base SalaryStable source of cash income at competitive levelsAnnual Cash Incentive (ACI)Annual cash incentive to motivate and reward achievement of Company financial and operational objectivesMeasurement PeriodCompensation Elements in Target Direct Compensation 1 year (2017)85% of base salaryBase
SalaryAnnual Cash
Incentive (ACI)Restricted
Stock Units
(RSUs)Performance Stock
Units (PSUs)Payout Range
Cash
vs. Equity
2015 2016 2017 142.0% 79.8% 114.8% Performance Stock Units (PSUs)Annual grant of performance stock units that reward achievement of Company financial objectives, continued service and long-term performance of our common stockMeasurement PeriodPerformance-basedVesting2 years (2017-2018)1/3rd at 30 months2/3rds at 36 months
Vesting Range
20151 20162 2016/172 122.9% 38.2% 85.5% Restricted Stock Units (RSUs)Grants of restricted stock units to reward continued service and long-term performance of our common stockGrants Annually for Mr. D’Souza (CEO), Mr. Mehta and Ms. McLoughlin; every 3 years for Mr. Chintamaneni and Mr. FriedrichVesting Quarterly over 3 yearsNote: The above presentation seeksCompensation Committee also from time to provide a viewtime makes other awards. Cash bonuses are from time to time awarded in lieu of 2017 totalACI – such bonus amounts typically being included in target direct compensation. Awards for new hires, such as sign-on bonuses or one-time equity grants upon joining the company, are not included in target direct compensation as reviewed by the Compensation Committee. As such, it uses grant date share pricesthey are not recurring and typically designed to compensate a new hire for RSUs and PSUs and the target levelcompensation being lost as a result of achievement for the ACI and PSUs. The above presentation excludesleaving a prior employer or additional grantscosts as a result of RSUs and PSUs to Mr. Mehta and Mr. Chintamaneni made in connection with the expansion of their roles in 2016 and the signing bonus and grants of RSUs and PSUs to Mr. Friedrich upon his joining the Companycompany, or are needed as additional incentive for a new hire to join the company. Equity accelerations upon retirement are also not included in 2017.2017 Target Annual Compensation Mix
1Weighting was 100% revenue for the 2015 performance measurement period.2Weighting was 75% revenue and 25% non-GAAP EPS for the 2016 and 2016/17 performance periods.2018 Proxy Statement 29Table of Contentstarget direct compensation.Base SalaryNon-Performance-Based Compensation Componentsbasis. The primary objective of the base salary component of an executive’s total direct compensation is to provide financial stabilitybasis and certainty. The committee makes periodic adjustments to base salary based on individual performance and contributions, market trends, increases in the cost of living, competitive position and our financial situation. Consideration is also given to relative responsibility, seniority, experience and performance of each individual NEO. No specific weight is assigned to any of the above criteria relative to the others, but rather the committee uses its judgment in combination with market and other data provided by Pay Governancedata.Company.committee includes in target direct compensation the targeted grant date value of the vestings that are anticipated to occur in the applicable year. In 2019, the RSUs granted to Mr. D’Souza pursuant to his Transition Agreement vested entirely in 2019 (seepage 41).2019 RSU Awards 2020 RSU Awards Rationale for Change Grant Frequency Ms. McLoughlin, Mr. Frank
Granted annually in Q1
Granted annually in Q1 (with transition awards to bridge between grant methods) Mr. Sinha, Mr. Thomas
Granted in multiple once-every three-years awardsAnnual Cash Incentive34 COGNIZANT2017 Annual Cash Incentive2019 ANNUAL CASH INCENTIVE
Component and Weighting Threshold
(50% earned) Target
(100% earned) Maximum
(200% earned) 2019 Increase1 Overall 2019 ACI
AchievementTarget Achieved 
(in billions)
from Operations
(in millions)
11.6% 
Outstanding (DSO)
has designed our 2019 ACI program to stimulate and support a high-performance environment by tying such incentive compensation to the attainment of organizationalshort-term financial goals and by recognizing superior performance. The annual cash incentives are intended to compensate individuals for the achievement of these goals. The committee determines actual cash incentives after the end of the fiscal year based upon the Company’s performance.For 2017, the Compensation Committee based the annual cash incentive awards for the NEOs on the achievement of financial goals tied to metricsaligned with our company’s operational objectives that it believesbelieved are valued by our stockholders. The committee believes that our stockholders valueshareholders: increased revenue and measure the performance of these executives based principally on the growth of Company revenue, earnings and consistent cash flow. Consequently, as in past years,In 2019, the committee believed it appropriate to establish three components to the annual cash incentive: constant currency revenue non-GAAP Incomegrowth, adjusted income from Operations (see “Non-GAAP Financial Measures and Forward-Looking Statements” on page 65)operations and days sales outstanding (“DSO”).Compensation Committeecommittee determined a target for each component (revenue, non-GAAP Income from Operations and DSO) and a weighting for the various componentseach component as a percentage of the total award such that achievement of the targeted level of performance for all three components would result in the executivesNEOs receiving their target awards. The committee set threshold, or minimum, levels forFor each metric, the Compensation Committee established at the time of the componentsaward: (i) threshold – 50% earned, with 0% earned for performance below which no annual cash incentive would be paidthe threshold; (ii) target – 100% earned; and (iii) maximum – 200% earned. Whether and to what extent the performance as to any metric for the particular component. The committee also set maximum levels for each of2019 ACI was achieved was determined by the components above which no additional annual cash incentive would be paidCompensation Committee in its sole discretion based upon the actual company results for the particular component and that collectively result in a maximum possible annual cash incentive equal to 200%2019 fiscal year. To the extent the level of the target awards for the executives. Achievement for performanceachievement was between the threshold and target levels or between the target and maximum levels for any metric, straight-line interpolation was utilized to calculate the payout level for the component.components is calculated using straight-line interpolation.company’s attainment of the targeted levels of performance and payout of the ACI.Annual CashIncentive TargetBased on HighGrowth ObjectivesThe Compensation Committee established revenue and non-GAAP Income from Operations targets for 2017 at levels 9.0% and 8.9% above the Company’s 2016 revenue and non-GAAP Income from Operations, respectively. These targets were established to incentivize the Company’s management to prioritize a continued high level of growth in the Company’s revenue as well as a targeted level of non-GAAP Operating Margin. Meanwhile, the DSO component remained at the same targeted level as prior years as the committee viewed the target as appropriately incentivizing maintenance of a healthy cash flow level. As a result of these targets, there was substantial uncertainty at the time the committee established the performance goals for 2017 as to the likelihood of the Company’s attainment of the targeted levels of performance.Companycompany against the targets for 2017,2019, the Compensation Committee increasedcommittee adjusted the revenue and non-GAAP Incomeadjusted income from Operations targetsoperations payout ranges by the amount of revenue and income from operations derived from acquisitions completed during 2017.2019, making the awards M&A-neutral, and adjusted the DSO target by two days to account for a policy change with respect to the presentation of certain amounts due to customers, such as discounts and rebates, that had the effect of reducing DSO by two days in 2019.30page 18 Cognizant Technology Solutions Corporation). The committee eliminated DSO as a performance metric for ACI awards and increased the revenue weighting. The committee may make additional changes based on the impact of the COVID-19 pandemic.Components/Weighting 2019 ACI Awards 2020 ACI Awards Rationale for Change 
1 Stock-Based AwardsPERFORMANCE STOCK UNITS (PSUs)OverviewCURRENT CEOWe provide long-term incentive compensation through stock-based awards in the form of PSUs and RSUs. TheOur Compensation Committee believes that such stock-based grants provide our executive officersdesigned the 2019 PSU award granted to Mr. Humphries (the “2019 – 2023 CEO PSUs”) with a strong incentiveview toward incentivizing shareholder return over the next four years and, as such, set performance metrics based on the total shareholder return of our common stock. The 2019 – 2023 CEO PSUs were granted to manageMr. Humphries upon his join date on April 1, 2019 and have a 4-year performance measurement period (April 1, 2019 – April 1, 2023) over which the Company fromcompany’s performance is measured across two components: (i) the perspectivetotal shareholder return of our common stock on an owner with an equity stake inabsolute basis of share price growth and dividends (“Absolute TSR”) and (ii) the long-term successtotal shareholder return of our common stock on a relative basis as compared to the return of the business, create an ownership culture,S&P 500 Information Technology Index (“Relative TSR”). Absolute TSR and help align the interests of our executives to those of our stockholders. In addition, the committee believes the vesting featuresRelative TSR each determine 50% of the stock-based grants should further our goal of executive retention by providing an incentive to our executive officers to remain in our employ duringaward. The following graph and table summarize the vesting period.In considering the number of stock-based awards to grant, the Compensation Committee first establishes a target compensation value that it wants to deliver to the NEOs through long-term equity awards. In doing so, the committee generally takes into account various factors,2019 – 2023 CEO PSUs, including the value offirst year performance. The 2019 – 2023 CEO PSUs and RSUs that each of our executive officers has previously been awarded,were the base salary and target ACI of the executive officer, the Committee’s emphasis on performance-based and equity compensation in the mix of total compensation, and the perceived retention value of the total compensation package in light of the competitive environment. The committee also generally takes into account increases in the cost of living, the size of comparable awards made to individuals in similar positions within the industry, the scope, responsibility and business impact of the officer’s position, the individual’s potentialonly PSUs outstanding for increased responsibility and promotion over the award term, and the individual’s personal experience and performance in recent periods. Once the target value is established, the committee determines the number of PSUs and RSUs to be granted by reference to the current value of the Company’s common stock.Mr. Humphries during 2019.
20172019 have a 2-year performance measurement period (fiscal years 20172019 and 2018)2020) over which the Company’scompany’s performance is measured across two performance metrics:components: revenue and non-GAAP EPS. See “Non-GAAP Financial Measures and Forward-Looking Statements” on page 65. Revenue and non-GAAPadjusted diluted EPS, each determineof which determines 50% of the award.
The board unanimously recommends a voteFORthe approval, on an advisory (non-binding) basis, of our executive compensation. (i) threshold – 50% vesting, with 0% vesting for performance below the threshold; (ii) target – 100% vesting; and (iii) maximum – 200% vesting, and the maximum possible number of PSUs that may vest. Whether and to what extent the performance as to either metric has beenfor the 2019/20 PSUs is achieved will be determined by the Compensation Committee in its sole discretion based upon the audited financialsactual company results for the 20172019 and 20182020 fiscal years.
To the extent the level of achievement falls between the threshold and target levels or between the target and maximum levels for either metric, straight-line interpolation iswill be utilized to calculate the payout level for the component.
PerformanceFor the 2019/20 PSUs, performance across the two metrics determineswill determine the total number of PSUs that may vest, with actual vesting of the awards as set forth below, and contingent upon the NEO continuing in the service of the Companycompany through such dates:the applicable date:
| ● | 1/3rdwill vest 30 months following the start of the performance measurement |
| ● | 2/3rdswill vest 36 months following the start of the performance measurement period. |
For information on 2016 PSUs that in part vested in, andPrior to determining the performance by the company against the targets for the 2016/17 PSUs, 2017/18 PSUs and 2018/19 PSUs, the Compensation Committee adjusted the revenue and adjusted diluted EPS payout ranges by the amount of revenue and adjusted diluted EPS derived from acquisitions completed during the applicable performance periods, making them M&A-neutral. The committee may make similar adjustments for the 2019/20 PSUs and other future PSUs.
36 COGNIZANT
The following timeline and table shows the 2019/20 PSUs granted in 2019 and other PSUs granted in prior years that had aperformance periods or vestings during 2019, including PSUs granted in 2016, 2017 and 2018.
PSUs OUTSTANDING IN 2019 FOR OTHER NEOs
| 1 | Target increase (compound annual growth rate) is as initially set by the Compensation Committee and assumes no acquisitions. Achieved increase is as reported less acquisitions (for comparability to target). |
| 2 | Target and achieved revenue increases for the 2019/20 PSUs are based on constant currency revenue growth as determined by the Compensation Committee. |
2020 PROXY STATEMENT 37
2020 PSU AWARD CHANGES
For 2020, the Compensation Committee revised the performance-based compensation structure to better align with the company’s strategy as refined during 2019, peer group, competitor and industry practices, the recommendations of the committee’s independent compensation consultant and feedback from shareholders gathered through the company’s fall 2019 shareholder engagement process (seepage 18). The committee determined to make changes to the performance metrics and weightings, performance measurement period during, 2017, see “Aligning Pay with Performance”and vesting schedule. The committee may make additional changes based on page 6, “Primary Compensation Elements for 2017 – Overview” on page 29 and footnotes 4 and 5 to the Outstanding Equity Awards at Fiscal Year-End 2017 Table on page 39.impact of the COVID-19 pandemic.
| 2019 PSU Awards | 2020 PSU Awards | Rationale for Change | |||
| Components/ Weighting |   |  | ●TSR metric favored by shareholders helps align management and shareholder interests ●Feedback from shareholders generally favored a relative TSR metric as compared to an absolute TSR metric as used for part of the 2019 - 2023 CEO PSUs ●While adding relative TSR, weighting of revenue remained the same while weighting of adjusted diluted EPS was decreased to reflect the strategic priority of increased revenue growth | ||
 | |||||
| Relative TSR Performance Scale | Current CEO | Payout range: | ●Payout range aligns with payout range for the 2019 - 2023 CEO PSUs ●Payout range, including the setting of the target at the 50th percentile of the peer group, was considered appropriate given the historical TSR of the relative TSR peer group making it a strong peer group | ||
| Payout range: |  | Maximum: 80thpercentile (200%) Target: 50thpercentile (100%) Threshold: 30thpercentile (50%) | |||
 | Target: 50thpercentile (100%) Threshold: 30thpercentile (50%) | If absolute TSR is negative, payout on relative TSR metric is capped at 100% | |||
| Other NEOs No relative TSR component | |||||
| Relative TSR Peer Group | Current CEO Other NEOs | S&P 500 IT Indexplus ●5 non-U.S. Cognizant direct competitors (Capgemini, HCL Technologies, Infosys, Tata Consultancy and Wipro) ●3 emerging IT consulting companies (CGI, EPAM Systems and Genpact) | ●Revised relative TSR peer group includes 75 total constituents, including direct and emerging competitors and numerous technology companies ●Historical TSR of the relative TSR peer group makes it a strong peer group | ||
| Performance Measurement Period | Current CEO Other NEOs | 3-year performance measurement period: ●Revenue and Adjusted EPS: Three 1-year goals (1/3rd weighting each), set upfront as a percentage increase over prior year actuals, with performance and payout measured separately for each year ●Relative TSR: 3-year goal | ●3-year performance measurement period is better aligned with peer group and competitor practices and feedback from shareholders supported the move from a 2-year to a 3-year performance measurement period ●Use of three 1-year goals for revenue and adjusted diluted EPS, set upfront as a percentage increase over prior year actuals, helps address the challenges of 3-year goal setting and maintains the incentive value of the awards for subsequent years even if there is underperformance in a single year | ||
| Vesting | Current CEO At end of performance measurement period Other NEOs 1/3rdat 30 months 2/3rdsat 36 months …from the start of the performance measurement period | No later than the March 15 following the end of the performance measurement period | ●With the longer 3-year performance measurement period, an additional time vesting period was determined to be no longer necessary and did not align with peer group and competitor practices | ||
RSUs38
RSUs vest in quarterly installments over a 3-year period from the grant date. Grants are made annually for Mr. D’Souza, Mr. Mehta and Ms. McLoughlin, with the full amount of such grants included in target direct compensation. Grants are made on a three-year cycle for Mr. Chintamaneni and Mr. Friedrich, with the targeted grant date value of annual vestings included in target direct compensation.
2018 Proxy Statement 31COGNIZANT
2017 Compensation for Our Named Executive Officersby NEO
This section includes compensation information for and provides an overview of the compensation decisions made with respect to our NEOs.
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-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 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 committee in the year of such decision.
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 “2019 Summary Compensation Table” onpage 49. The SEC compensation view reflects the actual base salary and ACI earned by an NEO in a given year, the grant date fair value of the RSUs and PSUs granted in a given year 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 periods. It also includes any incremental modification date fair value of any PSUs or RSUs whose terms were modified during the year. 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 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.
The table below summarizes the manner in which the various compensation elements for a given year are included in target direct compensation, SEC compensation and realized compensation.
| Annual Cash | |||||||||
| Base Salary | Incentive (ACI) | PSUs | RSUs | Other | |||||
| Target Direct Compensation | Target base salary for the year (generally equal to actual base salary) | Target ACI for the year | Grant date fair value of the PSUs granted during the year | McLoughlin and Frank: Grant date fair value of the RSUs granted during the year Sinha and Thomas: Grant date fair value of the RSUs targeted to vest during the year | D’Souza:Cash bonus paid in lieu of ACI for 2019 | ||||
| SEC Compensation | Actual base salary for the year | Actual ACI earned for the year | Grant date fair value of the PSUs granted during the year and any incremental modification date fair value of any PSUs whose terms were modified during the year | Grant date fair value of the RSUs granted during the year and any incremental modification date fair value of any RSUs whose terms were modified during the year | All other compensation as required by SEC rules, including sign-on bonuses and equity grants upon joining the company and perquisites | ||||
| Realized Compensation | Actual value as of the vesting date of PSUs that vested during the year | Actual value as of the vesting date of RSUs that vested during the year | All other reported W-2 income |
2020 PROXY STATEMENT 39
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 | Age 46 | Cognizant Tenure
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1 | |||
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Key Responsibilities and Career Highlights
Mr. Humphries joined Cognizant as our CEO on April 1, 2019. In his role as CEO, Brian sets the company’s strategic direction, promotes the company’s client-first culture and focuses on ensuring the company’s sustainable growth and driving long-term shareholder value. Prior to joining Cognizant, he was CEO of Vodafone Business where he was responsible for the strategy, solution development, sales, marketing, partnerships and commercial and financial success of Vodafone Business, a division of Vodafone Group, one of the world’s largest telecommunications companies. Vodafone Business accounted for nearly a third of Vodafone Group’s service revenue, with approximately €12 billion in sales globally, during Mr. Humphries’ tenure as CEO. Prior to Vodafone, Mr. Humphries held a variety of executive roles at technology companies Dell Technologies and Hewlett-Packard.
Committee Assessment and Target Direct Compensation
Mr. Humphries was selected by the board to serve as the company’s CEO based on his extensive experience as a senior executive in the technology sector. In connection with his appointment as CEO, the company entered into an offer letter with Mr. Humphries on November 30, 2018 (the “Offer Letter”) and subsequently entered into an Executive Employment and Non-Disclosure, Non-Competition, and Invention Assignment Agreement on April 1, 2019 (such employment agreement, Mr. Humphries’ “Employment Agreement”), pursuant to which Mr. Humphries 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. Humphries’ 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 committee approved, and Mr. Humphries’ Employment Agreement provided for (by way of reference to the Offer Letter, as applicable), target direct compensation consisting of the following: (i) base salary of £800,000 (prorated to £602,740 for 2019), (ii) ACI target of 200% of base salary (£1,600,000, prorated to £1,205,479 for 2019) and (iii) full value equity awards with a grant date value of $8,000,000. For 2019, the full value equity awards consist entirely of the 2019 – 2023 CEO PSUs as described on32page 36. For 2020, the full value equity awards are expected to consist of PSUs (60%) and RSUs (40%) on terms consistent with the annual equity awards to be provided in 2020 to other executive officers of the company as described onpages 34to38. In addition, Mr. Humphries was entitled to certain buy-out awards in 2019: (i) an equity buy-out award consisting of $3,000,000 in RSUs and (ii) a cash sign-on bonus of $4,000,000, of which Mr. Humphries was required to utilize $1,000,000 of the after-tax amount to purchase shares of our common stock during our first open trading window after April 1, 2019. The buy-out awards in 2019 were intended to compensate Mr. Humphries for long-term compensation at Vodafone that he forfeited upon joining Cognizant Technology Solutions Corporationand were not considered part of his target direct compensation. Overall, the compensation arrangement for Mr. Humphries, excluding the buy-out awards, was set at an overall level competitive with the company’s peer group, but weighted more heavily towards performance-based and equity compensation as compared to the peer group.
SEC Compensation
In 2019, Mr. Humphries’ SEC compensation was significantly higher than his target direct compensation as it included the full value of the buy-out awards ($3,000,000 in RSUs and a $4,000,000 sign-on bonus, both included in “Other”,
, below), partially offset by the 2019 ACI achievement being 42.8% of target. The grant date value of the PSUs included in SEC compensation differs from target because it is computed in accordance with applicable accounting rules as an award with a “market condition” due to the inclusion of the Absolute TSR component. The effect of the market condition results in a discount relative to the fair value of an award without a market condition.
Realized Compensation
In 2019, Mr. Humphries’ realized compensation was substantially lower than his target direct compensation as nearly all of the equity awards made in 2019 will vest in future periods. His realized compensation consisted principally of his base salary, 2019 ACI at 42.8% of target, two quarterly vestings of RSUs from his buy-out award and the $4,000,000 sign-on bonus (the latter two included in “Other”,, below).
Certain numbers shown in the graphs above were converted to US$ based on a £1 = $1.28 exchange ratio, the twelve-month average for fiscal year 2019.
40 COGNIZANT
Francisco D’Souza Age51 |  |
Key Responsibilities and Career Highlights
Mr. D’Souza co-founded Cognizant in 1994 and served as the company’s CEO from 2007 through March 31, 2019 and as an advisor to the company through June 30, 2019.
Committee Assessment and Target Direct Compensation
On February 1, 2019, Mr. D’Souza and the company entered into an amendment to his Amended and Restated Executive Employment and Non-Disclosure, Non-Competition, and Invention Assignment Agreement (such employment agreement, Mr. D’Souza’s “Employment Agreement” and such amendment, the “Transition Agreement”). The Compensation Committee considered the Transition Agreement with the assistance of Pay Governance and approved it as in the best interests of the company in light of Mr. D’Souza’s long and highly successful tenure with the company and the desire to ensure a smooth CEO transition.
Pursuant to the Transition Agreement, Mr. D’Souza received during 2019: (i) $375,000 in base salary and a cash bonus of $750,000 (included in “Other”,, below) for the six months of 2019 during which he remained employed by the company; (ii) RSUs with a grant date value of $6,000,000 of which 25% vested on March 31, 2019 and 75% vested on June 30, 2019; and (iii) vesting of all of his outstanding unvested equity awards other than the 2018/19 PSUs granted to him in 2018 (with a performance period through the end of 2019), which continued to be subject to satisfaction of the applicable performance-vesting criteria. Mr. D’Souza received no shares from the 2018/19 PSUs since the overall achievement was determined by the Compensation Committee to be 0% (seepage 37). The Compensation Committee determined that such acceleration of unvested equity was appropriate given Mr. D’Souza’s long and highly successful tenure and the retirement policy for VP+ employees under consideration at the time (seepage 46for the retirement policy adopted in March 2020).
SEC Compensation
In 2019, Mr. D’Souza’s SEC compensation was substantially higher than his target direct compensation primarily due to the inclusion per SEC rules of $22,021,575 of incremental modification date fair value of PSUs and RSUs that were previously granted to Mr. D’Souza and modified by the Transition Agreement to vest on June 30, 2019, earlier than originally scheduled, resulting in inclusion of additional incremental value based on a determination that such awards would probably vest as a result of the modification versus it being improbable that they would vest without the modification. Specifically, the accelerated equity vesting provision of the Transition Agreement resulted in the following additional amounts: (a) PSUs: $18,949,093 (
below) from the modification of 2017/18 PSUs granted in 2017 ($12,186,194) and 2018/19 PSUs granted in 2018 ($6,762,899); and (b) RSUs: $3,072,482 (included in
below) from the modification of RSUs granted in 2017 ($1,099,935) and RSUs granted in 2018 ($1,972,547). In 2018, Mr. D’Souza’s SEC compensation was slightly lower than his target direct compensation due to the actual 2018 ACI achievement being 87.7% of target.
Realized Compensation
Mr. D’Souza’s realized compensation was substantially higher than his target direct compensation in both 2018 and 2019. In 2019, this was principally due to the following: (a) the vesting of 2016/17 PSUs on January 1, 2019 ($4,706,454) and the accelerated vesting of 2017/18 PSUs on June 30, 2019 pursuant to the Transition Agreement ($11,472,118) (included in
below); and (b) the vesting of RSUs granted in 2019 ($5,399,593), the vestings of RSUs before June 30, 2019 that had been granted prior to 2019 ($1,262,758) and the accelerated vesting of other outstanding RSUs pursuant to the Transition Agreement ($2,874,164) (included in
below). Additionally, his 2019 realized compensation included in “Other” the amount of his director compensation that he received once he ceased to be an employee of the company ($86,607) (included in
below). In 2018, this was due to his exercise during 2018 of stock options granted to him in 2008, resulting in over $15 million of additional compensation included in “Other” (
below). Other differences in 2018 were primarily due to the actual achievement of ACI versus target and differences in equity vestings (including as a result of PSU achievement) versus equity grant date fair values during the year.
2020 PROXY STATEMENT 41
Karen McLoughlin | |||
 | Age | Cognizant Tenure 16 years Public Company Boards | |
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Key Responsibilities and Career Highlights
Ms. McLoughlin oversees the company’s worldwide financial planning and analysis, accounting, controllership, tax, treasury and internal audit functions. Other areas under her purview include our corporate development, investor relations, enterprise risk management, procurement and real estate functions. Prior to joining Cognizant in 2003, Ms. McLoughlin held key financial management positions with Spherion Corp. and Ryder System Inc. She began her career with Price Waterhouse (now PricewaterhouseCoopers LLP).
Committee Assessment and Target Direct Compensation
The Compensation Committee, at its meeting in February 2019, evaluatedMs. McLoughlin’s performance during 2018 and prior years and the compensation information provided by Pay Governance for CFOs in the company’s peer group. The committee considered Ms. McLoughlin’s continued strong performance as CFO in 2018, the company’s continued growth and the compensation information for CFOs in the peer group for 2019 (see “Peer Group” onpage 32).
Based on these considerations, the committee determined that Ms. McLoughlin’s target direct compensation for 2019 should be increased to $5,800,000 (4% increase vs. 2018) to reflect continued performance and general market trends.
The specific components of Ms. McLoughlin’s 2019 target direct compensation were as follows: (i) base salary of $750,000 (7% increase vs. 2018), (ii) ACI target of 1x base salary ($750,000; a 7% increase vs. 2018), (iii) PSUs of $2,300,000 (15% increase vs. 2018) and (iv) RSUs of $2,000,000 (9% decrease vs. 2018 primarily due to her receiving in mid-2018 an additional RSU retention grant during the period during which the company undertook a search for a new CEO).
SEC Compensation
In both 2018 and 2019, Ms. McLoughlin’s SEC compensation was lower than her target direct compensation due to the actual ACI achievement for each year being less than target (87.7% of target in 2018 and 42.8% of target in 2019).
Realized Compensation
Ms. McLoughlin’s realized compensation was lower than her target direct compensation in both 2018 and 2019 due to the actual achievement of ACI versus target and differences in equity vestings versus equity grant date fair values during the years. In 2018, this lower value was partially offset by her exercise during 2018 of stock options granted to her in 2008, which resulted in $747,989 in additional consideration in 2018 included in “Other” (
below).
42 COGNIZANT
Age54 |  |
Key Responsibilities and Career Highlights
Mr. Frank became our Executive Vice President and President, Cognizant Digital Business in May 2019. In this role, Mr. Frank is responsible for overseeing our digital business practice. This includes digital strategy, artificial intelligence (AI) and analytics, interactive, digital engineering and Internet of Things (IoT). Prior to his current role, Mr. Frank was our Executive Vice President, Chief Strategy Officer and Chief Marketing Officer. He joined Cognizant in 2005 and his deep understanding of the digital economy – across silos, organizations and marketplaces - and ability to see around technology’s tight corners have been key factors in Cognizant’s continued growth and ability to address clients’ ever-changing business needs.
Committee Assessment and Target Direct Compensation
The Compensation Committee, at its meeting in February 2019, evaluated Mr. Frank’s performance during 2018 and prior years and compensation information provided by Pay Governance for executives with similar responsibilities based on size- and industry-appropriate market data. The committee considered Mr. Frank’s continued strong performance in 2018, his importance in determining company strategy as it makes the shift to digital and the compensation information for executives at other companies with similar responsibilities. Based on these considerations, the committee determined that Mr. Frank’s target direct compensation for 2019 should be increased to $4,800,000 (1% increase vs. 2018) to reflect continued performance and general market trends.
The specific components of Mr. Frank’s 2019 target direct compensation were as follows: (i) base salary of $650,000 (21% increase vs. 2018), (ii) ACI target of 1x base salary ($650,000; a 21% increase vs. 2018), (iii) PSUs of $1,900,000 (2% increase vs. 2018) and (iv) RSUs of $1,600,000 (11% decrease vs. 2018 primarily due to his receiving in mid-2018 an additional RSU retention grant during the period during which the company undertook a search for a new CEO).
SEC Compensation
In both 2018 and 2019, Mr. Frank’s SEC compensation was lower than his target direct compensation due to the actual ACI achievement for each year being less than target (87.7% of target in 2018 and 42.8% of target in 2019).
Realized Compensation
Mr. Frank’s realized compensation was lower than his target direct compensation in both 2018 and 2019 due to the actual achievement of ACI versus target and differences in equity vestings versus equity grant date fair values during the years.
2020 PROXY STATEMENT 43
Dharmendra Age57 |  |
Key Responsibilities and Career Highlights
Mr. Sinha became our Executive Vice President and President, North America in June 2019. In this role, he is responsible for our North American strategy, industry verticals, sales, delivery and vertical operations. Prior to this role, he was our President, Global Client Services and managed Cognizant’s global go-to-market team, which included sales, field marketing, the strategic partnership group and the strategic engagement and advisory relationships group. He joined Cognizant in 1997 and has served in a variety of client-facing roles.
Committee Assessment and Target Direct Compensation
The Compensation Committee, at its meeting in February 2019, considered Mr. Sinha’s strong performance during 2018 and prior years, and compensation information provided by Pay Governance for executives with similar responsibilities in the company’s peer group. Based on these considerations, the committee determined that Mr. Sinha’s target direct compensation for 2019 should be $3,700,000 (13% increase vs. 2018) to reflect continued performance and general market trends.
The specific components of Mr. Sinha’s 2019 target direct compensation were as follows: (i) base salary of $650,000 (37% increase vs. 2018), (ii) ACI target of 1x base salary ($650,000; a 37% increase vs. 2018), (iii) PSUs of $883,000 (10% increase vs. 2018) and (iv) RSUs of $1,517,000 (1% decrease vs. 2018).
SEC Compensation
In both 2018 and 2019, Mr. Sinha’s SEC compensation differed from his target direct compensation in part due to the timing of his multiple once-every-three years RSU grants: while his SEC compensation is determined on the basis of the grant date fair value of the RSU grants he received in the respective year, the committee set his target direct compensation using the grant date fair value of the portions of the RSU awards that were targeted to vest in the applicable year. In addition, in both 2018 and 2019, his SEC compensation with respect to the ACI component of compensation differed as a result of the actual ACI achievement for each year being less than target (87.7% of target in 2018 and 42.8% of target in 2019).
Realized Compensation
Mr. Sinha’s realized compensation was lower than his target direct compensation in both 2018 and 2019 due to the actual achievement of ACI versus target and differences in equity vestings versus equity grant date fair values during the years.
44 COGNIZANT
Santosh Thomas | |||
 | Age52 | Cognizant Tenure | |
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Key Responsibilities and Career Highlights
Mr. Thomas served as our Executive Vice President and President, Global Growth Markets, which comprise Europe, Asia-Pacific, Middle East and Latin America, through February 14, 2020. In that role, he ran the company’s market strategies and day-to-day operations, which included managing client relationships, sales, profit and loss, and nearshore delivery, among other responsibilities. Prior to that role, he served as our Head, Growth Markets from 2011 to 2016. He joined Cognizant in 1999 and held various other senior leadership roles including leading Continental European operations and various roles in client relationships and market development in North America. Prior to joining Cognizant in 1999, Mr. Thomas worked with Informix and HCL Hewlett Packard Limited.
Committee Assessment and Target Direct Compensation
The Compensation Committee, at its meeting in February 2019, considered Mr. Thomas’ strong performance during 2018 and prior years and compensation information provided by Pay Governance for executives with similar responsibilities in the company’s peer group. Based on these considerations, the committee determined that Mr. Thomas’ target direct compensation for 2019 should be $4,155,606 to reflect continued performance and general market trends. The specific components of Mr. Thomas’ 2019 target direct compensation were as follows: (i) base salary of €560,815, (ii) ACI target of 1x base salary (€560,815), (iii) PSUs of $1,450,000 and (iv) RSUs of $1,450,000.
SEC Compensation
In 2019, Mr. Thomas’ SEC compensation differed from his target direct compensation in part due to the timing of his multiple once-every-three years RSU grants: while his SEC compensation is determined on the basis of the grant date fair value of the RSU grants he received in 2019, the committee set his target direct compensation using the grant date fair value of the portions of the RSU awards that were targeted to vest in 2019. In addition, his SEC compensation with respect to the ACI component of compensation differed as a result of the actual ACI achievement being 42.8% of target.
Realized Compensation
Mr. Thomas’ realized compensation was lower than his target direct compensation in 2019 due to the actual achievement of ACI versus target and differences in equity vestings versus equity grant date fair values during the year.
Certain numbers shown in the graphs above were converted to US$ based on a €1 = $1.12 exchange ratio, the twelve-month average for fiscal year 2019. Under applicable SEC rules, we have excluded Mr. Thomas’ compensation for 2018 as he was not an NEO during that year.
2018 Proxy Statement2020 PROXY STATEMENT 3345
Other Elements of Compensation
Supplemental Retirement Programs
We do not have any nonqualified deferred compensation programs, pension plans or pre-tax supplemental executive retirement plans for our executive officers,NEOs, except for the CSRP described under “Broad-Based Programs” below.
Broad-Based Programs
Our U.S.-based executive officers are eligible to participate in our broad-based medical, dental, and vision, insurance, life and accidental death insurance programs.
Our U.S.-based executive officers are additionally eligible to participate in our 401(k) savings plan, CSRP2004 Employee Stock Purchase Plan, as amended and ESPPrestated in 2013 and 2018 (the “ESPP”), and the Cognizant Technology Solutions Supplemental Retirement Plan (the “CSRP”) on the same basis as all other regular employees.
U.S.-based employees generally. Under the 401(k) savings plan, we match employee contributions at the rate of 50% for each dollar contributed during each pay period, up to the first 6% of eligible compensation contributed during each pay period, subject to applicable U.S. Internal Revenue Service (“IRS”) limits. The matching contributions immediately vest.vest immediately.
| RETIREMENT POLICY | |
In March 2020 the board adopted a new retirement policy covering certain RSU and PSU awards that includes the following key terms: | |
Eligibility | All employees at the VP level and above |
Retirement | Voluntary retirement upon: |
●At least55 yearsof age; and ●At least10 yearsof service | |
Benefits | RSUs and PSUs continue to settle on the originally scheduled vesting dates following retirement |
●Applies only to equity awards made on or after the adoption of the policy and at least 6 months before the individual’s retirement date ●PSU awards are pro-rated based on the portion of the performance measurement period during which the individual was employed before retirement (actual performance continues to be assessed on the full original performance measurement period) | |
Additional Conditions | 3 month’s notice before retirement to allow for succession planning; execution of a release and compliance with non-competition and non-solicitation restrictions that apply until 1 year after settlement of the individual’s last equity award |
The retirement policy was developed by the Compensation Committee with reference to the practices of the peer group companies and with the advice of Pay Governance. | |
Our U.S.-based executive officers who are subject to contribution restrictions under our 401(k) savings plan due to statutory limits that apply to highly-compensated employees are eligible to participate in the Cognizant Technology Solutions Supplemental Retirement Plan (the “CSRP”)CSRP on the same basis as all other regular U.S.-based employees.employees generally. The CSRP is a nonqualified savings plan in which the employee’s contributions are made on a post-tax basis to an individually owned, portable and flexible retirement plan held with a life insurance company. The CSRP works alongside established qualified retirement plans such as our 401(k) savings plan or can be the basis for a long-term stand-alone retirement savings plan. We provide a fully vested incentive match following the same formula as our 401(k) savings plan. Because the CSRP is not subject to the same IRS non-discrimination rules as our 401(k) savings plan, employees that face limitations on their 401(k) contributions due to these rules can avail themselves of the CSRP without forgoing the Companycompany match. Although there is a limit in the amount of employer contributions, there is no limit to the amount an employee may contribute to the CSRP and it can be used in concert with other retirement strategies that may be available outside of the Company.company.
Our U.K.-based executive officers are eligible to participate in our U.K. group personal pension plan on the same basis as other U.K.-based employees generally. Under this plan, we match employee contributions of up to 10% of pensionable salary (depending on the employee’s job grade), subject to applicable statutory annual allowance limits. For any excess pension contributions over the annual allowance limits, which an employee is eligible for under the terms of such employee’s contract of employment, such employee is paid such contribution value as a cash allowance, subject to applicable tax law.
Our Netherlands-based executive officer was eligible to participate in our defined contribution pension scheme at Zwitserleven PPI (“Zwitserleven Plan”) on the same basis as other Netherlands-based employees generally. Under this scheme, a premium is made available to an eligible employee each month, which is invested in a pension savings deposit at Zwitserleven PPI. The level of the premium depends on the employee’s salary and age on January 1 of each calendar year.
The 401(k) savings plan, CSRP, U.K. group personal pension plan, Zwitserleven Plan and other generally available benefit programs allow us to remain competitive for employee talent. We believe that the availability of the aforementioned broad-based benefit programs generally enhances employee morale and loyalty.
Perquisites
We seek to maintain an egalitarian culture in our facilities and operations. The Company’scompany’s philosophy is to provide a minimal amount of personal benefits and perquisites to its executives and generally only when such benefits have a strong business purpose.
We incur expenses to ensure that our employees, including our executive officers, are accessible to us and our customers at all times and to promote our commitment to provide our employees and executives with the necessary resources and items of technology to allow them to operate “around the clock” in a “virtual office” environment. However, we do not view these expenses as executive perquisites because they are
46 COGNIZANT
essential to the efficient performance of theirexecutives’ duties and are comparable to the benefits provided to a broad-based group of our employees. We also provide personal security services to certain of our executive officers where we believe the provision of such services is in the interest of the Company,company, and we may reimburse executives for approved travel expenses where an immediate family member accompanies an executive to attend a business function at which such family member is generally expected to attend.
In addition, the Companycompany provides Mr. D’SouzaHumphries with limited accessa corporate apartment in New York City as a result of his frequent travel to an administrative assistant of the our New York office.
Company and vehicle rentals for security purposes. Mr. D’Souza does not reimburse the Company for its cost of providing the administrative services and vehicle rentals and the Company pays him an additional amount to help offset any income taxes associated with the receipt of such services.Policies Impacting Compensation
Executive Stock Ownership Guidelines
| CEO |  | Our stock ownership guidelines |
| 6x | ||
| OTHER NEOs | ||
| 4x | ||
 |
34 Cognizant Technology Solutions Corporation
Hedging, Short Sale, Margin Account and Pledging Prohibitions
The Company’sOur insider trading policies include the following prohibitions:
 | No or | All of the |
| No Sales | All of the |
| No Accounts | All of the company’s directors, |
| No | All of |
Clawback Policy
The Company maintainsWe maintain a Clawback Policy,clawback policy, which applies to all NEOs and certain other members of management.
When Clawback Policy May Apply | Compensation Subject to Clawback | |||
Company is required to prepare anaccounting restatementdue to material noncompliance by the | Incentive compensation actually received during the preceding three years less amount that would have been received based on restated financial results | |||
 | ||||
…and to the extent therestatement is caused by anemployee’s willful fraud or intentional manipulation of performance measuresthat | Same as above, but clawback may cover the entire period the employee was subject to the clawback policy | |||
| ||||
Employeeengages in illegal or improper conductthat causes significant financial or reputational harm to the | Any portion of incentive compensation | |||
| ||||
Employeehas knowledge of and fails to report to the | Any portion of incentive compensation | |||
| ||||
Employee isgrossly negligent in fulfilling his or her supervisory responsibilitiesto prevent any employee or agent of the | Any portion of incentive compensation | |||
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2020 PROXY STATEMENT 47
Equity Grant Practices
The Compensation Committee or the Boardboard approves the grant of stock-based equity awards, such as options, PSUs, RSUs and RSUs,options, 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 specified)date). In addition, the Boardcommittee has authorized, an executivesubject to various limitations, a committee comprised of members of the executive management team to grant optionsstock-based equity awards to newly hired and certain existing employees, excluding executive officers and certain other than employees subject to Section 16 reporting as defined by the SEC.
senior employees. The Compensation Committee and the Boardboard do not engage in any market timing ofwith regards to the stock-based equity awards made to executive officers or other award recipients. It is the Company’scompany’s policy that all stock option grants, whether made by the Board,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
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’scompany’s value or reward poor judgment by executives. Several features of the Company’scompany’s compensation programsprogram reflect sound risk management practices. Notably, the Compensation Committeecommittee believes compensation has been allocated among base salarycash and shortequity and short-term and long-term compensation target opportunitieselements in such a way as to not encourage excessive risk-taking, but rather to reward meeting strategic Companycompany goals that enhance stockholdershareholder value. In addition, the Compensation Committeecommittee believes that the mix of equity award instruments used under the Company’scompany’s long-term incentive program (full value awards as well as the multi-year vesting of the equity awards) also mitigatesminimize 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 NEOs to help mitigate potential compensation risk (seepage 47). Additionally, the targets and properly accounts forachievement determinations related to our performance-based compensation (ACI and PSUs) is M&A-neutral, which discourages excessive risk-taking with respect to M&A transactions. In sum, the time horizon of risk.
The Compensation Committeecommittee believes that the Company’scompany’s compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company.
2018 Proxy Statement 35
Table of Contentscompany.
Tax Considerations – Deductibility of Executive Compensation
IRCU.S. Internal Revenue Code (“IRC”) Section 162(m) imposes a $1 million annual limit on the amount that a public company may deduct for compensation paid to covered employees, which generally includes all current and certain former NEOs (2017 and later), who are employed as of the end of the year. Prior to the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), covered employees generally consisted of our CEO and each of the next three highest compensated officers serving at the end of the taxable year other than our CEO, and compensation that qualified as “performance-based” under Section 162(m) was exempt from this $1 million deduction limitation. As part of the Tax Reform Act, the ability to rely on the “performance-based” exemption was, with certain limited exceptions, eliminated. In addition, the definition of covered employees was expanded to generally include all named executive officers. Although we maintain compensation plans that originally were intended to permit the payment of compensation deductible under Section 162(m), we may no longer be able to take a deduction forsuch, any compensation in excess of the $1 million annual limit that is paidwe may pay to a covered employee subject to the Tax Reform Act’s limited transition relief rules.is not deductible.
Ongoing and Post-Employment CompensationSeverance Benefits
NO TAX GROSS-UPS ON SEVERANCE BENEFITS None of the NEOs is entitled to any tax gross-up payments for the tax liability they incur with respect to such severance benefits or other changes 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 onpage 56. |
We have entered into Amendedexecutive employment and Restated Executive Employmentnon-disclosure, non-competition and Non-Disclosure, Non-Competition and Invention Assignment Agreementsinvention assignment agreements (collectively, the “Employment Agreements”) with each of the NEOs under which certain payments and benefits would be provided should the NEO’s employment terminate under certain circumstances, including in connection with a change in control.
control (seepage 56). We believe that the Employment Agreements continue to achieve two important goals crucial to our long-term financial success, namely, the long-term retention of theour NEOs and their commitment to the attainment of our strategic objectives.strategicobjectives. These agreements will 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 these severance packages are fair and reasonable in light of market practices, the years of service our NEOs have collectively rendered us (average tenure of over 1516 years), the level of dedication and commitment they have rendered us over that period, the contributions they have made to our growth and financial success and the value we expect to receive from retaining their services, including during challenging transition periods following a change in control.
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The Compensation Committee has furnished the report set forth below. The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Companycompany specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Exchange Act.
To the Board of Directors of Cognizant Technology Solutions Corporation:
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in the Company’s proxy statement for the 2018 Annual Meeting of Stockholders. The Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in such proxy statement for filing with the Securities and Exchange Commission and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
To the Board of Directors of Cognizant Technology Solutions Corporation: The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in the company’s proxy statement for the 2020 annual meeting of shareholders. The Compensation Committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in such proxy statement for filing with the Securities and Exchange Commission and incorporated by reference into the company’s Annual Report on Form 10-K for the year ended December 31, 2019. By the Compensation Committee of the Board of Directors of
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| JOHN N. FOX, JR. | LEO S. MACKAY JR. | MICHAEL PATSALOS-FOX | JOSEPH M. VELLI |
48 COGNIZANT
Executive Compensation Tables and Pay Ratio
20172019 Summary Compensation Table
The following 20172019 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, 2015, 20162017, 2018 and 20172019 by our CEO, CFO and each of our three other most highly compensated executive officers who were serving as executive officers at the end of the 20172019 fiscal year (collectively, the “NEOs”). Additionally, our former CEO, Mr. D’Souza, is included in the table as he served as our CEO through March 31, 2019. No executive officers who would have otherwise been includable in such table on the basis of total compensation for the 20172019 fiscal year have been excluded by reason of their termination of employment or change in executive status during that year.
| Name and Principal Position | Year | Salary | Bonus | Stock Awards1, 2 | Option Awards | Non-Equity Incentive Plan Comp.3 | All Other Pension and Nonqualified Deferred Comp. | All Other Comp. | SEC Total4 | Adjusted SEC Total5 | |||||||||||||||||||
| Francisco D’Souza CEO | 2017 | $ | 669,282 | — | $ | 10,993,841 | — | $ | 648,111 | — | $ | 167,157 | 6 | $ | 12,478,392 | $ | 12,478,392 | ||||||||||||
| 2016 | $ | 664,300 | — | $ | 7,018,671 | — | $ | 450,332 | — | $ | 123,337 | $ | 8,256,640 | $ | 12,030,863 | ||||||||||||||
| 2015 | $ | 645,000 | — | $ | 10,483,400 | — | $ | 778,306 | — | $ | 44,677 | $ | 11,951,383 | $ | 11,951,383 | ||||||||||||||
| Rajeev Mehta President | 2017 | $ | 630,000 | — | $ | 7,149,159 | — | $ | 614,647 | — | $ | 56,205 | 7 | $ | 8,450,011 | $ | 8,450,011 | ||||||||||||
| 2016 | $ | 574,100 | — | $ | 3,584,397 | — | $ | 389,284 | — | $ | 5,750 | $ | 4,553,531 | $ | 7,098,962 | ||||||||||||||
| 2015 | $ | 538,500 | — | $ | 5,353,875 | — | $ | 649,795 | — | $ | 1,500 | $ | 6,543,670 | $ | 6,543,670 | ||||||||||||||
| Karen McLoughlin CFO | 2017 | $ | 500,000 | — | $ | 3,005,130 | — | $ | 487,815 | — | $ | 8,100 | 8 | $ | 4,001,045 | $ | 4,001,045 | ||||||||||||
| 2016 | $ | 426,500 | — | $ | 1,875,841 | — | $ | 289,126 | — | $ | 7,950 | $ | 2,599,417 | $ | 3,637,530 | ||||||||||||||
| 2015 | $ | 406,000 | — | $ | 2,801,868 | — | $ | 489,910 | — | $ | 7,950 | $ | 3,705,728 | $ | 3,705,728 | ||||||||||||||
| Ramakrishna Prasad Chintamaneni EVP and President, Global Industries and Consulting | 2017 | $ | 475,000 | — | $ | 2,938,243 | — | $ | 463,424 | — | $ | 8,100 | 9 | $ | 3,884,767 | $ | 3,884,767 | ||||||||||||
| 2016 | 10 | $ | 417,250 | $ | 566,052 | $ | 2,445,428 | — | — | — | $ | 7,950 | $ | 3,436,680 | $ | 3,436,680 | |||||||||||||
| Matthew W. Friedrich EVP, General Counsel, Chief Corporate Affairs Officer and Secretary | 2017 | 11 | $ | 330,144 | $ | 500,000 | $ | 5,508,542 | — | $ | 512,206 | — | $ | 132,148 | 12 | $ | 6,983,040 | $ | 6,983,040 | ||||||||||
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2018 Proxy Statement and 2017 for Mr. Humphries and Mr. Thomas, and for 2017 for Mr. Frank, as they were not NEOs during those years. Mr. Humphries was first employed by the company on April 1, 2019.
Salary.Salaries are paid in the local currency of the resident jurisdiction of each NEO. The local currency for all NEOs, other than Mr. Humphries and Mr. Thomas, is US$. For purposes of this column, Mr. Humphries’ salary has been converted to US$ from GBP at an exchange rate of £1 = $1.28 and Mr. Thomas’ salary has been converted to US$ from Euros at an exchange rate of €1 = $1.12, in each case the twelve-month average exchange rate for fiscal year 2019.
Bonus.From time to time, our Compensation Committee determines that a cash bonus is appropriate in light of an NEO’s individual circumstances. Mr. Humphries received a one-time cash sign-on bonus upon his joining the company on April 1, 2019 that was designed to compensate him for long-term compensation at Vodafone he forfeited on joining Cognizant and of which $1,000,000 of the after-tax amount he was required to utilize to purchase shares of our common stock during our first open market trading window after April 1, 2019 (see37page 40). As part of his Transition Agreement, Mr. D’Souza received a cash bonus on June 30, 2019 for the six months of 2019 during which Mr. D’Souza was employed by the company (seepage 41).
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 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 “Restricted Stock Units (RSUs)” and “Performance Stock (PSUs)” onpages 34and36, respectively, for a description of the terms of the RSUs and PSUs granted during 2019. None of the NEOs forfeited any stock awards during the 2017, 2018 or 2019 fiscal years. 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.
2020 PROXY STATEMENT 49
The grant date fair value of stock awards granted in 2019 resulted from RSU and PSU awards with the following grant date fair values:
| Mr. Humphries | Mr. D’Souza | Ms. McLoughlin | Mr. Frank | Mr. Sinha | Mr. Thomas | ||||||||
| RSUs | $2,999,935 | $5,999,995 | $1,999,975 | $1,599,936 | $ | 1,973,568 | $1,785,110 | ||||||
| PSUs | $7,346,737 | – | $2,299,949 | $1,899,983 | $ | 882,994 | $1,449,949 | ||||||
The aggregate grant date fair value of PSUs granted to our NEOs during 2019, assuming maximum performance (200%), would be as follows:
| Mr. Humphries | Mr. D’Souza | Ms. McLoughlin | Mr. Frank | Mr. Sinha | Mr. Thomas | |||||||
| PSUs, settlement at maximum – 200% | $7,346,737 | – | $4,599,898 | $3,799,966 | $1,765,988 | $2,899,898 |
The grant date fair value of the 2019 – 2023 CEO PSUs (see2017page 36) granted to Mr. Humphries are determined in accordance with FASB ASC Topic 718 as an award with a “market condition,” meaning that the potential for maximum performance is built into the grant date fair value calculation.
The amount shown in the Summary Compensation Table in the “Stock Awards” column includes for Mr. D’Souza $22,021,575 of incremental modification date fair value of RSUs and PSUs that were previously granted to Mr. D’Souza and modified by the Transition Agreement to vest on June 30, 2019, earlier than originally scheduled, resulting in incremental value based on a determination that that such awards would probably vest as a result of the modification versus it being improbable that they would vest without the modification. Specifically, the accelerated equity vesting provision of the Transition Agreement resulted in the following additional amounts:
| RSUs | PSUs | |||||||
| 2017 Grant | $ | 1,099,935 | 2017/18PSUs | $ | 12,186,194 | |||
| 2018 Grant | $ | 1,972,547 | 2018/19PSUs | $ | 6,762,899 | |||
| Total | $ | 3,072,482 | Total | $ | 18,949,093 | |||
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 (seepage 35). ACI is paid in the local currency of the resident jurisdiction of each NEO. The local currency for all NEOs, other than Mr. Humphries and Mr. Thomas, is US$. For purposes of this column, Mr. Humphries’ ACI has been converted to US$ from GBP at an exchange rate of £1 = $1.28 and Mr. Thomas’ ACI has been converted to US$ from Euros at an exchange rate of €1 = $1.12, in each case the twelve-month average exchange rate for fiscal year 2019.
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 2019 are shown in the table below. Additionally, Mr. D’Souza received compensation for his services as a director beginning on July 1, 2019, when he ceased to be an employee of the company, commensurate with the compensation paid to our other non-employee directors (seepage 26).
| Mr. Humphries | Mr. D’Souza | Ms. McLoughlin | Mr. Frank | Mr. Sinha | Mr. Thomas | |||||||||
| 401(k) matching contribution | – | $ | 938 | $3,500 | $7,750 | $7,750 | – | |||||||
| CSRP matching contribution | – | – | $4,900 | – | $ 650 | – | ||||||||
| Home security services | $ | 13,731 | $ | 229 | $1,346 | – | – | – | ||||||
| Corporate apartment | $ | 92,516 | – | – | – | – | – | |||||||
| Pension allowance | $ | 71,827 | – | – | – | – | – | |||||||
| U.K. group personal pension plan matching contribution | $ | 4,788 | – | – | – | – | – | |||||||
| Zwitserleven plan matching contribution | – | – | – | – | – | $13,654 | ||||||||
| Director compensation | – | $ | 86,607 | – | – | – | – | |||||||
For Mr. Humphries, (i) 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 are paid to Mr. Humphries as a cash allowance, subject to applicable income tax, and (ii) the value of the U.K. group personal pension plan matching contribution represents the employer contributions to such plan (seepage 46). The value of home security services provided to Mr. Humphries is converted to US$ from CHF at exchange rate of 1 CHF = $1.01, the twelve-month average rate for fiscal year 2019, and the values of pension allowance and the employer contributions under the U.K. group personal pension plan are converted to US$ from GBP at an exchange rate of £1 = $1.28, the twelve-month average exchange rate for fiscal year 2019. For Mr. Thomas, the value of the Zwitserleven plan matching contribution represents employer contributions to such plan and is converted to US$ from Euros at an exchange rate of €1 = $1.12, the twelve-month average exchange rate for fiscal year 2019.
50 COGNIZANT
2019 Grants of Plan-Based Awards Table
The following table provides certain summary information concerning each grant of an award made to an NEO in the 20172019 fiscal year under a compensation plan.
| Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | Estimated Future Payouts Under Equity Incentive Plan Awards2 | All Other Stock Awards: Number of Shares of Stock or Units3 | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Equity Awards4 | ||||||||||||||||||||
| Name | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||
| Francisco D’Souza | 03/02/17 | $ | 282,328 | $ | 564,655 | $ | 1,129,310 | |||||||||||||||||||
| 03/02/17 | 59,994 | 119,987 | 239,974 | — | — | $ | 7,219,618 | |||||||||||||||||||
| 03/02/17 | 62,726 | — | — | $ | 3,774,223 | |||||||||||||||||||||
| Rajeev Mehta | 03/02/17 | $ | 267,750 | $ | 535,500 | $ | 1,071,000 | |||||||||||||||||||
| 03/02/17 | 38,256 | 76,512 | 153,024 | — | — | $ | 4,603,727 | |||||||||||||||||||
| 03/02/17 | 42,304 | — | — | $ | 2,545,432 | |||||||||||||||||||||
| Karen McLoughlin | 03/02/17 | $ | 212,500 | $ | 425,000 | $ | 850,000 | |||||||||||||||||||
| 03/02/17 | 16,346 | 32,691 | 65,382 | — | — | $ | 1,967,017 | |||||||||||||||||||
| 03/02/17 | 17,253 | — | — | $ | 1,038,113 | |||||||||||||||||||||
| Ramakrishna Prasad | 03/02/17 | $ | 201,875 | $ | 403,750 | $ | 807,500 | |||||||||||||||||||
| Chintamaneni | 03/02/17 | 8,656 | 17,311 | 34,622 | — | — | $ | 1,041,603 | ||||||||||||||||||
| 12/12/17 | 26,545 | — | — | $ | 1,896,640 | |||||||||||||||||||||
| Matthew W. Friedrich | 05/15/17 | $ | 223,125 | $ | 446,250 | $ | 892,500 | |||||||||||||||||||
| 05/15/17 | 9,707 | 19,413 | 38,826 | — | — | $ | 1,251,944 | |||||||||||||||||||
| 05/15/17 | 66,004 | — | — | $ | 4,256,598 | |||||||||||||||||||||
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| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Equity Awards | |||||||||||||||||||
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||
| Brian Humphries | 04/01/19 | $ | 769,649 | $ | 1,539,298 | $ | 3,078,596 | |||||||||||||||
| 04/01/19 | 54,164 | 108,327 | 216,654 | $ | 7,346,737 | |||||||||||||||||
| 04/01/19 | 40,622 | $ | 2,999,935 | |||||||||||||||||||
| Francisco D’Souza | 02/26/19 | 83,287 | $ | 5,999,995 | ||||||||||||||||||
| Karen McLoughlin | 02/26/19 | $ | 375,000 | $ | 750,000 | $ | 1,500,000 | |||||||||||||||
| 02/26/19 | 15,963 | 31,926 | 63,852 | $ | 2,299,949 | |||||||||||||||||
| 02/26/19 | 27,762 | $ | 1,999,975 | |||||||||||||||||||
| Malcolm Frank | 02/26/19 | $ | 325,000 | $ | 650,000 | $ | 1,300,000 | |||||||||||||||
| 02/26/19 | 13,187 | 26,374 | 52,748 | $ | 1,899,983 | |||||||||||||||||
| 02/26/19 | 22,209 | $ | 1,599,936 | |||||||||||||||||||
| DK Sinha | 02/26/19 | $ | 325,000 | $ | 650,000 | $ | 1,300,000 | |||||||||||||||
| 02/26/19 | 6,129 | 12,257 | 24,514 | $ | 882,994 | |||||||||||||||||
| 02/26/19 | 4,031 | $ | 290,393 | |||||||||||||||||||
| 12/02/19 | 26,490 | $ | 1,683,175 | |||||||||||||||||||
| Santosh Thomas | 02/26/19 | $ | 313,901 | $ | 627,803 | $ | 1,255,606 | |||||||||||||||
| 02/26/19 | 10,064 | 20,127 | 40,254 | $ | 1,449,949 | |||||||||||||||||
| 02/26/19 | 12,867 | $ | 926,939 | |||||||||||||||||||
| 12/02/19 | 13,506 | $ | 858,171 | |||||||||||||||||||
38Estimated Future Payouts Under Non-Equity Incentive Plan Awards. Cognizant Technology Solutions CorporationRepresents the range of ACI that can be earned by the NEO if the minimum 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 minimum threshold results in no ACI payout to the NEO. See “Annual Cash Incentive (ACI)” onpage 35for 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 2019 performance is reported as “Non-Equity Incentive Plan Comp.” in the 2019 Summary Compensation Table onpage 49. For each of Mr. Humphries and Mr. Thomas, the ACI amount, including threshold, target and maximum payouts, were set in such NEO’s resident jurisdiction local currency and such amounts were converted to US$ for purposes of the table above based on the twelve-month average exchange rate for fiscal year 2019. For Mr. Humphries, that rate was £1 = $1.28 and for Mr. Thomas, that rate was €1 = $1.12. Additionally, since Mr. Humphries joined the company on April 1, 2019, his ACI payout has been pro-rated to the number of days during 2019 that he served as CEO.
Estimated Future Payouts Under Equity Incentive Plan Awards.Represents the range of shares that could vest pursuant to PSUs. See “Performance Stock Units (PSUs)” onpage 36for a description of the terms of the PSUs.
All Other Stock Awards.Represents RSUs. See “Restricted Stock Units (RSUs)” onpage 34for a description of the terms of the RSUs.
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. For information regarding assumptions underlying the valuation of stock-based awards, see Note 17 to the Consolidated Financial Statements in our 2019 Annual Report.
2020 PROXY STATEMENT 51
Outstanding Equity Awards at Fiscal Year-End 20172019 Table
The following table provides certain summary information concerning outstanding equity awards held by the NEOs as of December 31, 2017.2019. Our NEOs did not hold any outstanding option awards as of December 31, 2019.
| Option Awards1 | Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested2 | 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 Vested2 | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested1 | 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 Vested1 | |||||||||||||||||||||
| Exercisable | Unexercisable | ||||||||||||||||||||||||||||||||
| Brian Humphries | 33,8522 | $ | 2,099,501 | ||||||||||||||||||||||||||||||
| 108,3273 | $ | 6,718,441 | |||||||||||||||||||||||||||||||
| Francisco D’Souza | 240,000 | — | — | $ | 9.11 | 12/08/18 | — | — | — | — | –5 | – | |||||||||||||||||||||
| — | — | — | — | — | 18,939 | 3 | $ | 1,345,048 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 47,045 | 3 | $ | 3,341,136 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 26,872 | 4 | $ | 1,908,449 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 109,063 | 5 | $ | 7,745,654 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | — | — | 119,987 | 6 | $ | 8,521,477 | |||||||||||||||||||||||
| Rajeev Mehta | — | — | — | — | — | 9,672 | 3 | $ | 686,905 | — | — | ||||||||||||||||||||||
| — | — | — | — | — | 31,728 | 3 | $ | 2,253,323 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 13,723 | 4 | $ | 974,607 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 55,696 | 5 | $ | 3,955,530 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | — | — | 76,512 | 6 | $ | 5,433,882 | |||||||||||||||||||||||
| Karen McLoughlin | 12,500 | — | — | $ | 15.53 | 08/13/18 | — | — | — | — | 1,4382 | $ | 89,185 | ||||||||||||||||||||
| — | — | — | — | — | 5,062 | 3 | $ | 359,503 | — | — | 8,0352 | $ | 498,331 | ||||||||||||||||||||
| — | — | — | — | — | 12,940 | 3 | $ | 918,999 | — | — | 3,8342 | $ | 237,785 | ||||||||||||||||||||
| — | — | — | — | — | 7,182 | 4 | $ | 510,066 | — | — | 20,8222 | $ | 1,291,380 | ||||||||||||||||||||
| — | — | — | — | — | 29,147 | 5 | $ | 2,070,020 | — | — | 31,5584 | $ | 1,957,227 | ||||||||||||||||||||
| — | — | — | — | — | — | — | 32,691 | 6 | $ | 2,321,715 | –5 | – | |||||||||||||||||||||
| Ramakrishna Prasad Chintamaneni | — | — | — | — | — | 1,965 | 3 | $ | 139,554 | — | — | ||||||||||||||||||||||
| — | — | — | — | — | 16,712 | 3 | $ | 1,186,886 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 26,545 | 3 | $ | 1,885,226 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 1,990 | 4 | $ | 141,330 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 10,768 | 5 | $ | 764,743 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | 2,172 | 5 | $ | 154,255 | — | — | |||||||||||||||||||||||
| — | — | — | — | — | — | — | 17,311 | 6 | $ | 1,229,427 | |||||||||||||||||||||||
| Matthew W. Friedrich | — | — | — | — | — | 55,004 | 3 | $ | 3,906,384 | — | — | ||||||||||||||||||||||
| — | — | — | — | — | — | — | 19,413 | 6 | $ | 1,378,711 | 31,9266 | $ | 1,980,051 | ||||||||||||||||||||
| Malcolm Frank | 1,3102 | $ | 81,246 | ||||||||||||||||||||||||||||||
| 5,0222 | $ | 311,464 | |||||||||||||||||||||||||||||||
| 5,1282 | $ | 318,039 | |||||||||||||||||||||||||||||||
| 16,6572 | $ | 1,033,067 | |||||||||||||||||||||||||||||||
| 29,0084 | $ | 1,799,076 | |||||||||||||||||||||||||||||||
| –5 | – | ||||||||||||||||||||||||||||||||
| 26,3746 | $ | 1,635,715 | |||||||||||||||||||||||||||||||
| DK Sinha | 6,1942 | $ | 384,152 | ||||||||||||||||||||||||||||||
| 3,7672 | $ | 233,629 | |||||||||||||||||||||||||||||||
| 4,5532 | $ | 282,377 | |||||||||||||||||||||||||||||||
| 3,0242 | $ | 187,548 | |||||||||||||||||||||||||||||||
| 26,4902 | $ | 1,642,910 | |||||||||||||||||||||||||||||||
| 12,1654 | $ | 754,473 | |||||||||||||||||||||||||||||||
| –5 | – | ||||||||||||||||||||||||||||||||
| 12,2576 | $ | 760,179 | |||||||||||||||||||||||||||||||
| Santosh Thomas | 8,8492 | $ | 548,815 | ||||||||||||||||||||||||||||||
| 4,8632 | $ | 301,603 | |||||||||||||||||||||||||||||||
| 9,6512 | $ | 598,555 | |||||||||||||||||||||||||||||||
| 13,5062 | $ | 837,642 | |||||||||||||||||||||||||||||||
| 12,0684 | $ | 748,457 | |||||||||||||||||||||||||||||||
| –5 | – | ||||||||||||||||||||||||||||||||
| 20,1276 | $ | 1,248,277 | |||||||||||||||||||||||||||||||
| 1 |
| |
Market value was determined based on | ||
Amounts shown represent the following with respect to RSUs: | ||
Mr. | ||
Ms. McLoughlin and Mr. Frank.Awards shown are time-based RSUs that were granted on March 2, 2017, February 26, 2018, June 12, 2018 and February 26, 2019 and vest on specified dates if the individual is still employed by the | ||
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| Mr. | ||
| ||
| ||
2018 Proxy Statement 3952 COGNIZANT
Mr. Sinha.Awards shown are time-based RSUs that were granted on December 12, 2017, February 26, 2018, June 12, 2018, February 26, 2019 and December 2, 2019 and vest on specified dates if Mr. Sinha is still employed by the company: a total of approximately 20,208 shares are scheduled to vest in March, April, June, July, September, October and December of 2020; a total of approximately 12,446 shares are scheduled to vest in January, March, April, June, July, September, October and December of 2021; a total of approximately 9,166 shares are scheduled to vest in January, March, April, July and October of 2022; and approximately 2,208 shares are scheduled to vest in January of 2023. | |
Mr. Thomas.Awards shown are time-based RSUs that were granted on December 12, 2017, June 12, 2018, February 26, 2019 and December 2, 2019 and were scheduled to vest on specified dates if Mr. Thomas were still employed by the company on such dates: a total of approximately 19,756 shares were scheduled to vest in March, April, June, July, September, October and December of 2020; a total of approximately 10,412 shares were scheduled to vest in January, March, April, June, July, September, October and December of 2021; a total of approximately 5,575 shares were scheduled to vest in January, March, April, July and October of 2022; and approximately 1,126 shares were scheduled to vest in January of 2023. | |
| 3 | 2019 – 2023 CEO PSUs.Represents the number of unearned shares not vested equal to the target award for PSUs granted in 2019 with a market condition, as described in FASB ASC Topic 718, and a four-year performance measurement period (April 1, 2019 – April 1, 2023). See “Performance Stock Units (PSUs) – Current CEO” onpage 36for additional information. |
| 4 |
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| 5 |
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20172019 Option Exercises and Stock Vested Table
None of our NEOs held or exercised any options during 2019. The following table provides additional information about the value realized by the NEOs on option award exercises and stock award vestings during the year ended December 31, 2017.2019.
| Name | Option Awards | Stock Awards | ||||||||
| Number of Shares Acquired on Exercise | Value Realized on Exercise1 | Number of Shares Acquired on Vesting Date2 | Value Realized on Vesting3 | |||||||
| Francisco D’Souza | 240,000 | $ | 15,115,810 | 170,288 | $ | 11,970,251 | ||||
| Rajeev Mehta | — | — | 89,533 | $ | 6,293,377 | |||||
| Karen McLoughlin | 7,500 | $ | 425,608 | 44,121 | $ | 3,100,267 | ||||
| Ramakrishna Prasad Chintamaneni | 10,000 | $ | 489,368 | 32,260 | $ | 2,224,019 | ||||
| Matthew W. Friedrich | — | — | 11,000 | $ | 786,170 | |||||
| |||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||
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 stock. 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. Each NEO actually received the following net number of shares (and net value realized on vesting, including any dividend equivalents payable on vesting) following such share withholding: Mr. Humphries, 4,040 ($252,408), Mr. D’Souza, 194,790 ($12,538,173); Ms. McLoughlin, 30,039 ($1,919,925); Mr. Frank, 27,631 ($1,765,839); Mr. Sinha, 20,272 ($1,311,803) and Mr. Thomas, 7,081 ($457,016). 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 date, including any dividend equivalents payable on vesting. | |||||||||||||||||||||||||||||||||||||||||||||||||
40 Cognizant Technology Solutions Corporation
2017 Pension Benefits Table
None of the NEOs participated in any defined benefit pension plan in 2017.
20172019 Nonqualified Deferred Compensation Table
None of the NEOs participated in any nonqualified defined contribution or other nonqualified deferred compensation plan in 2017.2019.
2019 Pension Benefits Table
None of the NEOs participated in any defined benefit pension plan in 2019.
2020 PROXY STATEMENT 53
Equity Compensation Plan Information
The following table provides information as of December 31, 2019 with respect to the shares of our common stock that may be issued under our existing equity compensation plans approved by shareholders, which include the 2017 Incentive Award Plan (the “2017 Plan”), the ESPP, and our prior equity compensation plan, the 2009 Incentive Compensation Plan (the “2009 Plan”). The 2017 Plan succeeded the 2009 Plan. Awards granted under the 2009 Plan remain valid, though no additional awards may be granted from such plan. For additional information on our equity compensation plans, see Note 17 to the Consolidated Financial Statements in our 2019 Annual Report.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Available for Future Issuance Under Equity Compensation Plans (excludes securities reflected in first column) | ||||
| Equity compensation plans approved by security holders | 6,611,012 | $ | 55.02 | 43,300,831 | |||
| Equity compensation plans not approved by security holders | – | N/A | – | ||||
| Total | 6,611,012 | $ | 55.02 | 43,300,831 | |||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights.The amounts listed in this column exclude purchase rights outstanding under the ESPP. Under such plan, employees may purchase whole shares of common stock at a price per share equal to 90% of the lower of the fair market value per share on the first day of the purchase period or the fair market value per share on the last day of the purchase period. As of December 31, 2019, 138,518 shares may be issued pursuant to stock options upon exercise, 4,500,919 shares may be issued pursuant to RSUs upon vesting, and 1,971,575 shares may be issued pursuant to PSUs upon vesting. The number of shares that may be issued under the outstanding and unvested PSUs for which the performance measurement period has not ended is based on vesting of the maximum number of award shares. The actual number of shares that may vest will generally range from 0% to 200% of the target number based on the level of achievement of the applicable performance metrics and the continued service vesting requirements. See “Performance Stock Units (PSUs)” onpage 36.
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights.As of December 31, 2019, the weighted-average exercise price of outstanding options to purchase common stock was $55.02, and no weighting was assigned to PSUs or RSUs as no exercise price is applicable to PSUs or RSUs.
Number of Securities Available for Future Issuance Under Equity Compensation Plans.The amounts listed in this column include 34,382,509 shares available for future issuance under the 2017 Plan. Any shares underlying outstanding awards that are forfeited under the 2009 Plan (which are included in the first column of this table) will be available for future issuance under the 2017 Plan. Also includes 8,918,322 shares available for future issuance under the ESPP. As of December 31, 2019, there were no outstanding purchase periods under the ESPP.
We are required by SEC rules and regulations to disclose the annual total compensation for our CEO and an estimate of the median annual total compensation for our worldwide employee population excluding our CEO, and the ratio of annual total compensation for our CEO to the annual total compensation for our median employee.
The following table provides information, based on our reasonable estimates, about the relationship between the annual total compensation of our current CEO and the annual total compensation of our employees as of December 31, 2017.2019.
| Category | Median Employee Annual Total Compensation | CEO Annual Total Compensation | Pay Ratio (CEO : median employee) | |||
| CEO Pay toWorldwideMedian Employee Pay | $31,998 | $12,478,392 | 390 : 1 | |||
| (SEC-required pay ratio disclosure) | ||||||
| CEO Pay toU.S.Median Employee Pay | $90,293 | 138 : 1 | ||||
| (Supplemental pay ratio information) |
| Category | Median Employee Annual Total Compensation | Current CEO Annual Total Compensation | Pay Ratio (CEO : median employee) | |||||
| Current CEO Pay toWorldwide Median Employee Pay (SEC-required pay ratio disclosure) | $ | 32,084 | $ | 16,503,792 | 514 : 1 | |||
| Current CEO Pay toU.S. Median Employee Pay (Supplemental pay ratio information) | $ | 89,177 | 185 : 1 | |||||
54 COGNIZANT
CEO Compensation.For the year ended December 31, 2019, the total compensation for our current CEO, Mr. Humphries, was $15,958,002 as reported in the “SEC Total” column of the Summary Compensation Table onpage 49. Since Mr. Humphries was appointed CEO effective April 1, 2019, we annualized his Salary, Non-Equity Incentive Plan Compensation and All Other Compensation as disclosed in the Summary Compensation Table, and added the disclosed values of his Bonus and Stock Awards to arrive at a value of $16,503,792, used for the ratio of annual total compensation for our current CEO to the annual total compensation for our median employee. We annualized Mr. Humphries total compensation as follows:
| Compensation included in | ||||||||
| Current CEO Pay Components | Summary Compensation Table | Annual Total Compensation for CEO Pay Ratio | Rationale | |||||
| Salary | $ | 769,649 | $ | 1,021,534 | Annualized Salary | |||
| Bonus | $ | 4,000,000 | $ | 4,000,000 | Not annualized; one-time cash sign-on payment | |||
| Stock Awards | $ | 10,346,672 | $ | 10,346,672 | Not annualized; one-time award of 108,327 PSUs and 40,622 RSUs | |||
| Non-Equity Incentive Plan Compensation | $ | 658,819 | $ | 874,433 | Annualized earned ACI | |||
| All Other Compensation | $ | 182,862 | $ | 261,153 | Annualized rent on corporate apartment, home security services, pension allowance and U.K. group personal pension plan matching contribution | |||
| Total Current CEO Pay | $ | 15,958,002 | $ | 16,503,792 | ||||
As we provided a cash sign-on bonus (i.e., $4,000,000 sign-on cash payment) and equity buy-out award (i.e., 40,622 RSUs with a grant date fair value of $2,999,935) to our current CEO in 2019 to compensate him for long-term compensation at his prior employer that he forfeited upon joining the company, we expect the 2019 CEO pay ratio to be higher than the CEO pay ratio in future years when we are not providing compensation to recruit a new CEO. If we were to exclude these one-time cash and equity compensation values from the 2019 pay ratio calculation, our CEO compensation would have been $9,503,857 and the resulting CEO pay ratio with respect to worldwide median employee pay would have been 296 : 1.
Employees Included.Included.The Companycompany had approximately 260,000293,000 employees worldwide as of December 31, 2017,2019, including approximately 50,40047,000 in North America, approximately 13,80021,000 in Europe and approximately 195,800225,000 in various other locations throughout the rest of the world, including approximately 180,000204,000 in India. In identifying the worldwide median employee, we included all of such employees, except for our current CEO and approximately 6001,500 employees of NetcentricMustache, Meritsoft, Zenith, Samlink and Zone,Contino, which businesses we acquired during the fourth quarter of 2017.2019 (the “2019 Acquired Companies”). In identifying the U.S. median employee, we included all U.S. employees, except for our CEO.employees of the 2019 Acquired Companies. We did not include any independent contractors in either calculation.
Compensation Included.Included.In identifying the worldwide and U.S. median employees, we used the actual salary, bonus and annual cash incentiveACI for 2019 (in each case annualized for full-time employees who joined during 2017)2019) and the grant date fair value of PSUs and RSUs awarded during 20172019 for each applicable employee as of December 31, 2017.2019. Where there were multiple employees with the resulting median compensation, we calculated each of such employees’employee’s annual total compensation in the same manner as the “SEC Total” of compensation shown for our current CEO in the “2017“2019 Summary Compensation Table” onpage 37.49. We used such annual total compensation to identify the median of such employees and for disclosure of median employee pay herein.herein (averaged where the median fell between two employees).
Currency Conversion.Conversion.For employees receiving their compensation in a currency other than U.S. dollars, including the current CEO, we translated such compensation to U.S. dollars at twelve-month average monthly exchange rates for 2017.2019.
Cost-of-Living Adjustment.Adjustment.We applied a cost-of-living adjustment to the compensation of each of our employees resident in a jurisdiction other than the jurisdiction in which our current CEO residesresided (the United States)Kingdom) in order to adjust the compensation of such employees to the jurisdiction in which our current CEO resides.resided. In making such cost-of-living adjustments, we used the cost-of-living index for the country in which the employee iswas based for all employees not based in the United States.Kingdom. Each such cost-of-living index including that for India (27.48), the location of the median employee, was used to adjust the applicable compensation of employees to the cost-of-living index for the United States (77.23)Kingdom (65.33). For the worldwide median employee, the cost-of-living indexes for both Malaysia (39.46) and India (25.14) were used as such employee was located in Malaysia for part of the year (January – May) and India for the remainder of the year (June – December). For the U.S. median employee, the U.S. index (70.95) was used. All cost-of-living indexes used were as published byNumbeo.comfor mid-year 2017.2019. Without application of a cost-of-living adjustment, and after otherwise utilizing the same process described above to identify the median employee, the median employee would have been a full-time, salaried employee located in India with annual total compensation of $12,187.$13,513. The ratio of the annual total compensation of our current CEO to such median employee’s annual total compensation was 1,0241,221 : 1.
Supplemental U.S. Median Employee Pay Ratio.Ratio.The form and amount of our current CEO’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 Companycompany is a U.S.-headquartered, publicly tradedpublicly-traded company, we believe that it is useful to understand the relationship between the annual total compensation of our current CEO and the median of the annual total compensation of our U.S. employees. As noted above, the median of the annual total compensation of our U.S. employees was adjusted to the cost-of-living index for the United Kingdom.
2018 Proxy Statement2020 PROXY STATEMENT 4155
Potential Payments Upon Termination or Change in Control
Overview of Potential Payments
We have entered into Employment Agreements with our NEOs that provide certain benefits upon such employees being terminated without Cause or leaving for Good Reason (a(each, a “Qualifying Termination”) — see "What is a 'Qualifying Termination'?" below for more details). Such benefits are adjusted in the event the Qualifying Termination occurs within the 12 months following a change in control. Following a 2017 review by the Compensation Committee of the terms of such Employment Agreements against the Companycompany’s peer group and other market trends and data that indicated that such agreements provided benefits that were below market, we entered into amended and restated versions of such Employment Agreements with each of our NEOs, except Messrs. Frank and Thomas, in February 2018. We entered into an Employment Agreement with Mr. Humphries on April 1, 2019 with provisions similar to the Employment Agreements with Ms. McLoughlin and Mr. Sinha. We also entered into the Transition Agreement with Mr. D’Souza, as described onpage 41, which included terms for termination for a Qualifying Termination, but such terms are no longer in effect as Mr. D’Souza ceased to be an employee after June 30, 2019.
The table below summarizes the benefits under suchthe Employment Agreements, as amended and restated andapplicable to each of our NEOs who remain executive officers as of the benefits under the prior versionsdate of such Employment Agreements.this proxy statement.
| Unvested PSUs / Performance-Based Awards | ||||||||||||||
| Termination Event | Employment Agreement Version | Salary and | Benefits | Unvested RSUs / Time-Based Awards | Performance Measurement Period Ended; Objectives Satisfied | Performance Measurement Period Not Ended | ||||||||
Qualifying | McLoughlin, Sinha | 1x | 18 months |
| Acceleration | Forfeited | ||||||||
| Frank | 22 months | 12 months ofreimbursement for COBRA premiums | ||||||||||||
| Qualifying Termination – within 12 months ofChange in Control | Humphries, McLoughlin, Sinha | 2x | Acceleration of | Acceleration ofentire award | Acceleration of entire award(based on performance as of change in control date) | |||||||||
| Frank | 1x | 12 months | ||||||||||||
WHAT IS A “QUALIFYING TERMINATION”?
| Termination without “Cause” | Leaving for “Good Reason” | |
“Cause” is defined as: ●Willful malfeasance or willful misconduct in connection with employment; ●Continuing failure to perform duties ●Failure to observe material policies of the ●Commission of any felony or any misdemeanor involving moral turpitude; ●Engaging in any fraudulent act or embezzlement; or ●Any material breach of an Employment Agreement. | “Good Reason” is defined as: ●A material diminution of authority, duties or responsibilities; ●A material diminution in overall compensation package that is not broadly applied to other executives; ●The ●The | |
4256 Cognizant Technology Solutions CorporationCOGNIZANT
The amended and restated versions of the Employment Agreements also provide the following benefits upon the death of the employee (the prior versions did not include any such benefits):
DEATH BENEFITS The Employment Agreements applicable to Mr. Humphries, Ms. McLoughlin and Mr. Sinha (but not Mr. Frank) also provide the following death benefits: ●1x | |
● | Acceleration of the entirety of any equity awards that would have vested solely upon continued service with the |
● | Acceleration of any equity awards that had performance measurement periods ongoing, with the level of achievement determined by the Compensation Committee’s good faith determination of the level of |
| The Employment Agreements also provide that in the event any payments under the Employment Agreements would constitute parachute payments under IRC Section 280G, then the payments under the Employment Agreements will be reduced by the minimum amount necessary so that no amounts paid will be non-deductible to the | |
Cash severance payments are contingent on the NEOexecutive officers executing and not revoking a waiver and release of claims in favor ofagainst the Companycompany and complying with one-year post-termination non-competition and non-solicitation covenants, a six-month post-termination intellectual property covenant and a perpetual confidentiality covenant.
Upon any termination of employment, each NEOexecutive officer will also be entitled to any amounts earned, accrued and owed but not yet paid to such NEO as of the termination date and any benefits accrued and earned in accordance with the terms of any benefits plans or programs, and these amounts are not conditioned upon the release becoming effective. No additional amounts will be paid on termination due to death or disability.
Calculation of Potential Payments
The following table shows potential payments to our NEOs under the Employment Agreements in effect on December 31, 2017 (i.e., prior2019 (as opposed to the amendment and restatementdate of such Employment Agreements in February 2018)this proxy statement for the table onpage 56) in the event of a Qualifying Termination prior to or within 12 months following a change in control. After the period of 12 months following a change in control, the potential payments upon a Qualifying Termination, absent another change in control, revert to those prior to a change in control as set forth below. Potential payments are calculated assuming a December 31, 20172019 Qualifying Termination date and, where applicable, using the closing price of our common stock of $71.02$62.02 on December 29, 2017,31, 2019, as reported on Nasdaq.
| Name | Trigger | Salary and Bonus | Benefits | Awards Acceleration / Extension | Total | |||||||||
| Francisco D’Souza | Qualifying Termination Prior to Change in Control | $ | 1,217,883 | $ | 10,834 | $ | 7,320,315 | $ | 8,549,033 | |||||
| Qualifying Termination Following Change in Control | $ | 1,228,955 | $ | 10,834 | $ | 26,696,418 | $ | 27,936,207 | ||||||
| Death or Disability | — | — | — | — | ||||||||||
| Retirement | — | — | — | — | ||||||||||
| Termination for Other Reasons | — | — | — | — | ||||||||||
| Rajeev Mehta | Qualifying Termination Prior to Change in Control | $ | 1,155,000 | $ | 14,574 | $ | 3,981,452 | $ | 5,151,027 | |||||
| Qualifying Termination Following Change in Control | $ | 1,165,500 | $ | 14,574 | $ | 15,749,537 | $ | 16,929,611 | ||||||
| Death or Disability | — | — | — | — | ||||||||||
| Retirement | — | — | — | — | ||||||||||
| Termination for Other Reasons | — | — | — | — | ||||||||||
| Karen McLoughlin | Qualifying Termination Prior to Change in Control | $ | 916,667 | $ | 11,221 | $ | 1,967,964 | $ | 2,895,852 | |||||
| Qualifying Termination Following Change in Control | $ | 925,000 | $ | 11,221 | $ | 7,225,078 | $ | 8,161,298 | ||||||
| Death or Disability | — | — | — | — | ||||||||||
| Retirement | — | — | — | — | ||||||||||
| Termination for Other Reasons | — | — | — | — | ||||||||||
| Ramakrishna Prasad | Qualifying Termination Prior to Change in Control | $ | 870,833 | $ | 15,606 | $ | 1,781,111 | $ | 2,667,550 | |||||
| Chintamaneni | Qualifying Termination Following Change in Control | $ | 878,750 | $ | 15,606 | $ | 6,054,597 | $ | 6,948,953 | |||||
| Death or Disability | — | — | — | — | ||||||||||
| Retirement | — | — | — | — | ||||||||||
| Termination for Other Reasons | — | — | — | — | ||||||||||
| Matthew W. Friedrich | Qualifying Termination Prior to Change in Control | $ | 962,500 | $ | — | $ | 1,562,582 | $ | 2,525,082 | |||||
| Qualifying Termination Following Change in Control | $ | 971,250 | $ | — | $ | 5,905,455 | $ | 6,876,705 | ||||||
| Death or Disability | — | — | — | — | ||||||||||
| Retirement | — | — | — | — | ||||||||||
| Termination for Other Reasons | — | — | — | — | ||||||||||
| Name | Trigger | Salary and Bonus | Benefits | Awards Acceleration / Extension | Total | |||||||||
| Brian Humphries | Qualifying Termination Prior to Change in Control | $ | 3,064,584 | – | $ | 839,813 | $ | 3,904,397 | ||||||
| Qualifying Termination Following Change in Control | $ | 6,129,168 | – | $ | 2,099,501 | $ | 8,228,669 | |||||||
| Death or Disability | $ | 1,539,298 | – | $ | 2,099,501 | $ | 3,638,799 | |||||||
| Retirement | – | – | – | – | ||||||||||
| Termination for Other Reasons | – | – | – | – | ||||||||||
| Karen McLoughlin | Qualifying Termination Prior to Change in Control | $ | 1,500,000 | $ | 19,108 | $ | 3,177,533 | $ | 4,696,641 | |||||
| Qualifying Termination Following Change in Control | $ | 3,000,000 | $ | 19,108 | $ | 4,073,908 | $ | 7,093,016 | ||||||
| Death or Disability | $ | 750,000 | – | $ | 4,073,908 | $ | 4,823,908 | |||||||
| Retirement | – | – | – | – | ||||||||||
| Termination for Other Reasons | – | – | – | – | ||||||||||
| Malcolm Frank | Qualifying Termination Prior to Change in Control | $ | 1,191,667 | $ | 17,719 | $ | 2,800,575 | $ | 4,009,961 | |||||
| Qualifying Termination Following Change in Control | $ | 1,300,000 | $ | 17,719 | $ | 3,542,893 | $ | 4,860,612 | ||||||
| Death or Disability | – | – | – | – | ||||||||||
| Retirement | – | – | – | – | ||||||||||
| Termination for Other Reasons | – | – | – | – | ||||||||||
| DK Sinha | Qualifying Termination Prior to Change in Control | $ | 1,300,000 | $ | 19,108 | $ | 2,007,773 | $ | 3,326,881 | |||||
| Qualifying Termination Following Change in Control | $ | 2,600,000 | $ | 19,108 | $ | 3,485,090 | $ | 6,104,198 | ||||||
| Death or Disability | $ | 650,000 | – | $ | 3,485,090 | $ | 4,135,090 | |||||||
| Retirement | – | – | – | – | ||||||||||
| Termination for Other Reasons | – | – | – | – | ||||||||||
| Santosh Thomas | Qualifying Termination Prior to Change in Control | $ | 1,150,972 | – | $ | 1,973,724 | $ | 3,124,696 | ||||||
| Qualifying Termination Following Change in Control | $ | 1,255,608 | – | $ | 3,035,073 | $ | 4,290,681 | |||||||
| Death or Disability | – | – | – | – | ||||||||||
| Retirement | – | – | – | – | ||||||||||
| Termination for Other Reasons | – | – | – | – | ||||||||||
2018 Proxy Statement2020 PROXY STATEMENT 4357
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Our Auditor Review and Engagement Process
The Audit Committee is directly responsible for the appointment, compensation (including negotiation and approval of the audit fee)fees), retention and oversight of the independent registered public accounting firm that audits our financial statements and our internal control over financial reporting. Our Audit CommitteeThe committee and its Chairpersonchairperson are directly involved in the selection of the lead audit partner at the start of each rotation.
To ensure continuing audit independence:
| ● | The Audit Committee periodically considers whether there should be a change of the accounting firm that is retained, and considers the advisability and potential impact of selecting a different accounting firm; |
| ● | Neither the accounting firm nor any of its members is permitted to have any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services; and |
| ● | In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide services to our |
The members of the Audit Committeecommittee and the Boardboard believe that the continued retention of PwC to serve as the Company’scompany’s independent registered public accounting firm is in the best interests of the Companycompany and its stockholders.shareholders.
We Expect PricewaterhouseCoopers LLP to Attend the 2018 Annual Meeting Attendance
We expect PwC representatives are expected to attend the Annual Meeting.annual meeting. They will have an opportunity to make a statement if they wish and are expected to be available to respond to appropriate questions from stockholders.shareholders.
44Pre-Approval Policy and Procedures
The Audit Committee has adopted a policy that generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the committee or the engagement is entered into pursuant to one of the pre-approval procedures described below. From time to time, the committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided. The committee has also delegated to Maureen Breakiron-Evans, its current chairperson, the authority to approve any audit or non-audit services to be provided to us by our independent registered public accounting firm. Any such approval of services pursuant to this delegated authority is reported on at the next committee meeting. During 2018 and 2019, the committee approved all services provided to us by PwC that are subject to the pre-approval procedures in accordance with our pre-approval policy.
58 Cognizant Technology Solutions CorporationCOGNIZANT
Audit Committee ReportAuditor Fees
The Audit Committee has furnished the following report:
To the Board of Directors of Cognizant Technology Solutions Corporation:
The Audit Committee of the Board of Directors acts under a written charter, which is available in the “Company Governance” section of the “About Cognizant” page of the Company’s website located atwww.cognizant.com. The members of the Audit Committee are independent Directors, as defined in its charter and the rules of The Nasdaq Stock Market LLC. The Audit Committee held 11 meetings during 2017.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s independent registered public accounting firm (“auditor”) is responsible for performing an independent integrated audit of the Company’s annual financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting. The Audit Committee is responsible for providing independent, objective oversight of these processes.
The Audit Committee has reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2017 and has discussed these financial statements with management and the Company’s auditor. The Audit Committee has also received from, and discussed with, the Company’s auditor various communications that such auditor is required to provide to the Audit Committee, including the matters required to be discussed by Statement on Auditing Standards No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (PCAOB), as may be modified or supplemented.
The Company’s auditor also provided the Audit Committee with formal written statements required by PCAOB Rule 3526 (Communications with Audit Committees Concerning Independence) describing all relationships between the auditor and the Company, including the disclosures required by the applicable requirements of the PCAOB regarding the auditor’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the auditor its independence from Cognizant Technology Solutions Corporation. The Audit Committee also considered whether the auditor’s provision of certain other non-audit related services to the Company is compatible with maintaining such firm’s independence.
Based on its discussions with management and the auditor, and its review of the representations and information provided by management and the auditor, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
By the Audit Committee of the Board of Directors of Cognizant Technology Solutions Corporation
Zein AbdallaMaureen Breakiron-EvansJonathan ChadwickJohn E. KleinLeo S. Mackay, Jr.Joseph M. Velli
2018 Proxy Statement 45
Independent Registered Public Accounting Firm Fees and Other Matters
FeesFEES
The following table summarizes the fees of PwC, our independent registered public accounting firm, for each of the last two fiscal years.
| Fee Category | 2016 | 2017 | 2018 | 2019 | |||||||||
| Audit Fees | $ | 7,681,100 | $ | 6,421,600 | $ | 6,164,300 | $ | 5,990,300 | |||||
| Audit-Related Fees | $ | 3,486,100 | $ | 4,063,100 | 4,830,100 | 1,325,600 | |||||||
| Tax Fees | $ | 879,400 | $ | 710,200 | 1,440,900 | 1,240,300 | |||||||
| All Other Fees | $ | 238,000 | $ | 911,000 | 1,096,900 | 596,300 | |||||||
| Total Fees | $ | 12,284,600 | $ | 12,105,900 | |||||||||
| Total | $ | 13,532,200 | $ | 9,152,500 | |||||||||
Audit FeesFees.
Audit fees consist of fees for the audit of our consolidated financial statements (including services necessary for rendering an opinion under Section 404 of the Sarbanes-Oxley Act)internal controls over financial reporting), the review of our interim quarterly financial statements, and other professional services provided in connection with statutory and regulatory filings or engagements. The decreaseAudit fees in audit fees from 2016 to 2017 was2018 were higher than in 2019 principally due to a reduction in fees in 2017 related to matters that are the subject of the Company’s ongoingcompany’s internal investigation that is being conducted underdescribed in Note 15 to the oversight of the Audit Committee, with the assistance of outside counsel, focused on whether certain payments relating to Company-owned facilitiesConsolidated Financial Statements in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act and other applicable laws.our 2019 Annual Report.
Audit-Related FeesFees.
Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review of our financial statements and which are not reported under “Audit Fees”, including financial due diligence services related to business combinations.. These services relate to attest services that are not required by statute or regulation consultations concerningand financial accounting and reporting matters, and independent assessment of controls related to outsourcingdue diligence services. The increasedecrease in audit-related fees from 20162018 to 20172019 was principally due to decreased financial due diligence services related to the independent assessment of the Company’s controls related to outsourcing services.business combinations in 2019.
Tax FeesFees.
Tax fees comprise fees for a variety of permissible services relating to tax compliance, tax planning and tax advice. These services include assistance in complying with local transfer pricing requirements, assistance with local tax audits and assessments, withholding tax and indirect tax matters, preparation and filing of local tax returns, and technical advice relating to local and international tax matters. The decrease in tax fees from 2018 to 2019 was principally related to decreased local tax advisory services.
All Other FeesFees.
For 2017,both 2018 and 2019, other fees primarily relate to advisory fees for immigration services outside the United States and benchmarking services. For 2016, other fees primarily relateinternal process reviews. The decrease in 2019 is attributable to advisory fees fora reduction in immigration services.
Audit Committee Pre-Approval Policy and ProceduresReport
The Audit Committee has adopted policiesfurnished the report set forth below.
To the Board of Directors of Cognizant Technology Solutions Corporation:
The Audit Committee of the board acts under a written charter, which is available in the “Corporate Governance” section of the “About Cognizant” page of the company’s website located atwww.cognizant.com. The members of the committee are independent directors, as defined in its charter and procedures relating to the approvalrules of all auditThe Nasdaq Stock Market LLC. The committee held 9 meetings during 2019. Management is responsible for establishing and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage ourmaintaining adequate internal control over financial reporting. The company’s independent registered public accounting firm to render(“auditor”) is responsible for performing an independent integrated audit or non-audit services unless the service is specifically approved in advance by the Audit Committee or the engagement is entered into pursuant to one of the pre-approval procedures described below.
From time to time,company’s annual financial statements and management’s assessment of the Audit Committee may pre-approve specified typeseffectiveness of services that are expected to be provided to us by ourthe company’s internal control over financial reporting. The committee is responsible for providing independent, registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or typeobjective oversight of services to be provided.these processes.
The Audit Committee has reviewed the company’s audited financial statements for the fiscal year ended December 31, 2019 and has discussed these financial statements with management and the company’s auditor. The committee has also delegatedreceived from, and discussed with, the company’s auditor various communications that such auditor is required to Maureen Breakiron-Evans,provide to the current Audit Committee Chair,committee, including the authority to approve any audit or non-audit servicesmatters required to be discussed by, as may be modified or supplemented by, the PCAOB and the SEC. The company’s auditor also provided to usthe committee with formal written statements required by our independent registered public accounting firm. Any such approval of services pursuant to this delegated authority is reported on atPCAOB Rule 3526 (Communications with Audit Committees Concerning Independence) describing all relationships between the next Audit Committee meeting. During 2016auditor and 2017, the Audit Committee approved all services provided to uscompany, including the disclosures required by PwC that are subject to the pre-approval policies and procedures described above.
46 Cognizant Technology Solutions Corporation
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Overview
Our stockholders approved the ESPP in 2013. On February 27, 2018, the Board adopted the Amended and Restated ESPP upon the recommendationapplicable requirements of the Compensation Committee and following a review byPCAOB regarding the Compensation Committee andauditor’s communications with the Board of the ESPP. The Board is submitting the Amended and Restated ESPP to our stockholders for approval. The Amended and Restated ESPP constitutes an amendment and restatement of the ESPP. The key differences between the Amended and Restated ESPP and the ESPP are:
Rationale for Share Increase
In its determination to approve the Amended and Restated ESPP, the Board considered the following:
In light of the factors described above, and the fact that the ability to continue to offer the benefit of participating in an employee stock purchase plan is vital to our ability to continue to attract and retain employees in the competitive labor markets in which we compete, the Board has determined that the size of the share reserve under the Amended and Restated ESPP is reasonable and appropriate at this time.
2018 Proxy Statement 47
Frequently Asked Questions About the Amended and Restated ESPP
This summary is qualified in its entirety by reference to the complete text of the Amended and Restated ESPP, which is attached as Appendix A to this proxy statement.
Who will be eligible to participate in the Amended and Restated ESPP?
All employees of Cognizant and its designated subsidiaries, other than those whose customary employment is 20 hours or less per week or no more than five months per calendar year or who own more than 5% of the total combined voting power or value of all classes of our stock, will be eligible to participate in the Amended and Restated ESPP. As of March 31, 2018, this represents approximately 48,000 persons (approximately eighteen executive officers and approximately 48,000 other employees) at Cognizant and its U.S. subsidiaries.
Who will administer the Amended and Restated ESPP?
Administration.The Amended and Restated ESPP will be administered by the Compensation Committee, an independent committee of the Board. The Compensation Committee will have the authority to make rules and regulations for the administration of the Amended and Restated ESPP.
Change in Control and Similar Significant Transactions.In the event of certain significant transactions or a ‘‘Change in Control’’ (as defined in the Amended and Restated ESPP), the Compensation Committee may provide for (i) either the replacement or termination of outstanding rights in exchange for cash, (ii) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, if any, (iii) the adjustment in the number and type of shares of stock subject to outstanding rights, (iv) the use of participants’ accumulated payroll deductions to purchase stock on a new purchase date prior to the next purchase date and termination of any rights under ongoing offering periods or (v) the termination of all outstanding rights.
How many shares will be available for purchase under the Amended and Restated ESPP?
The number of shares of our common stock reserved for issuance under the Amended and Restated ESPP will be 40,000,000 shares, which includes the 28,000,000 shares originally reserved for issuance under the ESPP (of which approximately 1,600,000 remain), and the additional 12,000,000 shares reserved for issuance subject to stockholder approval pursuant to this Proposal 4. The shares issuable under the Amended and Restated ESPP may be made available from authorized but unissued shares of our common stock or from shares of common stock reacquired by us. Shares subject to any purchase right (or portion thereof) that terminates unexercised may again be granted under the Amended and Restated ESPP.
How do eligible employees purchase shares under the Amended and Restated ESPP?
Purchase Periods.The Amended and Restated ESPP provides for eligible employees of us and our designated subsidiaries to designate in advance of specified and successive purchase periods a percentage of compensation to be withheld from their pay and applied toward the purchase of shares of our common stock. Unless otherwise determined by the Compensation Committee, each purchase period will have a duration of three (3) months, and will begin on the first business day of each calendar quarter (e.g., the first business day of January, April, July and October of each year) and end on the last business day of each calendar quarter (e.g., the last business day of March, June, September and December of each year).
Purchase Rights.Each eligible employee will be granted a right to purchase a number of shares of our common stock under the Amended and Restated ESPP on the first day of each purchase period. Unless otherwise determined by the Compensation Committee, each purchase right covers shares of our common stock with an aggregate value of up to $25,000.
What is the purchase price per share of common stock under the Amended and Restated ESPP?
The purchase price per share of the common stock sold under the Amended and Restated ESPP for any purchase period will be equal to the lesser of (a) 90% of the fair market value of a share of common stock on the first day of such purchase period and (b) 90% of the fair market value of a share of common stock on the last day of such purchase period.
The fair market value of a share of common stock as of any date will equal the closing sales price of the common stock on such date as reported by the principal exchange on which such stock is listed and traded, or in the event there is no closing sales price on such date, the closing sales price on the last preceding date on which such a closing sales price exists. As of April 19, 2018, the fair market value per share of our common stock was $82.37.
How are payroll deductions made and applied under the Amended and Restated ESPP?
In order to purchase shares pursuant to the Amended and Restated ESPP, an eligible employee must enroll through our online enrollment system in advance of the first day of the purchase period. By doing so, the employee becomes a participant in the Amended and Restated ESPP. In connection with his or her enrollment, each eligible employee authorizes contributions to the Amended and Restated ESPP through regular payroll deductions, effective as of the first day of the relevant purchase period. A Participant authorizes payroll deductions from his or her cash W-2 compensation, as defined in the Amended and Restated ESPP, for each payroll period, as a specified percentage of such compensation, not less than 1% and not more than 15%, in multiples of 1%. The amount of payroll deduction must be established
48 Cognizant Technology Solutions Corporation
at the beginning of a purchase period and may not be altered; however, if the participant withdraws from the plan prior to the last day of the purchase period by filing a notice of withdrawal or incurs a termination of service during the purchase period, then his or her payroll deductions will automatically cease and the entire amount credited to the participant under the Amended and Restated ESPP shall be refunded. The payroll deductions authorized by a participant are credited to a book account maintained for the participant.
Any accumulated payroll deductions for a purchase period will automatically be applied to purchase shares of common stock on the last day of such purchase period. Accordingly, on each purchase date, a participant’s payroll deductions accumulated for the purchase period ending on such purchase date will be applied to the purchase of the greatest number of whole shares of common stock that can be purchased with such participant’s account at the purchase price in effect for that purchase date. Any balance remaining in a participant’s book account at the end of a purchase period (not in excess of the purchase price of one share of common stock) will be carried forward into the participant’s account for the following purchase period.
If, as of any one purchase date, the aggregate funds available for the purchase of shares of common stock would result in a purchase of shares in excess of the maximum number of shares then available for purchase under the Amended and Restated ESPP, then the number of shares which would otherwise be purchased by each participant on the purchase date will be reduced pro rata based on the payroll deductions accumulated for each participant and the remaining balance of each participant’s account will be refunded to such participant.
Are there any limitations on the number of shares that can be purchased by a participant under the Amended and Restated ESPP?
The Amended and Restated ESPP imposes certain limitations upon a participant’s rights to acquire shares of common stock under the Amended and Restated ESPP, including the following limitations:
How do participants cease participating in the Amended and Restated ESPP?
Termination of Purchase Rights.A participant may withdraw from the Amended and Restated ESPP at any time prior to the next scheduled purchase date, and his or her accumulated payroll deductions or other permitted contributions for the purchase period will be refunded.
A participant’s purchase right will immediately terminate upon his or her cessation of employment for any reason other than retirement on or after attaining age 55. Any payroll deductions that a participant has made for the purchase period in which such cessation of employment occurs will be refunded and will not be applied to the purchase of common stock. Upon a participant’s retirement on or after attaining age 55, his or her accumulated payroll deductions will, at the participant’s election, be refunded immediately or applied to the purchase of shares of our common stock on the next scheduled purchase date.
How long will the Amended and Restated ESPP remain in effect and under what circumstances may it be modified?
The term of the Amended and Restated ESPP will continue in effect until all shares reserved for issuance have been granted to participants, unless terminated earlier by the Board. The Board may terminate the Amended and Restated ESPP at any time, which termination will be effective as of the next succeeding purchase date.concerning independence. In addition, the Board may, withoutcommittee discussed with the consentauditor its independence from the company. The committee also considered whether the auditor’s provision of certain other non-audit related services to the company is compatible with maintaining such firm’s independence.
Based on its discussions with management and the auditor, and its review of the participants, amendrepresentations and information provided by management and the Amended and Restated ESPP at any time, providedauditor, the committee recommended to the board that no such action will adversely affect outstanding purchase rights granted under the Amended and Restated ESPP, and provided further that no such action by the Board, without approval of the Company’s stockholders, may: (i) increase the total number, or change the type, of shares of common stock available for issuance under the Plan; (ii) change the corporations or classes of corporations the employees of which mayaudited financial statements be granted rights under the Amended and Restated ESPP; or (iii) change the Amended and Restated ESPP in any manner that would cause the Amended and Restated ESPP to no longer be an “employee stock purchase plan” within the meaning of Section 423(b) of the IRC.
2018 Proxy Statement 49
Other Information About the Amended and Restated ESPP
Summary of U.S. Federal Income Tax Consequences
The following summary of tax consequences to Cognizant and to Amended and Restated ESPP participants is intended to be used solely by stockholders in considering how to vote on this proposal and not as tax guidance to participantsincluded in the Amended and Restated ESPP. It relates only to federal income tax and does not address state, local or foreign income tax rules or other U.S. tax provisions, such as estate or gift taxes. Different tax rules may apply to specific participants and transactions under the Amended and Restated ESPP, particularly in jurisdictions outside the United States. In addition, this summary is as of the date of this proxy statement; federal income tax laws and regulations are frequently revised and may be changed again at any time. Therefore, each recipient is urged to consult a tax advisor before participating in the Amended and Restated ESPP or before disposing of any shares acquired under the Amended and Restated ESPP.
The following generally summarizes the U.S. federal income tax consequences that will arise with respect to participation in the Amended and Restated ESPP and the purchase and sale of common stock under the Amended and Restated ESPP. The Amended and Restated ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the IRC. Under a plan that so qualifies, no taxable income will be recognized by a participant, and no deductions will be allowable to us, upon either the grant or the exercise of the purchase rights. However, taxable income will be recognized by a participant in the year in which there is a sale or other disposition of the purchased shares or in the event the participant dies while owning the purchased shares.
Disposition of Shares Following the Holding Period.If the purchased shares are not disposed of within two years after the date on which the Company granted the purchase right or within one year after the date on which a participant purchased the shares (such period, the “Holding Period”), or if the participant dies while owning the purchased shares, the participant will be taxed in the year in which he or she disposes of the shares, or the year in which the participant’s death occurs, as applicable. The participant will recognize ordinary income on an amount equal to the lesser of: (i) the excess, if any, of the fair market value of the purchased shares on the date on which he or she disposed of such shares or the date on which he or she died, as applicable, over the amount paid for the purchased shares, and (ii) the excess of the fair market value of the purchased shares on the date the Company granted the purchase right over the purchase price, determined assuming that the purchase right was exercised on the date granted. The participant will recognize as capital gain any further gain realized by him or her when he or she disposes of the purchased shares (after increasing the tax basis in these shares by the amount of ordinary income realized as described above).
Disposition of Shares During the Holding Period.If a participant disposes of the purchased shares before the Holding Period expires, the participant will be taxed in the year in which he or she disposes of such shares. The participant will recognize ordinary income, reportable for the year of the disposition of such shares, to the extent of the excess of the fair market value of such shares on the date on which the purchase right was exercised, over the purchase price for such shares. The participant will recognize as capital gain any further gain realized by him or her upon the disposition of the shares (after increasing the tax basis in these shares by the amount of ordinary income realized as described above).
If a participant disposes of the purchased shares before the Holding Period expires and the amount realized is less than the fair market value of the shares at the time of exercise, the participant will be taxed in the year in which he or she disposes of such shares. The participant will recognize ordinary income to the extent of the excess of the fair market value of such shares on the date on which the purchase right is exercised, over the purchase price for such shares. The participant will recognize a capital loss to the extent the fair market value of such shares on the exercise date exceeds the amount realized on the sale.
Company Deduction.The Company is generally entitled to a tax deduction equal to the amount recognized as ordinary income by the participant in connection with the Amended and Restated ESPP, but not for amounts the participant recognizes as capital gain.
New Plan Benefits
No purchase rights will be granted on the basis of the increase to the share reserve of the Amended and Restated ESPP unless our stockholders approve the Amended and Restated ESPP at the 2018 Annual Meeting.
50 Cognizant Technology Solutions Corporation
2004 Employee Stock Purchase Plan Purchases
The following table sets forth, as to each of our NEOs and the other individuals and groups indicated, the number of shares of our common stock purchased under the ESPP from April 1, 2004 through March 31, 2018, and the weighted average purchase price paid per share. The Company’s non-employee directors are not entitled to participate in the ESPP.
| Name and Position | Number of Shares Purchased | Weighted Average Purchase Price | |||
| Francisco D’Souza | |||||
| Chief Executive Officer | — | — | |||
| Rajeev Mehta | |||||
| President | 19,477 | $ | 17.19 | ||
| Karen McLoughlin | |||||
| Chief Financial Officer | 11,891 | $ | 23.82 | ||
| Ramakrishna Prasad Chintamaneni | |||||
| EVP and President, Global Industries and Consulting | 11,600 | $ | 10.39 | ||
| Matthew W. Friedrich | |||||
| EVP, General Counsel, Chief Corporate Affairs Officer and Secretary | — | — | |||
| All executive officers, as a group | 125,506 | $ | 19.68 | ||
| All directors who are not executive officers, as a group | — | — | |||
| All employees, including current officers who are not executive officers, as a group | 26,391,022 | $ | 31.70 | ||
Equity Compensation Plan Information
The following table provides information as of December 31, 2017 with respect to the shares of our common stock that may be issued under our existing equity compensation plans, which include the 2017 Incentive Award Plan (the “2017 Plan”) and the ESPP, and two of our prior equity compensation plans, the 2009 Incentive Compensation Plan (the “2009 Plan”) and the Amended and Restated 1999 Incentive Compensation Plan (the “1999 Plan”). The 2017 Plan succeeded the 2009 Plan and was approved by stockholders. Awards granted under the 2009 Plan and the 1999 Plan remain valid, though no additional awards may be granted from such plans. For additional information on our equity compensation plans, see Note 16 of the Consolidated Financial Statements in ourcompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Available for Future Issuance Under Equity Compensation Plans (excludes securities reflected in first column) | |||||
| Equity compensation plans approved by security holders1 | 8,595,659 | 2 | $ | 24.88 | 3 | 48,523,780 | 4 | |
| Equity compensation plans not approved by security holders | — | N/A | — | |||||
| Total | 8,595,659 | $ | 24.883 | 48,523,780 | ||||
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2018 Proxy Statement 51
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Summary of Proposed Amendment2019.
The CertificateBy the Audit Committee of Incorporation currently provides that certain matters may be approved by stockholders only by the affirmative vote of at least 66 2/3 percent in voting power of all outstanding shares of the Company entitled to vote generally in the election of directors. These matters include stockholder amendment of the Company’s bylaws (the “By-laws”), the removal of a director and the amendment of certain provisions of the Certificate of Incorporation.
In 2017, the Board considered a stockholder proposal that requested that the Board take the steps necessary to eliminate the supermajority voting requirements contained in the Certificate of Incorporation and By-laws (the “2017 Supermajority Stockholder Proposal”). The Board unanimously recommended that stockholders vote “FOR” the 2017 Supermajority Stockholder Proposal and, at the 2017 Annual Meeting, the proposal won the support of 99.8% of the votes cast for that proposal.
Given the outcome of the vote on the 2017 Supermajority Stockholder Proposal, the Board has determined that it is in the best interests of the Company to amend the Certificate of Incorporation and By-laws to eliminate each of the supermajority voting requirements. Stockholder approval is required to amend the Certificate of Incorporation. The Board of Directors has approved an amendment to the By-laws to eliminate any supermajority voting requirements, as further described in Proposal 5(a) below.
52 Cognizant Technology Solutions Corporation
Proposal 5(a): Amend Article VII of the Certificate of Incorporation to Eliminate the Supermajority Vote Requirement for Stockholders to Amend the By-laws
The Board proposes to amend Article VII of the Certificate of Incorporation to eliminate the 66 2/3 percent supermajority vote currently required for stockholders to amend the By-Laws (the “Article VII Supermajority Amendment”). Specifically, the Board proposes to replace the existing Article VII with the proposed Article VII shown in the table below. The table also contains a comparison of the proposed Article VII to the existing Article VII showing the proposed changes (new text appears inblue underline and deleted text appears inred strikethrough):
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If Proposal 5(a) is approved by stockholders, the Company intends to file a certificate of amendment containing the Article VII Supermajority Amendment with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”), at which time the Article VII Supermajority Amendment would become effective.
The By-laws also contain a requirement that a 66 2/3 percent supermajority vote is required for stockholders to amend the By-laws. Therefore, the Board of Directors has also approved an amendment to the By-laws to eliminate this requirement (the “By-laws Amendment”). The By-laws Amendment is subject to stockholder approval of the Article VII Supermajority Amendment and will become effective upon the effectiveness of the Article VII Supermajority Amendment. If the Article VII Supermajority Amendment and the By-laws Amendment become effective, stockholder amendments to the By-laws would require the approval of a majority of votes cast in accordance with the voting standard contained in Article I, Section 7 of the By-laws.Cognizant Technology Solutions Corporation
| MAUREEN BREAKIRON-EVANS | JOHN DINEEN | LEO S. MACKAY, JR. | JOSEPH M. VELLI | SANDRA S. WIJNBERG |
2018 Proxy Statement2020 PROXY STATEMENT 5359
Proposal 5(b): Amend Paragraph 3 of Article VIII of the Certificate of Incorporation to Eliminate the Supermajority Vote Requirement to Remove a Director
The Board proposes to amend the third paragraph of Article VIII (“Paragraph 3”) of the Certificate of Incorporation to eliminate the 66 2/3 percent supermajority vote currently required for stockholders to remove a director (the “Article VIII Supermajority Amendment”). The Board also proposes to amend Paragraph 3 to delete certain language that is no longer relevant due to the prior declassification of the Company’s Board. Specifically, the Board proposes to replace the existing Paragraph 3 with the proposed Paragraph 3 shown in the table below. The table also contains a comparison of the proposed Paragraph 3 to the existing Paragraph 3 showing the proposed changes (new text appears inblue underline and deleted text appears inred strikethrough):
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If Proposal 5(b) is approved by stockholders, the Company intends to file a certificate of amendment containing the Article VIII Supermajority Amendment with the Delaware Secretary of State, at which time, the Article VIII Supermajority Amendment would become effective. If the Article VIII Supermajority Amendment becomes effective, the removal of a director would require the approval of a majority of shares entitled to vote at an election of directors, in accordance with Delaware law.
54 Cognizant Technology Solutions Corporation
Proposal 5(c): Amend Article XI of the Certificate of Incorporation to Eliminate the Supermajority Vote Requirement for Stockholders to Amend Certain Provisions of the Certificate of Incorporation
The Board proposes to amend Article XI of the Certificate of Incorporation to eliminate the 66 2/3 percent supermajority vote currently required for stockholders to amend certain provisions of the Certificate of Incorporation (the “Article XI Supermajority Amendment”). These provisions pertain to: amendment of the By-laws (Article VII); the size of the Board of Directors, directors’ terms of office, the process for filling vacancies and director removal (Article VIII); special meetings of stockholders and written consent (Article IX); and amendment of the Certificate of Incorporation (Article XI) (together, the “Article XI Supermajority Provisions”). Specifically, the Board proposes to replace the existing Article XI with the proposed Article XI shown in the table below. The table also contains a comparison of the proposed Article XI to the existing Article XI showing the proposed changes (deleted text appears inred strikethrough):
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If Proposal 5(c) is approved by stockholders, the Company intends to file a certificate of amendment containing the Article XI Supermajority Amendment with the Delaware Secretary of State, at which time the Article XI Supermajority Amendment would become effective. If the Article XI Supermajority Amendment becomes effective, the amendment of any provision of the Certificate of Incorporation, including any of the Article XI Supermajority Provisions, would require the approval of a majority of the outstanding shares entitled to vote on the amendment, in accordance with Delaware law.
2018 Proxy Statement 55
Table of ContentsShareholder Proposals
Stockholder ProposalsShareholder Proposal for the 2020 Annual Meeting
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The Company has been advised that James McRitchie and Myra K. Young, 9295 Yorkship Court, Elk Grove, California 95758, beneficial owners of 100 shares of the Company’s common stock, intend to submit the proposal set forth below at the Annual Meeting. Mr. McRitchie and Ms. Young have delegated John Chevedden to act on their behalf regarding the proposal.
PROPOSAL 6 — RIGHT TO ACT BY WRITTEN CONSENT
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The Board’s Statement of OppositionProposal
The BoardUNANIMOUSLY recommends that stockholders voteAGAINST this proposal for the following reasons:
2018 Proxy Statement 57
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The Companycompany has been advised that John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, beneficial owner of 100 shares of the Company’scompany’s common stock, intends to submit the proposal set forth below at the Annual Meeting.annual meeting.
PROPOSAL 7 — SPECIAL SHAREHOLDER MEETING IMPROVEMENT4 – RIGHT TO ACT BY WRITTEN CONSENT
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58 Resolved, Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with giving shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
Cognizant shareholders, who own their shares for less than one continuous year, cannot participate in calling for a special meeting. Hundreds of major companies enable shareholder action by written consent. Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle.
This proposal topic won 46%-support at the 2018 Cognizant Technology Solutions meeting. The 46%-support most like represented at least 51%-support from the shares that have access to independent proxy voting advice. After a 45%-vote for a written consent shareholder proposal The Bank of New York Mellon Corporation (BK) said it adopted written consent in 2019.
This proposal is of additional importance because all Cognizant shareholders, who own their shares for less than one continuous year, cannot participate in calling for a special meeting. This could disqualify from 25% to 50% of Cognizant shares. This is an unusual restriction.
The right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compared to 2018.
This is a proposal topic that can gain increased shareholder support even if management opposes it. For instance Flowserve Corporation opposed this proposal topic and support increased from 43% to 51% in one-year.
There is also concern about Cognizant executive pay being rejected by 12% of shares in 2019. The usual rate of rejection is 5% at a well performing company. John Klein, Chairman of the Board, received the highest negative director votes in 2019. Zein Abdalla, who chaired the all-important Nomination Committee, received the second highest negative director votes. And Cognizant stock was flat in 2019 during a bull market.
And a proxy advisor set certain minimum requirements for a company adopting written consent in case the directors of a company are tempted to adopt a “fig leaf” version of written consent.
Please vote yes:
Right to Act by Written Consent – Proposal 4
The Board’s Statement of Opposition
Substantially identical proposals have been rejected by the company’s shareholders at five of the last seven annual meetings. Substantially the same proposal has been submitted, considered by the board and rejected by shareholders at the 2013, 2015, 2016, 2017 and 2018 annual meetings. The board continues to believe that this proposal is not in the best interests of all shareholders, and that the proponent wastes shareholder time and company resources in continuing to submit substantially the same proposal year after year notwithstanding its having been repeatedly rejected by shareholders.
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The Board’s Statementcompany’s current practice with respect to shareholder action by written consent is consistent with market practice. An overwhelming majority of OppositionS&P 500 companies, 70%, either do not permit shareholders to act by written consent or require that any shareholder action by written consent be unanimous (which is effectively the same as not permitting action by written consent for a large public company). As such, most other large public companies in fact do not permit the kind of shareholder action by written consent requested by the proponent and the board believes that the company’s current practice is consistent with market practice.
The Boardcompany’s existing corporate governance practices already ensure shareholder democracy and board accountabilityUNANIMOUSLY recommends that stockholders voteAGAINST. Implementation of this proposal is unnecessary given the company’s other governance practices, including our by-law provisions that (i) permit shareholders owning 10% of our common stock for one year to call special meetings, and (ii) permit shareholder proxy access, meaning a group of shareholders who have owned at least 3% of the following reasons:company’s stock for at least three years may submit up to 2 director nominees or 25% of the board, whichever is greater, for inclusion in our proxy statement.
Written consent can result in an unfair, secret and unsound process. Action by written consent as set forth in this proposal would allow a limited group of shareholders to act on potentially significant matters, without a meeting, without prior notice to all shareholders, and without an opportunity for fair and open discussion among shareholders. Given this, the board believes that such action by written consent would be an unfair, secretive and unsound process. By contrast, at meetings of shareholders, all shareholders have the opportunity to express views on proposed actions, participate in deliberations and vote, and such meetings occur at a time and date announced publicly in advance of the meeting. As such, the board believes that the company’s existing right of shareholders holding 10% of our common stock for one year to call a special meeting represents a much better process, while action by written consent is not in the best interest of stockholders. |
2018 Proxy Statement 59
StockholderShareholder Proposals and Nominees for the 20192021 Annual Meeting
Stockholder Proposals
SEC rules permit stockholders to submit proposals for inclusion in our proxy statement if the stockholder and the proposal meet the requirements specified in Rule 14a-8 under the Exchange Act (“Rule 14a-8”).
| Rule 14a-8 Shareholder Proposals | Director Nominees Via Proxy Access | Other Proposals or Director Nominees | |||
| Description | SEC rules permit shareholders to | Our by-laws permit a group of shareholders who have owned a significant amount of the company’s common stock (at least 3%) for a significant amount of time (at least three years) to submit director nominees (up to 25% of the board and in any event not less than two directors) for inclusion in our proxy statement if the shareholder(s) and the nominee(s) satisfy the requirements specified in our by-laws. | Our by-laws require that any shareholder proposal, including a director nomination, that is not submitted for inclusion in next year’s proxy statement (either under Rule 14a-8 or our proxy access by-laws), but is instead sought to be presented directly at such meeting, must be received by our secretary in writing not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the anniversary of the preceding year’s annual meeting. | |||
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Director Nominees via Proxy Access
Our By-laws permit a group of stockholders who have owned a significant amount of the Company’s common stock (at least 3%) for a significant amount of time (at least three years) to submit director nominees (up to 25% of the Board and in any event not less than two directors) for inclusion in our proxy statement if the stockholder(s) and the nominee(s) satisfy the requirements specified in our By-laws.
| Shareholder proposals or director nominations submitted under these by-law provisions must be receivedno earlier than the close of business on February 2, 2021 and no later than the close of business on March 4, 2021. In the event that the date of the 2021 annual meeting is more than 30 days before or more than 70 days after June 2, 2021, then our secretary must receive any such proposal not earlier than the close of business on the 120th day prior to the | ||||||
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What | Proposals must conform to | Notice or proposal must include the information required by our | |||||
| Please Note: | SEC rules permit management to vote proxies in its discretion in certain cases if the shareholder does not comply with the above deadlines and, in certain other cases, notwithstanding the shareholder’s compliance with these deadlines. The company reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with the requirements set forth above or other applicable requirements. | ||||||
2020 PROXY STATEMENT Other Proposals or Director Nominees61
Our By-laws require that any stockholder proposal, including a director nomination, that is not submitted for inclusion in next year’s proxy statement (either under Rule 14a-8 or our proxy access By-laws), but is instead sought to be presented directly at such meeting, must be received by our Secretary in writing not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the anniversary of the preceding year’s annual meeting.
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Management Discretion to Vote Proxies on These Proposals
SEC rules permit management to vote proxies in its discretion in certain cases if the stockholder does not comply with the above deadlines and, in certain other cases, notwithstanding the stockholder’s compliance with these deadlines.
Non-Compliant Proposals
The Company reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with the requirements set forth above or other applicable requirements.
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Additional Information
Proxy Statement and Proxy Solicitation
About thisThis Proxy Statement and the Annual Meeting
This proxy statement is furnished in connection with the solicitation by the Boardboard of proxies to be voted at our Annual Meetingannual meeting to be held on Tuesday, June 5, 2018,2, 2020, at 8:9:30 a.m.am Eastern Time, at the Teaneck Marriott at Glenpointe, 100 Frank W. Burr Blvd., Teaneck, New Jersey 07666,via live webcast, and at any continuation, postponement or adjournment thereof. Holders of record of shares of common stock as of April 6, 2020, the Record Daterecord date, will be entitled to notice of and to vote at the Annual Meetingannual meeting and any continuation, postponement or adjournment thereof. As of the Record Date,record date, there were approximately 585,898,388541,055,494 shares of common stock issued and outstanding and entitled to vote at the Annual Meeting.annual meeting. Each share of common stock is entitled to one vote on any matter presented to stockholdersshareholders at the Annual Meeting.meeting.
This proxy statement and the Company’s 2017 Annual Report will be released on or about April 20, 2018 to our stockholders on the Record Date.
Management Discretion Proposals and Board Recommendations
At the Annual Meeting,annual meeting, our stockholdersshareholders will be asked to vote on the management proposals and other stockholder actionsshareholder proposal set forth below.onpage 2. The Boardboard recommends that you vote your shares as indicated below.onpage 2. If you return a properly completed proxy card, or vote your shares by telephone or over the Internet, your shares of common stock will be voted on your behalf as you direct. If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance with the Board’s recommendations.
| Proposals and Other Stockholder Actions | Board Recommendation | See Page No. | ||||
| 1. | Elect the 11 Director nominees named in this proxy statement to serve until the 2019 Annual Meeting of Stockholders; |  | FOR each Director nominee | 10 | ||
| 2. | Approve, on an advisory (non-binding) basis, the Company’s executive compensation; | | FOR | 26 | ||
| 3. | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2018; | | FOR | 44 | ||
| 4. | Approve an amendment and restatement of the Company’s 2004 Employee Stock Purchase Plan; | | FOR | 47 | ||
| 5. | Approve three separate proposals (5(a), (b) and (c)) to eliminate the supermajority voting requirements in the Company’s Certificate of Incorporation; | | FOR all 3 proposals | 52 | ||
| 6. | Consider a stockholder proposal requesting that the Board take the steps necessary to permit stockholder action by written consent (if properly presented at the Annual Meeting); and |  | AGAINST | 56 | ||
| 7. | Consider a stockholder proposal to lower the ownership threshold for stockholders to call a special meeting (if properly presented at the Annual Meeting.) | | AGAINST | 58 | ||
board’s recommendations set forth onpage 2. We know of no other business that will be presented at the Annual Meeting.annual meeting. If any other matter properly comes before the stockholdersshareholders for a vote at the Annual Meeting,annual meeting, however, the proxy holders named on the Company’scompany’s proxy card will vote your shares in accordance with their best judgment.
Additional Information About This Proxy Statement
Why You Received This Proxy Statement
You are viewing or have received these proxy materials because the Board is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement includes information that we are required to provide to you under SEC rules and that is designed to assist you in voting your shares.
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Notice of Internet Availability of Proxy Materials
As permitted by SEC rules, Cognizant is making this proxy statement and its 20172019 Annual Report available to certain of its stockholdersshareholders electronically via the Internet. On or about April 20, 2018,22, 2020, we mailed to these stockholdersshareholders a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) containing instructions on how to access this proxy statement and our 20172019 Annual Report and vote online. If you received an Internet Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them. Instead, the Internet Notice instructs you on how to access and review all of the important information contained in this proxy statement and 20172019 Annual Report. The Internet Notice also instructs you on how you may submit your proxy over the Internet. If you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Internet Notice.
Printed Copies of Our Proxy Materials and Householding
Some of our stockholdersshareholders received printed copies of our proxy statement, 20172019 Annual Report and proxy card. If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card included in the materials.
Householding
The SEC’s rules permit us to deliver a single Internet Notice or set of proxy materials to one address shared by two or more of our stockholders.shareholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Internet Notice or one set of proxy materials to multiple stockholdersshareholders who share an address, unless we received contrary instructions from the impacted stockholdersshareholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Internet Notice or proxy materials, as requested, to any stockholdershareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Internet Notice or proxy materials, contact Broadridge Financial Solutions, Inc. (“Broadridge”) at 866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currently a stockholdershareholder sharing an address with another stockholdershareholder and wish to receive only one copy of future Internet Notices or proxy materials for your household, please contact Broadridge at the above phone number or address.
Solicitation of Proxies
The accompanying proxy is solicited by and on behalf of the Board,board, whose Notice of Annual Meeting is included with this proxy statement, and the entire cost of such solicitation will be borne by us. In addition to the use of mail, proxies may be solicited by personal interview, telephone, e-mail, text and facsimile by our Directors,directors, officers and other employees who will not be specially compensated for these services. We have engaged Innisfree M&A IncorporatedMorrow Sodali Corporate LLC to assist us with the solicitation of proxies.
We expect to pay InnisfreeMorrow Sodali LLC a fee of $20,000$18,000 plus reimbursement for out-of-pocket expenses for its services. We will also request that brokers, nominees, custodians and other fiduciaries forward soliciting materials to the beneficial owners of shares held by such brokers, nominees, custodians and other fiduciaries. We will reimburse such persons for their reasonable expenses in connection therewith.
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Communications to the Board from Shareholders
Under procedures approved by a majority of our independent directors, our chairman, general counsel and secretary are primarily responsible for monitoring communications from shareholders and, if they relate to important substantive matters and include suggestions or comments that our chairman, general counsel and secretary consider to be important for the directors to know, providing copies or summaries to the other directors. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to receive repetitive or duplicative communications.
The board will give appropriate attention to written communications that are submitted by shareholders, and will respond if and as appropriate. Shareholders who wish to send communications on any topic to the board should address such communications to the board or our general counsel and secretary. See “Helpful Resources” onpage 69.
Questions and Answers About the 20182020 Annual Meeting
Who is entitled to vote at the Annual Meeting?annual meeting?
The Record Daterecord date for the Annual Meetingannual meeting is April 9, 2018.6, 2020. You are entitled to vote at the Annual Meetingannual meeting only if you were a stockholdershareholder of record at the close of business on that date, or if you hold a valid proxy for the Annual Meeting.annual meeting. The only class of stock entitled to be voted at the Annual Meetingannual meeting is our common stock. Each outstanding share of common stock is entitled to one vote for all matters before the Annual Meeting.annual meeting. At the close of business on the Record Date,record date, there were 585,898,388541,055,494 shares of common stock issued and outstanding and entitled to vote at the Annual Meeting.annual meeting.
What is the difference between being a “record holder” and holding shares in “street name”?
A record holder holds shares in his or her name. Shares held in “street name” means shares that are held in the name of a bank or broker on a person’s behalf.
62 Cognizant Technology Solutions Corporation
Am I entitled to vote if my shares are held in “street name”?
Yes. If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name”. If your shares are held in street name, these proxy materials are being provided to you by your bank or brokerage firm, along with a voting instruction card if yousuch bank or brokerage firm received printed copies of our proxy materials. As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and the bank or brokerage firm is required to vote your shares in accordance with your instructions. If your shares are held in street name, and you may notwish to vote your shares in person at the Annual Meeting unlessannual meeting, you obtain a legal proxy from your bank or brokerage firm.may join the annual meeting live webcast following the instructions provided under “How do I join the annual meeting live webcast?” below.
How many shares must be present to hold the Annual Meeting?annual meeting?
A quorum must be present at the Annual Meetingannual meeting for any business to be conducted. The presence at the Annual Meeting, in personannual meeting, via live webcast or by proxy, of the holders of a majority of the shares of common stock outstanding on the Record Daterecord date will constitute a quorum.
Who can attend the Annual Meeting?annual meeting live webcast?
You may attend the Annual Meetingannual meeting only if you are a Cognizant stockholdershareholder who is entitled to vote at the Annual Meeting,annual meeting, or if you hold a valid proxy for the Annual Meeting.annual meeting.
How do I join the annual meeting live webcast?
The annual meeting will be a virtual meeting of shareholders conducted via a live webcast that provides shareholders the same rights and opportunities to participate as they would have at an in-person meeting. We believe that a virtual meeting will provide expanded shareholder access and participation and improved communications. You will be able to vote your shares electronically at the virtual meeting.
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To attend and submit your questions during the virtual meeting, please visitwww.virtualshareholdermeeting.com/CTSH2020. To participate and vote during the annual meeting, you will need the 16-digit control number included on your Internet Notice or on your proxy card. Beneficial shareholders who do not have a control number may gain access to and vote at the meeting by logging in to their broker, brokerage firm, bank or other nominee’s website and selecting the shareholder communications mailbox to access the meeting; instructions should also be provided on the voting instruction card provided by your broker, bank, or other nominee. If you planlose your 16-digit control number, you may join the annual meeting as a “Guest”, but you will not be able to attendvote, ask questions or access the Annual Meeting,list of shareholders as of the record date.
If you mustencounter any difficulties accessing the virtual meeting during check-in or the meeting, please call the Company’s investor relations staff at 201-498-8840 or emailDavid.Nelson@cognizant.comno later than 5:00 p.m. Eastern Time on June 4, 2018 to have your name placedtechnical support number that will be posted on the attendance list. In order to be admitted into the Annual Meeting, your name must appear on the attendance list and you must present government-issued photo identification (such as a driver’s license). If your bank or broker holds your shares in street name, you will also be required to present proof of beneficial ownership of our common stock on the Record Date, such as the Internet Notice you received from your bank or broker, a bank or brokerage statement, or a letter from your bank or broker showing that you owned shares of our common stock at the close of business on the Record Date.virtual shareholder meeting log-in page.
What if a quorum is not present at the Annual Meeting?annual meeting?
If a quorum is not present at the scheduled time of the Annual Meeting, a majorityannual meeting, the chairperson of the outstanding shares represented at the Annual Meeting,meeting is authorized by proxy or in person, and entitledour by-laws to vote may adjourn the Annual Meeting.meeting without the vote of shareholders.
What does it mean if I receive more than one Internet Notice or more than one set of proxy materials?
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating and returning the enclosed proxy card in the enclosed envelope.
Where do I direct requests for materials mentioned in this proxy statement and how do I contact Cognizant’s secretary?
Please direct requests for materials mentioned in this proxy statement or other inquiries to our secretary. See “Helpful Resources” onpage 69for how to contact our secretary.
How do I vote?vote by proxy?
We recommend that stockholdersshareholders vote by proxy even if they plan to attend the Annual Meeting and vote in person.during the annual meeting. If you are a stockholdershareholder of record, there are three ways to vote by proxy:
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| ● | Call. You can vote by |
| ● | Mail Your Proxy Card. You can vote by mail by signing, dating and mailing the proxy card, which you may have received by mail. |
Telephone and Internet voting facilities for stockholdersshareholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on June 4, 2018.1, 2020.
If your shares are held in street name through a bank or broker, you will receive instructions on how to vote from the bank or broker. You must follow their instructions in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholdersshareholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares in person at the Annual Meeting, you should contact your bank or broker to obtain a legal proxy and bring it to the Annual Meeting in order to vote.
Can I change my vote after I submit my proxy?
Yes. If you are a registered stockholder,shareholder, you may revoke your proxy and change your vote:
| ● | by submitting a duly executed proxy bearing a later date; |
| ● | by granting a subsequent proxy through the Internet or telephone; |
| ● | by giving written notice of revocation to the |
| ● | by attending and voting |
Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meetingannual meeting itself will not revoke your proxy unless you give written notice of revocation to the Secretarysecretary before your proxy is voted or you vote in person at the Annual Meeting.
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Table of Contentsannual meeting.
If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your bank or broker and submitting the legal proxy along with your ballot.broker.
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Whom should I contact if I have questions or need assistance voting?
Please contact Innisfree M&A Incorporated,Morrow Sodali LLC, our proxy solicitor assisting us in connection with the Annual Meeting. Stockholdersannual meeting. Shareholders in the United States may call toll free at 888-750-5834.1-800-607-0088. Banks and brokers and shareholders located outside of the United States may call collect at 212-750-5833.1-203-658-9400.
Who will count the votes?
Representatives of Broadridge Financial Solutions, Inc., our inspector of election, will tabulate and certify the votes.
What if I do not specify how my shares are to be voted?
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board.board. The Board’sboard’s recommendations for each proposal are set forth onpage 61,2, as well as with the description of each proposal in this proxy statement.
Will any other business be conducted at the Annual Meeting?
We know of no other business that will be presented at the Annual Meeting. If any other matter properly comes before the stockholders for a vote at the Annual Meeting, however, the proxy holders named on the Company’s proxy card will vote your shares in accordance with their best judgment.
How many votes are required for the approval of the proposals to be voted upon and how will abstentions and broker non-votes be treated?
| Proposal | Votes required | Effect of Abstentions and Broker Non-Votes | ||
| Proposal 1:Election of | Votes cast “for” exceed | No effect. | ||
| Proposal 2:Advisory | Majority of votes cast. | No effect. | ||
| Proposal 3:Ratification of | Majority of votes cast. | Abstentions will have no effect; no broker non-votes expected. | ||
| Proposal 4: | Majority of votes cast. | |||
| No effect. |
What is an abstention and how will abstentions be treated?
An “abstention” represents a stockholder’sshareholder’s affirmative choice to decline to vote on a proposal. Abstentions are counted as present and entitled to vote for purposes of determining a quorum. For Proposals 5(a), (b), and (c), abstentions will have the same effect as a vote against these proposals. Abstentions will have no effect on any of the other proposals before the Annual Meeting.annual meeting.
What are broker non-votes and do they count for determining a quorum?
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1)(i) has not received voting instructions from the beneficial owner and (2)(ii) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters, such as the ratification of the appointment of PwC as our independent registered public accounting firm, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, we expect that a broker will not be entitled to vote shares held for a beneficial owner on all of the other proposals to be voted on at the Annual Meeting.annual meeting. Broker non-votes count for purposes of determining whether a quorum is present.
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Where can I find the voting results of the Annual Meetingannual meeting of Stockholders?shareholders?
We plan to announce preliminary voting results at the Annual Meetingannual meeting and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC shortly after the Annual Meeting.
Where do I direct requests for materials mentioned in this proxy statement and how do I contact Cognizant’s Secretary?
Please direct requests for materials mentioned in this proxy statement or other inquiries to our Secretary. See “Helpful Resources” on page 74 for how to contact our Secretary.
Other Matters at the 2018 Annual Meeting
The Board is not aware of any matter to be presented for action at the Annual Meeting other than the matters referred to above and does not intend to bring any other matters before the Annual Meeting. However, if other matters should come before the Annual Meeting, it is intended that holders of the proxies will vote thereon in their discretion.annual meeting.
Cognizant’s Annual Report on Form 10-K
A copy of Cognizant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2019 (“2019 Annual Report”), including financial statements and schedules thereto but not including exhibits, as filed with the SEC, will be sent to any stockholdershareholder of record on April 9, 2018,6, 2020, without charge, upon written request addressed to our Secretary.secretary. See “Helpful Resources” onpage 69. A reasonable fee will be charged for copies of exhibits. You also may access this proxy statement and our 2019 Annual Report atwww.proxyvote.comand atwww.cognizant.com.
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Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements
This proxy statement, and the letter to shareholders included with this proxy statement, include statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. These statements include, but are not limited to, express or implied forward-looking statements relating to our expectations regarding opportunities in the marketplace, our cost structure, investment in and growth of our business, our realignment plans, the timing, cost and impact of the 2020 Fit for Growth Plan, our shift to digital solutions and services, our anticipated financial performance, our capital deployment plan and clarification, if any, by the Indian government as to the application of the Supreme Court’s ruling related to the India Defined Contribution Obligation. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, the impact of the COVID-19 pandemic, changes in the regulatory environment, including with respect to immigration and taxes, and the other factors discussed in our most recent Annual Report on Form 10-K atwww.proxyvote.com. Our Annual Report on Form 10-K forand other filings with the fiscal year ended December 31, 2017 is also available atwww.cognizant.com.SEC. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
Non-GAAP Financial Measures and Forward-Looking Statements
Non-GAAP Financial Measures
Portions of our disclosure including the table under “Reconciliation to GAAP Financial Measures”, include non-GAAP Income from Operations, non-GAAP Operating Margin, and non-GAAP EPS.financial measures. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of Cognizant’sour non-GAAP financial measures to the corresponding GAAP measures, set forth below, should be carefully evaluated.
In 2018, we announced a plan to modify our non-GAAP financial measures. Our historical non-GAAP Incomefinancial measures, non-GAAP operating margin, non-GAAP income from Operationsoperations and non-GAAP Operating Margin excludediluted earnings per share (EPS), excluded stock-based compensation expense, acquisition-related charges and in 2017, realignment charges.unusual items. Our definitionnon-GAAP diluted EPS additionally excluded net non-operating foreign currency exchange gains or losses and the tax impacts of all applicable adjustments. Our new non-GAAP financial measures, adjusted operating margin, adjusted income from operations and adjusted diluted EPS, exclude unusual items. Additionally, adjusted diluted EPS excludes net non-operating foreign currency exchange gains or losses the effect of recognition in the first quarter of 2017 of an income tax benefit previously unrecognized in our consolidated financial statements related to a specific uncertain tax position, the impact of the one-time incremental income tax expense related to the Tax Reform Act enacted in the United States in 2017 and the impact of a one-time incremental income tax expense related to our principal operating subsidiary in India repurchasing its shares from its shareholders, which are non-Indian Cognizant entities, valued at $2.8 billion (the “Indian Cash Remittance”), in 2016, in addition to excluding stock-based compensation expense, acquisition-related charges and, in 2017, realignment charges. Our non-GAAP EPS is additionally adjusted for the income tax impact of the above items, as applicable.all applicable adjustments. The income tax impact of each item is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Additionally, we introduced two new non-GAAP financial measures, free cash flow and constant currency revenue growth. Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period’s reported revenues.
We believe providing investors with an operating view consistent with how we manage the Companycompany provides enhanced transparency into theour operating results of the Company.results. For our internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision making,decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for our executive officers and for making comparisons of our operating results to those of our competitors. Therefore, it is our belief that the use of non-GAAP financial measures excluding thesecertain costs provides a meaningful supplemental measure for investors to evaluate our financial performance. Accordingly, weWe believe that the presentation of our non-GAAP Income from Operations, non-GAAP Operating Margin and non-GAAP EPS, when read in conjunctionfinancial measures along with our reportedreconciliations to the most comparable GAAP results,measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and may exclude costs that are recurring namely stock-based compensation expense, certain acquisition-related charges, andsuch as our net non-operating foreign currency exchange gains or losses. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from our non-GAAP Income from Operations, non-GAAP Operating Margin and non-GAAP EPSfinancial measures to allow investors to evaluate such non-GAAP financial measures.
2018 Proxy Statement 6566 COGNIZANT
Reconciliation to GAAP Financial Measures
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the years ended December 31.indicated.
| ($ in millions, except per share data) | 2015 | % of Revenue | 2016 | % of Revenue | 2017 | % of Revenue | ||||||||||
| GAAP income from operations and operating margin | $ | 2,142 | 17.3% | $ | 2,289 | 17.0% | $ | 2,481 | 16.8% | |||||||
| Add: Stock-based compensation expense1 | $ | 192 | 1.5% | $ | 217 | 1.6% | $ | 221 | 1.5% | |||||||
| Add: Acquisition-related charges2 | $ | 116 | 0.9% | $ | 130 | 0.9% | $ | 138 | 0.9% | |||||||
| Add: Realignment charges3 | — | — | — | — | $ | 72 | 0.5% | |||||||||
| Non-GAAP Income from Operations and non-GAAP Operating Margin | $ | 2,450 | 19.7% | $ | 2,636 | 19.5% | $ | 2,912 | 19.7% | |||||||
| GAAP diluted earnings per share | $ | 2.65 | $ | 2.55 | $ | 2.53 | ||||||||||
| Effect of above operating adjustments, pre-tax | $ | 0.50 | $ | 0.57 | $ | 0.72 | ||||||||||
| Effect of non-operating foreign currency exchange (gains) losses, pre-tax4 | $ | 0.07 | $ | 0.04 | $ | (0.12 | ) | |||||||||
| Tax effect of non-GAAP adjustments to pre-tax income5 | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.31 | ) | |||||||
| Effect of recognition of income tax benefit related to an uncertain tax position6 | — | — | $ | (0.09 | ) | |||||||||||
| Effect of incremental income tax expense related to the Tax Reform Act7 | — | — | $ | 1.04 | ||||||||||||
| Effect of incremental income tax expense related to the India Cash Remittance8 | — | $ | 0.39 | — | ||||||||||||
| Non-GAAP diluted earnings per share | $ | 3.07 | $ | 3.39 | $ | 3.77 | ||||||||||
| (Dollars in millions, except per share data) | 2017 | % of Revenues | 2018 | % of Revenues | 2019 | % of Revenues | |||||||||||||||
| GAAP income from operations and operating margin | $ | 2,481 | 16.8 | % | $ | 2,801 | 17.4 | % | $ | 2,453 | 14.6 | % | |||||||||
| Realignment charges1 | 72 | 0.5 | 19 | 0.1 | 169 | 1.0 | |||||||||||||||
| Incremental accrual related to the India Defined | – | – | – | – | 117 | 0.7 | |||||||||||||||
| Contribution Obligation2 | |||||||||||||||||||||
| 2020 Fit for Growth Plan restructuring charges3 | – | – | – | – | 48 | 0.3 | |||||||||||||||
| Initial funding of Cognizant U.S. Foundation4 | – | – | 100 | 0.6 | – | – | |||||||||||||||
| Adjusted income from operations and adjusted operating margin | $ | 2,553 | 17.3 | % | $ | 2,920 | 18.1 | % | $ | 2,787 | 16.6 | % | |||||||||
| Stock-based compensation expense5 | 221 | 1.5 | 267 | 1.6 | – | 13 | – | 13 | |||||||||||||
| Acquisition-related charges6 | 138 | 0.9 | 158 | 1.0 | – | 13 | – | 13 | |||||||||||||
| Non-GAAP income from operations and non-GAAP operating margin | $ | 2,912 | 19.7 | % | $ | 3,345 | 20.7 | % | – | 13 | – | 13 | |||||||||
| GAAP diluted EPS | $ | 2.53 | $ | 3.60 | $ | 3.29 | |||||||||||||||
| Effect of realignment charges, incremental accrual related to | 0.12 | 0.20 | 0.60 | ||||||||||||||||||
| the India Defined Contribution Obligation, 2020 Fit for Growth | |||||||||||||||||||||
| Plan restructuring charges and initial funding of Cognizant U.S. | |||||||||||||||||||||
| Foundation, as applicable, pre-tax | |||||||||||||||||||||
| Effect of non-operating foreign currency exchange | (0.12 | ) | 0.26 | 0.11 | |||||||||||||||||
| losses (gains), pre-tax7 | |||||||||||||||||||||
| Tax effect of above adjustments8 | (0.06 | ) | (0.03 | ) | (0.15 | ) | |||||||||||||||
| Effect of the equity method investment impairment9 | – | – | 0.10 | ||||||||||||||||||
| Effect of the India Tax Law10 | – | – | 0.04 | ||||||||||||||||||
| Effect of net incremental income tax expense related | 1.04 | (0.01 | ) | – | |||||||||||||||||
| to the Tax Reform Act11 | |||||||||||||||||||||
| Effect of recognition of income tax benefit related to an | (0.09 | ) | – | – | |||||||||||||||||
| uncertain tax position12 | |||||||||||||||||||||
| Adjusted diluted EPS | $ | 3.42 | $ | 4.02 | $ | 3.99 | |||||||||||||||
| Effect of stock-based compensation expense and acquisition- | 0.60 | 0.73 | 0.75 | ||||||||||||||||||
| related charges, pre-tax | |||||||||||||||||||||
| Tax effect of stock-based compensation expense and | (0.25 | ) | (0.18 | ) | (0.16 | ) | |||||||||||||||
| acquisition-related charges8 | |||||||||||||||||||||
| Non-GAAP diluted EPS | $ | 3.77 | $ | 4.57 | $ | 4.58 | |||||||||||||||
| Net cash provided by operating activities | $ | 2,407 | $ | 2,592 | $ | 2,499 | |||||||||||||||
| Purchases of property and equipment | (284 | ) | (377 | ) | (392 | ) | |||||||||||||||
| Free cash flow | $ | 2,123 | $ | 2,215 | $ | 2,107 | |||||||||||||||
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| 2015 | 2016 | 2017 | |||||||
| Cost of revenues | $ | 39 | $ | 53 | $ | 55 | |||
| Selling, general and administrative expenses | $ | 153 | $ | 164 | $ | 166 | |||
| 2 | In 2019, we recorded an accrual of $117 million related to certain statutory defined contribution obligations of employees and employers in India (the "India Defined Contribution Obligation") as further described in Note 15 to the Consolidated Financial Statements in our 2019 Annual Report. |
| 3 | In 2019, we incurred certain employee separation, employee retention and facility exit costs under our 2020 Fit for Growth Plan. See Note 4 to the Consolidated Financial Statements in our 2019 Annual Report. |
| 4 | In 2018, we provided $100 million of initial funding to Cognizant U.S. Foundation. This cost is reported in “Selling, general and administrative expenses” in our Consolidated Statement of Operations in our 2019 Annual Report. |
| 5 | Stock-based compensation expense reported in: |
| For the years ended December 31, | |||||||||||
| (in millions) | 2017 | 2018 | 2019 | ||||||||
| Cost of revenues | $ | 55 | $ | 62 | – | 13 | |||||
| Selling, general and administrative expenses | 166 | 205 | – | 13 | |||||||
| 6 | Acquisition-related charges include |
2020 PROXY STATEMENT 67
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Non-operating foreign currency exchange gains | |
Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income: |
| 2015 | 2016 | 2017 | For the years ended December 31, | |||||||||||||||||
| (in millions) | 2017 | 2018 | 2019 | |||||||||||||||||
| Non-GAAP income tax benefit (expense) related to: | ||||||||||||||||||||
| Realignment charges | $ | 25 | $ | 5 | $ | 43 | ||||||||||||||
| Foreign currency exchange gains and losses | 10 | (12 | ) | (1 | ) | |||||||||||||||
| 2020 Fit for Growth Plan restructuring charges | – | – | 13 | |||||||||||||||||
| Incremental accrual related to the India Defined Contribution Obligation | – | – | 31 | |||||||||||||||||
| Initial funding of Cognizant U.S. Foundation | – | 28 | – | |||||||||||||||||
| Stock-based compensation expense | $ | 46 | $ | 49 | $ | 101 | 101 | 66 | 32 | |||||||||||
| Acquisition-related charges | $ | 43 | $ | 46 | $ | 48 | 48 | 38 | 55 | |||||||||||
| Realignment charges | — | — | $ | 25 | ||||||||||||||||
| Foreign currency exchange gains (losses) | $ | 2 | $ | 5 | $ | 10 | ||||||||||||||
The effective income tax rate related to each of our non-GAAP adjustments varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions. | |
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| 10 | In 2019, we recorded a one-time net income tax expense of $21 million as a result of the |
| 11 | In 2017, in connection with the enactment of the Tax Cuts and Jobs Act (the “Tax Reform Act”), we recorded a one-time provisional net income tax expense of $617 million. In 2018, we finalized our calculation of the one-time net income tax expense related to the enactment of the Tax Reform Act and recognized a $5 million income tax benefit, which reduced our provision for income taxes. |
| 12 | In 2017, we recognized an income tax benefit previously unrecognized in our consolidated financial statements related to a specific uncertain tax position of $55 million. The recognition of the benefit in |
66 Cognizant Technology Solutions Corporation
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Forward-Looking Statements
This proxy statement, and the letter to stockholders included with this proxy statement, include statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expectations regarding profitability and revenue, growth trends and enhancing stockholder value, plans to establish a charitable foundation for STEM education, plans to improve non-GAAP Operating Margin, and anticipated share repurchases and dividends, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, changes in the regulatory environment, including with respect to immigration and taxes, and the other factors discussed in the Company’s most recent Annual Report on Form 10-K and other filings with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
2018 Proxy Statement 67
Cognizant Technology Solutions Corporation2004 Employee Stock Purchase Plan(as Amended and Restated Effective as of February 27, 2018)
Article 1.Definitions
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68 Cognizant Technology Solutions Corporation
The masculine gender includes the feminine, the singular number includes the plural and the plural number includes the singular unless the context otherwise requires.
Article 2. Purpose
Article 3. Administration
The Plan shall be administered by the Committee. The Committee shall have authority to make rules and regulations for the administration of the Plan, and its interpretations and decisions with regard thereto shall be final and conclusive. The Committee shall have all necessary authority to communicate, from time to time, with Eligible Employees and Participants for purposes of administering the Plan, and shall notify Eligible Employees promptly of its election of the term of each forthcoming Purchase Period, if other than quarterly.
Article 4. Shares
There shall be 40,000,000 shares of Common Stock reserved for issuance to and purchase by Participants under the Plan. Such share reserve includes (i) the 28,000,000 shares of Common Stock previously reserved for issuance under the Plan (after giving effect to the two-for-one stock split of Common Stock that occurred on March 10, 2014), plus (ii) an increase of 12,000,000 shares of Common Stock approved by the Board of Directors on February 27, 2018, subject to stockholder approval at the Company’s 2018 Annual Meeting of Stockholders. The shares of Common Stock subject to the Plan shall be either shares of authorized but unissued Common Stock or shares of Common Stock reacquired by the Company. Shares of Common Stock subject to any unexercised portion of any terminated option may again be granted under the Plan.
Article 5. Purchase Price
The purchase price per share of Common Stock sold under this Plan for any Purchase Period shall be equal to the lesser of (a) 90% of the Fair Market Value of a share of Common Stock on the first day of such Purchase Period and (b) 90% of the Fair Market Value of a share of Common Stock on the Exercise Date of such Purchase Period.
Article 6. Grant of Option to Purchase Shares and Accrual Limitations
2018 Proxy Statement 69
Article 7. Election to Participate
Article 8. Payroll Deductions
Article 9. Employee Stock Purchase Account
An Account will be established for each Participant in the Plan. Payroll deductions made underArticle 8will be credited to the individual Accounts and no interest or other earnings will be credited to a Participant’s Account. The amounts collected from the Participant shall not be required to be held in any segregated account or trust fund and may be commingled with the general assets of the Company and used for general corporate purposes.
Article 10. Purchase of Shares
70 Cognizant Technology Solutions CorporationCOGNIZANT
Article 11. Withdrawal
A Participant may withdraw from the Plan at any time prior to the Exercise Date of a Purchase Period by filing a notice of withdrawal. Upon a Participant’s withdrawal, the payroll deductions shall cease for the next payroll period and the entire amount credited to his Account shall be refunded to him. Any Participant who withdraws from the Plan may again become a Participant hereunder at the start of the next Purchase Period in accordance withArticle 7.
Article 12. Issuance of Stock Certificates
The shares of Common Stock purchased by a Participant shall, for all purposes, be deemed to have been issued and sold at the close of business on the Exercise Date. Prior to that date, none of the rights or privileges of a stockholder of the Company shall exist with respect to such shares. Stock certificates shall be registered either in the Participant’s name or jointly in the names of the Participant and his spouse, as the Participant shall designate in his Stock Purchase Agreement. Such designation may be changed at any time by filing notice thereof. Certificates representing shares of purchased Common Stock shall be delivered promptly to the Participant following issuance.
Article 13. Termination of Service
Article 14. Authorized Leave of Absence, Disability
Article 15. Procedure If Insufficient Shares Available
In the event that on any Exercise Date the aggregate funds available for the purchase of shares of Common Stock pursuant toArticle 10 hereof would result in purchases of shares in excess of the number of shares of Common Stock then available for purchase under the Plan, the Committee shall proportionately reduce the number of shares that would otherwise be purchased by each Participant on the Exercise Date in order to eliminate such excess, and the provisions of the second paragraph ofArticle 10 shall apply.
Article 16. Rights Not Transferable
The right to purchase shares of Common Stock under this Plan is exercisable only by the Participant during his lifetime and is not transferable by him. If a Participant attempts to transfer his right to purchase shares under the Plan, he shall be deemed to have requested withdrawal from the Plan and the provisions ofArticle 11 hereof shall apply with respect to such Participant.
Article 17. No Obligation to Exercise Option
Granting of an option under this Plan shall impose no obligation on an Eligible Employee to exercise such option.
2018 Proxy Statement 71
Article 18. No Guarantee of Continued Employment
Granting of an option under this Plan shall imply no right of continued employment with the Company for any Eligible Employee.
Article 19. Notice
Article 20. Repurchase of Stock
The Company shall not be required to repurchase from any Participant shares of Common Stock acquired under this Plan.
Article 21. Adjustments Upon Changes In Stock
72 Cognizant Technology Solutions Corporation
Article 22. Amendment of the Plan
Article 23. International Participants
With respect to Eligible Employees who reside or work outside the United States of America, the Committee may, in its sole discretion, amend the terms of the Plan with respect to such Eligible Employees in order to conform such terms with the requirements of local law, provided that such special terms may not be more favorable than the terms of rights granted under the Plan to Eligible Employees who reside or work in the United States of America.
Article 24. Equal Rights and Privileges
Subject toArticle 23, all Eligible Employees will have equal rights and privileges under this Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Subject toArticle 23, any provision of this Plan that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board of Directors or the Committee, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code.
Article 25. Term of the Plan
This Plan originally became effective as of the Effective Date, and was approved by the stockholders on May 26, 2004, and was thereafter amended and restated on April 1, 2013, and such amendment and restatement was approved by the stockholders on June 4, 2013. The Plan, as amended and restated effective February 27, 2018, became effective upon its adoption by the Board of Directors on such date, provided, however, that the increase in the number of shares of Common Stock reserved for issuance under the Plan from 28,000,000 shares to 40,000,000 shares shall become effective only if it is approved at the Company’s 2018 Annual Meeting of Stockholders. The Plan shall continue in effect until all shares reserved for issuance pursuant toArticle 4 have been granted to Participants, unless terminated prior thereto pursuant toArticle 15 or21 hereof, or pursuant to the next succeeding sentence. The Board of Directors shall have the right to terminate the Plan at any time, effective as of the next succeeding Exercise Date. In the event of the termination of the Plan, outstanding options shall not be affected, except to the extent provided inArticle 15, and any remaining balance credited to the Account of each Participant as of the applicable Exercise Date shall be refunded to each such Participant.
2018 Proxy Statement 73
Index of Terms
74 Cognizant Technology Solutions Corporation
Table of ContentsHelpful Resources
Weblinks
| Board of Directors | |||
| Cognizant Board | |||
Board Committee Charters | https://www.cognizant.com/about-cognizant/board-of-directors | ||
| Audit Committee | https://www.cognizant.com/about-cognizant-resources/audit-committee-charter.pdf | ||
| Finance and Strategy Committee | https://www.cognizant.com/about-cognizant-resources/ | ||
| Management Development and Compensation Committee | https://www.cognizant.com/about-cognizant-resources/ | ||
| Nominating, Governance and Public Affairs Committee | https://www.cognizant.com/about-cognizant-resources/ | ||
| Financial Reporting | |||
| 2019 Annual Report | https://investors.cognizant.com/home/default.aspx#annual-report | ||
| Cognizant | |||
| Corporate Website | https://www.cognizant.com/ | ||
| https://www.cognizant.com/about-cognizant/leadership-team | |||
| https://investors.cognizant.com | |||
| Public Policy | https://www.cognizant.com/ | ||
| https://www.cognizant.com/about-cognizant/sustainability | |||
| Governance Documents | |||
| By-laws | https://www.cognizant.com/about-cognizant-resources/by-laws.pdf | ||
| Certificate of Incorporation | https://www.cognizant.com/about-cognizant-resources/certificate-of-incorporation.pdf | ||
| Code of Ethics | https://www.cognizant.com/codeofethics.pdf | ||
| Corporate Governance Guidelines | https://www.cognizant.com/about-cognizant-resources/ | ||
Weblinksare provided for convenience only and the content on the referenced websites does not constitute a part of this proxy statement.
Contacts
Company Contacts Board or Secretary General Counsel Chief Compliance Officer …or mail or fax to our principal executive offices, | Our Principal Executive Offices Cognizant Technology Solutions | To Request Copies of the Internet Notice or Proxy Materials Broadridge Financial Solutions, Inc. For Questions or Assistance Voting
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2020 PROXY STATEMENT69
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COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
GLENPOINTE CENTRE WEST
500 FRANK W. BURR BLVD.
TEANECK, NJ 07666
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| The Board of Directors recommends you vote FOR each of the nominees: | ||||||||||
| 1. | Election of | |||||||||
| Nominees | For | Against | Abstain | |||||||
| 1a. | Zein Abdalla | ☐ | ☐ | ☐ | ||||||
| 1b. | ☐ | ☐ | ☐ | |||||||
| 1c. | Maureen Breakiron-Evans | ☐ | ☐ | ☐ | ||||||
| 1d. | ☐ | ☐ | ☐ | |||||||
| 1e. | John M. Dineen | ☐ | ☐ | ☐ | ||||||
| 1 | John N. Fox, Jr. | ☐ | ☐ | ☐ | ||||||
| 1 | ☐ | ☐ | ☐ | |||||||
| 1 | Leo S. Mackay, Jr. | ☐ | ☐ | ☐ | ||||||
| 1 | Michael Patsalos-Fox | ☐ | ☐ | ☐ | ||||||
| 1 | Joseph M. Velli | ☐ | ☐ | ☐ | ||||||
| 1k. | Sandra S. Wijnberg | ☐ | ☐ | ☐ | ||||||
| The board of directors recommends you vote FOR proposals 2 and 3. | For | Against | Abstain | ||||||
| 2. | Approve, on an advisory (non-binding) basis, the compensation of the company's named executive officers. | ☐ | ☐ | ☐ | |||||
| 3. | Ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2020. | ☐ | ☐ | ☐ | |||||
| The board of directors recommends you vote AGAINST proposal 4. | For | Against | Abstain | ||||||
| 4. | Shareholder proposal requesting that the board of directors take action as necessary to permit shareholder action by written consent. | ☐ | ☐ | ☐ | |||||
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| Signature [PLEASE SIGN WITHIN BOX] | Date |
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FOR THE ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS OF
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CLASS A COMMON STOCK
JUNE 5, 20182, 2020
Please date, sign and mail your proxy card in the envelope provided as soon as possible.
The undersigned stockholder(s)shareholder(s) of Cognizant Technology Solutions Corporation hereby appoint(s) Karen McLoughlin, Chief Financial Officer of the Company,company, Matthew Friedrich, Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary of the company, Robert Telesmanic, Senior Vice President, Controller and Chief Accounting Officer of the Company,company, and Harry Demas, Vice President, AssistantDeputy General Counsel and Assistant Secretary of the Company,company, as proxies, with full power of substitution, to vote all shares of the Company'scompany's Class A Common Stock which the undersigned stockholder(s)shareholder(s) is/are entitled to vote at the Company's 2018 Annual Meetingcompany's 2020 annual meeting of Stockholdersshareholders or any postponement, continuation or adjournment thereof.
This proxy will be voted in the manner directed herein by the undersigned stockholder.shareholder. If no direction is made, this proxy will be voted in accordance with the Boardboard of Directors'directors' recommendations. The proxies are further authorized to vote in their discretion (1) for the election of any person to the Boardboard of Directorsdirectors if any nominee named herein becomes unable to serve or for good cause will not serve, (2) on any matter that the Boardboard of Directorsdirectors did not know would be presented at the Annual Meetingannual meeting by a reasonable time before the proxy solicitation was made, and (3) on such other business as may properly come before the meeting or any continuation, postponement or adjournment thereof.
Continued and to be signed on reverse side