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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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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2021 Proxy Statement & Notice of Annual Meeting
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April 21, 2021 To Our Shareholders |  |
The board is pleased with the progress Cognizant made in 2020. The company has positioned itself for success by building a diverse management team led by CEO Brian Humphries, strengthening its portfolio, completing a restructuring program and executing on a strategy designed to revitalize revenue growth and drive shareholder value in 2021 and beyond.
Company Performance
2020 was a year of solid execution in challenging conditions. The company made significant progress in transforming the business to position the company for accelerated growth and build leadership in advanced digital technologies. Cognizant implemented and executed its strategic objectives, which focused on protecting and optimizing the company’s core IT portfolio while continuing to extend its digital capabilities through organic investments and targeted M&A. The successful execution of these and other initiatives has positioned Cognizant for future success, with our long-term goal being to return the company to industry-leading growth and shareholder returns.
Throughout the Covid-19 pandemic, Cognizant’s highest priority has remained the health, safety and well-being of associates while maintaining continuity of service for clients. This required the company to orchestrate the movement of approximately 200,000 associates around the world to a work-from-home model. Cognizant also faced a ransomware attack that impacted its internal networks and systems and disrupted some operations. We moved swiftly to contain and remediate the attack, with a focus on communicating transparently to clients, and have since put additional programs in place to strengthen and better protect the company’s IT environment. Cybersecurity is a top priority of the company, our management and the board.
The board has stayed in near constant touch with the management team in navigating immediate challenges while monitoring the company’s strategic, operational and commercial progress. One measure of this engagement is the nearly 50% increase in the number of board and committee meetings in 2020 as compared to the two previous years.
Strategic Priorities
As Cognizant advances toward its vision to become the preeminent technology services partner to the Global 2000 C-suite, the board has worked with management to refine the company’s strategy. Following the board’s annual in-depth strategy review in September, the company announced a refined set of strategic priorities: repositioning the brand, globalizing the company, accelerating the shift to digital and increasing our relevance to clients. See pages 2 and 3. The board is committed to the company’s successful execution of this strategy.
Shareholder Engagement
In November and December of last year, the chair of our compensation committee, Leo S. Mackay, Jr., and I met with shareholders that hold approximately 35% of the company’s outstanding shares. We discussed and received their feedback on a number of topics, including our business and strategy, board composition and refreshment, executive compensation and sustainability efforts. See page 20.
Sustainability
In the last year the board has renewed its emphasis on Cognizant’s diversity and inclusion and environmental, social and governance (ESG) programs. The company is targeting increased diversity throughout the organization, is undertaking investments to enhance its ESG program and provide more comprehensive ESG disclosures to shareholders, and recently announced a new, five-year $250 million initiative to support its communities. See pages 22 to 24.
Executive Compensation
The compensation committee revised Cognizant’s performance-based compensation structure for 2020 to better align with the company’s strategy, peer group, competitor and industry practices, the recommendations of the committee’s independent compensation consultant and feedback from shareholders. Significant changes in the program were 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. See page 28.
Board Composition
Our board continually evaluates its composition and collective expertise based on Cognizant’s evolving needs as a large, publicly-traded company and its strategy and priorities. In the last few years, we added a number of new directors through an active, skills-based board refreshment process. In light of the significant refreshment in recent years, no new directors have been added since our 2020 annual meeting. We believe our 2021 director nominees bring the right mix of skills and experience to help the company achieve its full growth potential. See pages 6 to 11.
After 13 years of dedicated service on our board, including most recently as chairman of our compensation committee during the revisions to our performance-based compensation structure, John N. Fox Jr. will not stand for reelection at the end of his current director term. We are grateful to John for his many years of service. See page 12.
On behalf of my fellow board members, we welcome you to attend the 2021 annual meeting of shareholders and thank you for your continued support.
Sincerely,
MICHAEL PATSALOS-FOX Chair of the Board of Directors |  |
| 2021 Proxy Statement | 1 |
About Cognizant Our Purpose Why we exist We engineer modern businesses to improve everyday life. Our Vision What we aspire to achieve To become the preeminent technology services partner to the Global 2000 C-Suite. Our Values How we work Start with a point of view Seek data, build knowledge Always strive, never settle Work as one Create conditions for everyone to thrive Do the right thing, the right way 2020 Company Snapshot North America $12.6B Revenue 43,500 Employees Continental Europe $1.7B Revenue 13,400 Employees India 204,500 Employees Rest of world $1.1B Revenue 21,300 Employees UK $1.3B Revenue 6,800 Employees $16.7B Revenue 289,500 Employees OUR BUSINESS SEGMENTS Financial Services including banking and insurance 34% Revenue Healthcare including life sciences 29% Revenue Products and Resources including retail and consumer goods, manufacturing, logistics, energy and utilities, and travel and hospitality 22% Revenue Communications, Media and Technology 15% Revenue OUR GLOBAL FOOTPRINT
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Our Strategic Priorities 1 Repositioning the Cognizant Brand Evolve our brand in the marketplace to position us as a global IT services leader with worldclass digital solutions and talent 2 Globalizing Cognizant Diversify our revenue mix across geographies, globalize delivery, invest in our brand and develop our leadership team 3 Accelerating Digital Continue pivoting Cognizant to digital by evolving our offerings, partnerships, brand, talent and delivery capabilities 4 Increasing our Relevance to Clients Become indispensable to clients by ensuring industry-aligned thought leadership and capabilities to address their pain points Our Financial Results REVENUE (in billions) DILUTED EARNINGS PER SHARE $16.7B 0 5 10 15 20 2018 2019 2020 $16.1 $16.8 $16.7 $2.57 GAAP $3.42 Adjusted1 $3.60 $4.02 $3.29 $3.99 $2.57 $3.42 _ _ _ _ _ _ 2018 2019 2020 OPERATING MARGIN CASH FLOW (in billions) 12.7% GAAP 14.4% Adjusted1 $3.3B Net cash provided by operating activities (GAAP) $2.9B Free cash flow (Non-GAAP)1 17.4%18.1% 14.6% 16.6% 12.7% 14.4% _ _ __ __ __ 2018 2019 2020 $2.2 $2.6 $2.5 $3.3 $2.1 $2.9 _ _ _ _ _ 2018 2019 2020 CAPITAL RETURN (in billions) ACQUISITIONS (in billions) $2.1B Share repurchases Dividends $1.1B for 9 acquisitions in digital and cloud $1.7 $2.7 $2.1 73% 27% 83% 17% 77% 23% 2018 2019 2020 _._ _._ _._ _._ _._ _._ _._ $1.1 $0.6 $1.1 2018 2019 2020 5 Acq. 5 Acq. 9 Acq. _._ _._ _._ _._ _._ _._ 1 Adjusted diluted earnings per share, adjusted operating margin and free cash flow are not measurements of financial performance prepared in accordance with GAAP. See “Forward-Looking Statements and Non-GAAP Financial Measures” on page 68 for more information and, where applicable, reconciliations to the most directly comparable GAAP financial measures
| 1 | Adjusted diluted earnings per share, adjusted operating margin and free cash flow are not measurements of financial performance prepared in accordance with GAAP. See “Forward-Looking Statements and Non-GAAP Financial Measures” on |
Cognizant Technology Solutions Corporation
To Our Stockholders:Meeting Notice and Voting Roadmap
We cordially invite
You are invited to participate in Cognizant’s 2021 annual meeting. If you were a shareholder at the close of business on April 5, 2021, 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 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 knowledgesubmit your vote as soon as possible through one of the many disciplines that are central to the company’s long-term growth. methods below.
| John Kim Secretary |  |
Agenda
| 1 | PROPOSAL 1 Election of Directors | ||
| Elect the following 10 directors to serve until the 2022 annual meeting of shareholders: | |||
 | Zein Abdalla |  | Brian Humphries |
 | Vinita Bali |  | Leo S. Mackay, Jr. |
 | Maureen Breakiron-Evans |  | Michael Patsalos-Fox |
 | Archana Deskus |  | Joseph M. Velli |
 | John M. Dineen |  | Sandra S. Wijnberg |
| Logistics | |
| As in the last two years, the 2021 annual meeting will be a virtual meeting of shareholders conducted via a live webcast. We designed the format of the virtual annual meeting to ensure that our shareholders who attend the virtual annual meeting will be afforded comparable rights and opportunities to participate as they would at an in-person meeting. During the virtual annual meeting, you may ask questions and will be able to vote your shares electronically. To participate in the virtual annual meeting and access the list of shareholders, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or on your proxy card. A complete list of shareholders will also be available for examination by any shareholder during the ten days prior to the annual meeting for a purpose germane to the meeting by sending an e-mail to our general counsel at the e-mail address set out on page 73 stating the purpose of the request and providing proof of ownership of our common stock. | |
| DATE | Tuesday, June 1, 2021 |
| TIME | Online check-in begins: 9:15 a.m. Meeting begins: 9:30 a.m. (all times U.S. Eastern Time) |
| PLACE | Via live webcast – please visit www.virtualshareholdermeeting. com/CTSH2021 |
| Voting | |
| WHO CAN VOTE | Shareholders as of our record date, April 5, 2021, are eligible to vote |
| INTERNET | www.proxyvote.com |
| TELEPHONE | +1-800-690-6903 |
| Sign, date and return the proxy card | |
Board recommendation: 
FOR each director nominee.
See board adding five independent directors over the last three years. These individuals are providing expertise in key enabling digital technologies, healthcare, corporate governance, overview on pages 6 and other areas.7, our director skills matrix on pages 10 and 11 and our director nominees’ biographies starting on page 12. ►
Our newest
| Qualified | OUR BOARD’S KEY QUALIFICATIONS 6/10 Technology and Consulting Services 4/10 Talent Management 4/10 Security 5/10 Regulated Industries 6/10 Operations Management 8/10 International Business Development 5/10 Public Company Leadership 8/10 Public Company Governance 3/10 Finance, Accounting and Risk Management |
| Diverse | OUR BOARD’S DEMOGRAPHICS • 5/10 born outside the United States • 6/10 worked overseas • 4/10 racially/ethnically diverse • 4/10 female |
| Independent | 9/10 directors are independent |
| Engaged | 94% weighted average attendance of director nominees at 2020 board and committee meetings |
Information above is for our 2021 director Joseph M. Velli, joined the board last December. Mr. Velli served previously as Senior Executive Vice Presidentnominees 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 industryexcludes John N. Fox, Jr., who 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 retiredretiring from the board last December after 16 years of service toand not standing for reelection at 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.2021 annual meeting.
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,
 | Cognizant |  |
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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.
Agenda
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 | PROPOSAL 2 Advisory Vote on Executive Compensation (Say-On-Pay) | ||||
| Approve, on an advisory (non-binding) basis, the compensation of the | |||||
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Board recommendation:
FOR the approval, on an advisory (non-binding) basis, of our executive compensation.
See “Compensation Discussion and Analysis (CD&A)” on page 30. ►
| Performance-driven and Aligned with Strategic Priorities and Shareholder Interests | CASH
• EQUITY • Performance Stock Units (PSUs) • Restricted Stock Units (RSUs) | 2020 TARGET DIRECT COMPENSATION
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 | Our performance-based compensation utilizes performance goals that are designed to be ambitious but attainable. In 2020, ACI was achieved at 85% of target after a Covid-19 adjustment, 2019/20 PSUs achieved at 0% (no payout) and PSUs granted in 2020 achieved at 0% as to the 2020 company financial targets. | |
3 PROPOSAL 3 Ratification of Appointment of Independent Registered Public Accounting Firm Ratify the appointment of PricewaterhouseCoopers LLP as the | | 4 PROPOSAL 4
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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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| FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021.
• The continued retention of PwC is in the | |||
| best interests of the company and its shareholders. See “Audit Matters” on page 60. ► | Board recommendation:x AGAINST this proposal. See page 62. ► | |||
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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
Board Overview Chair BORN OUTSIDE U.S. 50% 5/10 RACIALLY/ ETHNICALLY DIVERSE 40% 4/10 WORKED OVERSEAS 60% 6/10 FEMALE 40% 4/10 Information provided is for our 2021 director nominees and excludes John N. Fox, Jr., who is retiring from the board and not standing for reelection at the 2021 annual meeting. AVERAGE TENURE 5 0-2 YEARS 40% 3-6 YEARS 30% 7-10+ YEARS 30% AVERAGE AGE 61 60 YEARS 60% Committees A Audit Committee C Compensation Committee Committee Chair F Finance Committee G Governance Committee + Audit Committee Financial Expert 90% INDEPENDENT 9 of 10 director nominees are independent Corporate Governance Brian Humphries CEO of Cognizant Mr. Humphries brings our board extensive senior leadership experience at public companies in the technology sector, having served as CEO, Vodafone Business, for Vodafone Group, and in various senior roles for Dell Technologies, including as President and COO, Infrastructure Solutions Group, and for Hewlett-Packard, including as SVP, Emerging Markets. Birthplace Skills Zein Abdalla Former President of PepsiCo Mr. Abdalla brings our board decades of experience leading and shaping large scale operations across the world as President and a manager of key divisions of PepsiCo. Birthplace Committees Skills Other Public Company Boards The TJX Companies Joseph M. Velli Former Senior EVP of The Bank of New York Mr. Velli brings our board 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) and as CEO of Convergex Group. Birthplace Committees Skills Other Public Company Boards AssetMark, Computershare, Paychex Sandra S. Wijnberg Former CFO, Marsh & McLennan Companies Ms. Wijnberg brings our board expertise managing a large, global professional services business from her role as CFO of Marsh & McLennan Companies as well finance and accounting expertise and regulated industry expertise gained through this proxy statement. Please readrole and her role as interim CFO of YUM! Brands. Birthplace Committees + Skills Other Public Company Boards ADP, T. Rowe Price Michael Patsalos-Fox Former Chairman, the entire proxy statement carefully before voting. We intend to make this proxy statement available toAmericas of McKinsey & Company and Former CEO of Stroz Friedberg Mr. Patsalos-Fox brings our stockholders on or about April 20, 2018.
CORPORATE GOVERNANCE
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2018 Proxy Statement 1
Proxy Statement Summary
Vinita Bali Former CEO and Managing Director of Britannia Industries and Former VP, The Coca-Cola Company Ms. Bali brings our board 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. Birthplace Committees Skills Other Public Company Boards Bunge, CRISIL, Syngene Maureen Breakiron-Evans Former CFO of Towers Perrin Ms. Breakiron-Evans brings our board accounting and auditing experience across a number of industries, having served as CFO of Towers Perrin, VP and General Auditor of CIGNA, EVP and CFO of Inovant (part of Visa), and a partner at Arthur Andersen. Birthplace Committees + Skills Archana Deskus Chief Information Officer of Intel Ms. Deskus brings our board extensive experience as a CIO, setting and leading the technology strategy for large, global corporations, including Intel, Hewlett-Packard, Baker Hughes, Ingersoll Rand, Timex and North America HVAC (part of Carrier Corporation). Birthplace Committees Skills Other Public Company Boards East West Bancorp Leo S. Mackay, Jr. SVP, Ethics and Enterprise Assurance of Lockheed Martin Mr. Mackay brings our board auditing and compliance expertise as well as expertise in security, government contracting and federal government senior policy-making through his positions at Lockheed Martin and in the Bush administration. Birthplace Committees Skills John M. Dineen Former President and CEO of GE Healthcare Mr. Dineen brings our board broad-based experience from managing several key business divisions of General Electric and extensive experience in the healthcare industry from having served as President and CEO of GE Healthcare. Birthplace Committees Skills Other Public Company Boards Syneos Health Key Qualifications Technology and Consulting Services Talent Management Security Regulated Industries Operations Management International Business Development Public Company Leadership Public Company Governance Finance, Accounting and Risk Management Director exits Sandra S. Wijnberg Jonathan Chadwick Archana Deskus Francisco D’Souza John E. Klein Director additions John N. Fox, Jr. (not standing for reelection at the 2021 annual meeting) 2021 2020 Vinita Bali 2019 Brian Humphries Other Public Company Boards Ameren
| 2021 Proxy Statement | 7 |
Director Nominee ExperienceTable of Contents
Board Composition and Refreshment Annual Board Self-Evaluation The board and each of its committees annually undertakes a self-evaluation process to help ensure continued effectiveness. In 2020, the board self-evaluation process was facilitated by a third party that conducted a series of interviews with each of our directors to gather input on each 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, which reviewed and discussed them, and provided feedback to individual directors and members of management. Proxy Access Shareholder Nominations of Directors for Annual Meeting 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 board 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” on page 63. Chair and Committee Appointments At its first quarterly meeting following the annual meeting of shareholders, the board reviews the committee assignments of directors and appoints (or reappoints) directors to committees. It also reviews the committee and board chair appointments and makes appointments (or reappointments) to such positions. The board also monitors director workload and board and committee requirements throughout the year and will make committee and chair changes as needed. Committee and Chair Rotation and Succession Planning. The board seeks to periodically rotate directors among committees and into chair positions. It also seeks to develop long-term succession plans for chair positions. For example, in 2020 the board completed two such chair succession plans: • Audit Committee – Ms. Wijnberg replaced Ms. Breakiron-Evans as chair • Compensation Committee – Mr. Mackay replaced Mr. Fox as chair Among other things, the board considers: 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 (known as the “Rooney Rule”). • 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. 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 three other public company boards (one if the director is a public company CEO). RELEVANT SKILLS AND EXPERIENCE for a Fortune 200 public company, a global professional services and technology company and the company’s strategy. See pages 10 and 11. BALANCE OF TENURES between knowledge of the company and fresh perspectives and insights. 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 ensure the continued independence of the board and its committees. • There are no family relationships among any of our directors, executive officers and key employees. • Our board determines independence in accordance with the rules of The Nasdaq Stock Market LLC (“Nasdaq”).
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Search Process and Recommendations GOVERNANCE COMMITTEE SEARCH The Governance Committee develops criteria for any search process, including any specific desired skills, experiences, characteristics or qualifications. The committee typically engages an independent director search firm. A subset of directors may be tasked by the committee with leading a search process. INTERNAL RECOMMENDATIONS Independent directors, management and others may recommend potential candidates to the Governance Committee. 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 Appointment of Directors The board may appoint directors at any time during the year. Typically, such appointments follow a search process or recommendation as set out above and a recommendation from the Governance Committee to the board. The process for shareholder-proposed candidates is substantially the same. GOVERNANCE COMMITTEE RECOMMENDATION PROCESS • Discuss, assess and interview candidates • Evaluate candidates based on desired skills and characteristics • Recommend nominees to the board BOARD NOMINATION AND APPOINTMENT PROCESS • Interview, discuss and assess candidates recommended by the Governance Committee • Analyze independence • Appoint directors to the board Annual Board Nomination of Directors for Annual Meeting BOARD NOMINATIONS Prior to the board making its annual recommendation to shareholders for the election of directors, the Governance Committee reviews the composition of the board based on the desired overall skills and characteristics of the board as a whole to support the company’s business and strategy and the long-term interests of our shareholders. The Governance Committee then makes a recommendation to the board, which reviews such recommendation, analyzes the independence of the director nominees and makes its recommendation to shareholders. See page 12 for the board’s 2021 director nominees for the annual meeting Annual Shareholder Vote to Elect Directors MAJORITY VOTING STANDARD All directors are elected annually and subject to a 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. Identify, Evaluate and Appoint Director Candidates YEAR-ROUND FEBRUARY TO APRIL JUNE Q2 Q1 Annual Meeting
| 2021 Proxy Statement | 9 |
Board Qualifications The following skills matrix shows key skills and experiences our board has identified as desirable in light of our company characteristics and strategic priorities, as well as the director nominees with the most significant levels of experience in such areas. In many instances, other directors not appearing in 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 due to this presentation’s focus on only those directors with the most significant levels of experience in the respective areas. Breakiron-Evans Former CFO of Towers Perrin and General Auditor of Cigna 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. Mackay, Jr. SVP, Ethics & Enterprise Assurance at Lockheed Martin Wijnberg Former CFO of Marsh & McLennan Abdalla Bali Breakiron- Evans 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 Policy: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. Deskus Dineen Mackay, Jr. Velli Wijnberg Velli Abdalla Former President of PepsiCo 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. Bali Former CEO of Britannia Industries Dineen Former CEO of GE Healthcare and GE Transportation Humphries Former CEO of Vodafone Business Deskus Patsalos- Fox Wijnberg Velli Abdalla Former CEO of PepsiCo Europe 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. Bali Former CEO of Britannia Industries Dineen Former CEO of GE Healthcare and GE Transportation Humphries Former CEO o Company Characteristics Cognizant is one of the world’s leading professional services companies, with offices and operations in over 85 cities and 35 countries. Global Technology Services Provider Nasdaq-listed, Fortune 200 Company 289,500 Employees
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Table of ContentsCreate an experienced Board
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. Deskus CIO of Intel and former CIO of Hewlett - Packard Enterprise, Baker Hughes and Ingersoll Rand Mackay, Jr. Wijnberg Humphries Former CEO of Vodafone Business Patsalos-Fox Former Chairman, The Americas of McKinsey & Company Velli Former Senior EVP, The Bank of New York TALENT MANAGEMENT As a global professional services organization, our people are our most important asset. 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. Breakiron-Evans Former CFO of Towers Perrin Humphries Patsalos-Fox Former Chairman, The Americas of McKinsey & Company Wijnberg Former CFO of Marsh & McLennan 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 areas relevantinformation security is important to our business and our risk management strategy. Deskus CIO of Intel and former CIO of Hewlett - Packard Enterprise, Baker Hughes and Ingersoll Rand Breakiron- Evans Mackay, Jr. SVP of Lockheed Martin Patsalos-Fox Former Chairman, The Americas of McKinsey & Company 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 Company.board’s understanding of the unique challenges faced by clients in these industries and oversight of the company’s strategy and regulatory compliance. Dineen Former CEO of GE Healthcare and GE Transportation Breakiron- Evans Wijnberg Mackay, Jr. SVP of Lockheed Martin and Former COO of ACS State Healthcare Velli Former Senior EVP, The Bank of New York 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. Abdalla Former President of PepsiCo Bali Mackay, Jr. Humphries Dineen Former CEO of GE Healthcare and GE Transportation Velli Former Senior EVP, The Bank of New York and CEO of Convergex Group Cognizant has four strategic priorities to enable continued success in the evolving enterprise digital market. 1 Repositioning the Cognizant Brand 2 Globalizing Cognizant 3 Accelerating Digital 4 Increasing our Relevance to Clients
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WHAT ARE YOU VOTING ON? In the event any of the nominees should become unable to serve or for good cause will not serve as a director, it is intended that votes will be cast for a substitute nominee designated by the board or the board may elect to reduce its size. The board has no reason to believe that the nominees named herein will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected. | |
The board unanimously recommends a vote 
| 93% | 94% | 91% | 100% | 96% | |||||
| B | Board of Directors | A | Audit Committee | C | Compensation Committee | F | Finance Committee | G | Governance Committee |
Our corporate governance guidelines provide that directors are expected to attend the annual meeting of shareholders. For the 2020 annual meeting, Mr. Humphries acted as chair and all of the other 10 then-current directors attended by teleconference. | |||||||||
KEY GOVERNANCE PRACTICES SHAREHOLDER RIGHTS AND ENGAGEMENT
Annual director elections / no classified board
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BOARD OF DIRECTORS
Majority of independent directors
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Majority voting in director elections
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Proxy Statement Summary
COMPENSATION
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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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| 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.
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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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| 2017 ACI | 8.9% | 40% |
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Proxy Statement Summary
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| 2016 PSUs | 10.4% | 25% | |||||
| 2016/17 PSUs | 10.7% | 25% |
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2018 Proxy Statement 7
Proxy Statement Summary
AUDIT
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ADDITIONAL PROPOSALS
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2018 Proxy Statement 9
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2018 Proxy Statement 13
Director Independence
Board Member Independence
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Committee Member Independence
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DIRECTOR RETIREMENT
John N. Fox, Jr. is not standing for reelection at the 2021 annual meeting. Over the last 13 years, he has |
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Corporate Governance > Director Nominees
Zein Abdalla Former President of PepsiCo Director Since 2015 Committees Birthplace Sudan Age 62 Independent Key Qualifications Executive Experience 2014 1995 Present 2012 PepsiCo, Inc. (PEP), a multinational food, snack and beverage company (1995 – 2014) • President (2012 – 2014) • CEO, European Region (2009 – 2012) • President, European Region (2006 – 2009) • Various senior executive positions (1995 – 2006) Public company leadership and experience leading and shaping large scale operations across the world from his global President role and decades of executive experience at a leading Fortune 50, Nasdaq-listed global company. Public Company Boards The TJX Companies, Inc. (TJX), a retailer of apparel and home fashions (since 2012) Select Board and Other Positions Mastercard Foundation – board member (since 2017) and chair (since 2020) Kuwait Food Company K.S.C.P. – board member (since 2017) Imperial College Business School Advisory Board – member (since 2016) Mars, Incorporated – board advisor (since 2016) Education Imperial College, London University – B.S.Vinita Bali Former CEO and Managing Director of Britannia Industries and Former VP, The Coca-Cola Company Director Since 2020 Committees Birthplace India Age 65 Independent Key Qualifications Executive Experience Britannia Industries, an international food products company based in India and listed on the National Stock Exchange and Bombay Stock Exchange in India (2005 – 2014) • Chief Executive Officer and Managing Director Public company CEO experience directing and shaping strategy for an international food products company. The Zyman Group, a marketing and communications strategy firm (2003 – 2005) • Managing Principal and Head of Business Strategy Practice, USA The Coca-Cola Company (KO), a multinational beverage company (1994 – 2003) • Vice President and Head, Corporate Strategy (2001 – 2003) • President, Andean Division (1999 – 2000) • Worldwide Marketing Director (1994 – 1998) Executive-level business, operational and marketing leadership roles, based in the United States and Chile, for key divisions around the globe for a then Fortune 100, NYSE listed company. Cadbury Schweppes Plc, a multinational confectionery company (1980 – 1994) • Senior marketing roles across a number of geographies, including South Africa, Nigeria, India and the U.K. Senior business, operational and marketing leadership roles across a number of geographies for a leading multinational confectionery company. Public Company Boards Bunge Ltd. (BG), an agribusiness and food company (since 2018; retiring in May 2021) 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) Past Director Positions Smith & Nephew Plc (SNN), a global portfolio medical technology business (2014 – 2020) Select Other Positions Board of Governors of the Indian Institute of Management (Bangalore) – member Education University of Delhi, India – B.A. Jamnalal Bajaj Institute of Management Studies in India – M.B.A. 2014 2005 2003 1994 1980 Present 2018 2017 2014
Key Technology and Talent Operations
Qualifications Consulting Services Management Security Regulated Industries Management
International Business Public Company Public Company Finance, Accounting
Development Leadership Governance and Risk Management
| 2021 Proxy Statement | 13 |
In 2016
Maureen Breakiron-Evans Former CFO of Towers Perrin Director Since 2009 Committees Birthplace USA Age 66 Independent Key Qualifications Executive Experience Towers Perrin, a global professional services company (2007 – 2008) • Chief Financial Officer Insight into the particular financial and operational challenges of a global business like Cognizant where talent is a key asset gained through her role as CFO of a global company. CIGNA Corporation (CI), a health insurance services company (2005 – 2006) • Vice President and General Auditor Accounting, auditing and enterprise risk management experience in the regulated healthcare industry for a top 10 U.S. health insurance company. Inovant, LLC, the captive technology development and transaction processing company of Visa, Inc. (V) (2001 – 2004) • Executive Vice President and Chief Financial Officer Accounting, auditing and enterprise risk management experience in the financial services sector with expertise in information security matters, having overseen the information security function in her roles as EVP and CFO. Transamerica Corp., a financial services company (1994 – 1999) • Various executive positions Expertise in information security matters as VP of control and services and President of Transamerica Business Technologies. Accounting, auditing, risk management and regulated industry experience as General Auditor. Arthur Andersen LLP, a global accounting firm (1978 – 1994) 16 years of accounting and auditing experience in public accounting, including as a partner. Public Company Boards Cubic Corporation (CUB), a provider of systems and services to transportation and defense markets worldwide (since 2017) Ally Financial Inc. (ALLY), an Internet bank (since 2015) Select Past Director Positions Federal Home Loan Bank of Pittsburgh, a private government-sponsored enterprise (2011 – 2014) Heartland Payment Systems, Inc. (HPY), a provider of payment processing services (2012 – 2016) ING Direct, an Internet bank (2007 – 2008) Education Stetson University – B.B.A. Harvard Business School – M.B.A. Stanford University – M.L.A. Certifications CPA in Florida Carnegie Mellon University – NACD certificate in cybersecurity
Chief Information Officer of Intel Director Since 2020 Committees Birthplace India Age 55 Independent Key Qualifications Executive Experience 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) • Senior 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 Carrier Corporation (CARR), a heating, air-conditioning and refrigeration solutions company (2003 – 2006) • Vice President, Chief Information Officer Extensive experience as a senior leader, setting and leading technology and information security strategy for a number of large, global technology companies across a diverse set of industries. Public Company Boards East West Bancorp, Inc. (EWBC), the holding company for East West Bank, the largest independent bank in Southern California; also on the board of subsidiary East West Bank (since 2019) Select Past Positions IBM Global Technology Services – customer advisory board member (2016 – 2017) Junior Achievement of Southeast Texas – board member (2014 - 2017) Data Science Institute of the University of Houston – advisory board member (2018 – 2020) Education Boston University – B.S. Rensselaer Polytechnic Institute – M.B.A. Present 2020 2017 2013 2012 2011 2006 2003 Present 2019 2008 2007 2006 2004 2005 2001 1999 1994 1978 Present 2017 2015
CommitteesAAudit CommitteeCCompensation CommitteeCommittee Chair
FFinance CommitteeGGovernance Committee+ Audit Committee Financial Expert
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Corporate Governance > Director Nominees
JohFormer President and CEO of GE Healthcare Director Since 2017 Committees Birthplace USA Age 58 Independent Key Qualifications Executive Experience Clayton, Dubilier & Rice LLC, an investment firm (since 2015) • Operating Advisor (Healthcare sector) General Electric Company engaged(GE), a global digital industrial company (1986 – 2014) • President and Chief Executive Officer, GE Healthcare (2008 – 2014) • Chief Executive Officer, GE Transportation (2005 – 2008) Broad-based leadership, operations management, regulated industry and international business experience gained during his 28 years in leadership roles managing several key business divisions of GE, a then Fortune 20 business. Most recently he was president and CEO of London-based GE Healthcare, a leading provider of medical imaging, diagnostics and other health information technology and then $18 billion annual revenue enterprise with 50,000 employees around the world. He also served in several international management roles in Asia and Europe. 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 University of Vermont – B.S. Present 2015 2014 1986 Present 2018 Brian Humphries CEO of Cognizant Director Since 2019 Birthplace Ireland Age 47 Key Qualifications Executive Experience Cognizant (since 2019) • Chief Executive Officer Vodafone Group plc (VOD), one of the world’s largest publicly listed telecommunications companies (2017 – 2019) • Chief Executive Officer, Vodafone Business Dell Technologies Inc. (DELL), a leading technology company (2013 – 2017) • 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) Hewlett-Packard (HPQ), a leading technology company (2002 – 2013) • Senior Vice President, Emerging Markets (2011 – 2013) • Senior Vice President, Strategy and Corporate Development (2008 – 2011) Significant senior leadership, technology, consulting, talent management, operations management and international experience as CEO of Cognizant since April 2019 and, prior to that, through progressively more senior executive leadership roles at three of the world’s most well-known global, publicly-listed technology companies, Vodafone, Dell and Hewlett-Packard. At Vodafone Group, he led Vodafone Business, a division encompassing the business-to-business fixed and mobile customers segment. During his tenure, Vodafone Business accounted for nearly a third party director searchof Vodafone Group’s service revenue with €12 billion in global annual sales. He also led Vodafone’s Internet of Things (IoT) business, Cloud & Security and Carrier Services. In addition to his Vodafone experienced based in London, he oversaw key divisions with geographically diverse operations and had experience developing business in emerging markets through his roles with Dell and Hewlett-Packard. Compaq Computer Corporation (1998 – 2002) and Digital Equipment Corporation (1994 – 1998) • Various senior finance, investor relations and internal audit positions Education University of Ulster, Northern Ireland – B.A. Present 2019 2017 2013 2002 1997 Key Technology and Talent Operations Qualifications Consulting Services Management Security Regulated Industries Management International Business Public Company Public Company Finance, Accounting Development Leadership Governance and Risk Management
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Leo S. Mackay, Jr. SVP, Ethics and Enterprise Assurance of Lockheed Martin Director Since 2012 Committees Birthplace USA Age 59 Independent Key Qualifications Executive Experience Lockheed Martin Corporation (LMT), a Fortune 100 global security and aerospace company (since 2007) • Senior Vice President, Ethics and Enterprise Assurance (since 2018) • Senior Vice President, Internal Audit, Ethics and Sustainability (2016 – 2018) • Vice President, Ethics and Sustainability (2011 – 2016) • Vice President, Corporate Business Development and various other positions (2007 – 2011) Extensive expertise in security, government contracting, auditing and compliance from his senior executive roles at one of the world’s largest and most well-known security and aerospace companies. Integrated Coast Guard Systems LLC, a joint venture between Lockheed Martin and Northrop Grumman Corporation (NOC) (2005 – 2007) • President Operations management experience from his senior leadership roles. ACS State Healthcare LLC (now part of Conduent), an IT/BPO services company in the healthcare space (2003 – 2005) • Chief Operations Officer Technology consulting and operations management experience specific to the healthcare industry from his role as COO. United States Department of Veterans Affairs • Deputy Secretary and Chief Operating Officer (2001 – 2003) Operations management experience from having served as Deputy Secretary and COO of the U.S. Department of Veterans Affairs. Bell Helicopter, a helicopter and tiltrotor craft manufacturer (1997 – 2001) Public Company Boards Ameren Corporation (AEE), a public utility holding company (since 2020) Select Other Director Positions Lockheed Martin Ventures, the venture capital arm of Lockheed Martin (since 2018) USAA Federal Savings Bank, a federal savings bank (since 2016) Education United States Naval Academy – B.S. Harvard University – M.P.P. Harvard University – Ph.D. Present 2007 2005 2003 1997 Present 2020 Michael Patsalos-Fox Former Chairman, the Americas of McKinsey & Company and Former CEO of Stroz Friedberg Director Since 2012 Committees Birthplace Cyprus Age 68 Independent Key Qualifications Executive Experience Vidyo, a cloud-based video conferencing services company (2017 – 2019) • Chairman and Chief Executive Officer Stroz Friedberg, a global investigation and cybersecurity firm to assist(2013 – 2017) • Chief Executive Officer Expertise and insight in the cybersecurity space from his experience as CEO. McKinsey & Company, a global management consulting company (1981 – 2013) • Senior Partner (1992 – 2013) • Board of Directors (1998 – 2010) • Chairman, the Americas (2003 – 2009) • Member of the Operating Committee (2003 – 2012) • Managing Partner of the New York (2001 – 2003) and New Jersey (1996 – 2001) offices, North American Corporate Finance and Strategy practice and European Telecoms practice Decades of experience counseling clients in the technology and consulting space gained from his 32-year tenure with McKinsey & Company, where he also served in various senior leadership roles. Among other things, he brings talent management experience from leading a global professional services business and extensive experience developing a technology consulting business from leading the firm’s new business growth opportunities around data, analytics and software. Select Other Director Positions MIO Partners, Inc., an investment subsidiary of McKinsey & Company (since 2020) • Chairman of the Board Education University of Sydney – B.S. International Institute for Management Development, Lausanne, Switzerland – M.B.A. Chair Committees A Audit Committee C Compensation Committee Committee Chair F Finance Committee G Governance Committee + Audit Committee Financial Expert
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Corporate Governance > Director Nominees
Joseph M. Velli Former Senior EVP of The Bank of New York Director Since 2017 Committees Birthplace USA Age 63 Independent Key Qualifications Executive Experience Lovell Minnick Partners, LLC, a private equity firm (since 2016) • Advisory Council Member Convergex Group, LLC, a provider of software platforms and technology-enabled brokerage services (2006 – 2013) • Chairman and CEO Significant experience in identifyingcreating, building and evaluating director candidates. In February 2017,leading large-scale technology, processing and software platform businesses for a broker-dealer in the Companyfinancial services industry. The Bank of New York (now BNY Mellon) (BK), a financial services institution (1984 – 2006) • Senior Executive Vice President and Elliott Management agreed to each identify and propose one new independent director for election to the Board, subject to the consentmember of the Senior Policy Committee (1998 – 2006) • Executive Vice President (1992 – 1998) • Other leadership positions (1984 – 1992) Senior executive leadership, technology, regulated industries and operations management experience from over two decades in senior business roles at a leading global financial institution. Among other prior tothings, he was involved in creating, building and leading large-scale technology, processing and software platform businesses and leading several key business lines, including global issuer services, global liquidity services, pension and 401(k) services, consumer and retail banking, correspondence clearing and securities services. Public Company Boards AssetMark Financial Holdings, Inc. (AMK), a provider of financial, investment and consulting services (since 2020) Computershare Limited, a global provider of corporate trust, stock transfer, employee share plan and mortgage servicing services listed on the filingAustralian 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 (2010 – 2014) Education William Paterson University – B.A. Fairleigh Dickinson University – M.B.A. Present 2016 2013 2006 1984 Present 2020 2014 2007 Sandra S. Wijnberg Former CFO of Marsh & McLennan Companies Director Since 2019 Committees Birthplace USA Age 64 Independent Key Qualifications Executive Experience Aquiline Holdings, LLC, a registered investment advisory firm (2007 – 2019) • Executive Advisor (2015 – 2019) • Partner, Chief Administrative Officer (2007 – 2014) Expertise in the investment management sector and with registered investment company regulations from having served in executive and advisory capacities for an investment advisory firm. Marsh & McLennan Companies, Inc. (MMC), a global professional services company (2000 – 2006) • Senior Vice President and Chief Financial Officer Extensive technology and consulting services, talent management, regulated industries, international business development and finance, accounting and risk management experience from her experience as CFO of Marsh & McLennan, a then $11 billion annual revenue enterprise with 55,000 employees around the world providing risk and insurance services, risk consulting and technology and other consulting and investment management services. Yum! Brands, Inc., a global operator and franchisor of quick service restaurants (1997 – 1999) • Senior Vice President, Treasurer and ultimately interim Chief Financial Officer International business development and finance, accounting and risk management experience from her senior finance roles, including as interim CFO, at a large, global enterprise. PepsiCo, Inc. (PEP) (1994 – 1997) • Chief Financial Officer, KFC Corporation (1996 – 1997) • Vice President and Assistant Treasurer (1994 – 1996) International business development and finance, accounting and risk management experience from her senior finance roles, including as CFO of a significant subsidiary, at a leading Fortune 50, Nasdaq-listed global company. 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 and Other Positions Office of the proxy statement forQuartet, U.S. Department of State Deputy Head of Mission, Jerusalem recruited to advance the 2017 Annual Meeting. Ms. AtkinsQuartet’s Palestinian economic development mandate (2014 – 2016) Tyco International plc (now Johnson Controls International plc) (2003 – 2016) – director Education University of California, Los Angeles – B.A. University of Southern California, Marshall School of Business – M.B.A. Key Technology and Mr. Dineen were elected to the Board in April 2017 through this process. As part of the February 2017 agreement, theTalent Operations Qualifications Consulting Services Management Security Regulated Industries Management International Business Public Company Public Company Finance, Accounting Development Leadership Governance and Elliott also agreed 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 identified by the Company, consented to by Elliott and joined the Board in December 2017.Risk Management
14 Cognizant Technology Solutions Corporation
| 2021 Proxy Statement | 17 |
Important Factors in Assessing Board CompositionStructure and Operations
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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Finance and Strategy Committee Meetings in 2020: 8 Weighted average 2020 attendance of
| Key Responsibilities and Areas of
• Targeted financial model • Capital structure and allocation • Dividend policies and stock repurchase programs • Enterprise resource planning and management • Growth and scalability of • Assisting the board with | ||||
Management Development and Compensation Committee Meetings in 2020: 7 Weighted average 2020 attendance
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• Evaluation and compensation of the • Director compensation recommendations to the • Performance-based compensation arrangements • Equity-based compensation plans • Employment and severance agreements and other • Management development program • Talent engagement • Diversity and • Assess shareholder “say-on-pay” and • Stock ownership guidelines • Clawback policy | ||||
Governance and Sustainability Committee Meetings in 2020: 7 Weighted average 2020 attendance of director nominees: 96%
| Key Responsibilities and Areas of Risk Oversight • Nominations to the board and board committees, including evaluation of any shareholder nominees • Director independence recommendations to the board • Annual board self-evaluation process • Succession planning for the CEO and other senior executives • Macro environment and geo-political risks, including immigration law changes • Legal and regulatory risks, including with respect to intellectual property | ||||
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2018 Proxy Statement 15
| 18 | Cognizant |
As part of theCorporate Governance Committee’s annual self-assessment process, it assesses its performance as to all aspects of the selection > Board Structure and nomination process for directors, including diversity.
Based 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 ElectionsOperations
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. See “Helpful Resources” on page 74.
How Stockholders Can Propose Director Candidates
Recommendations to Governance Committee
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16 Cognizant Technology Solutions Corporation
Our business faces various risks, including strategic, financial, legal, regulatory, operational, accounting, data / cyber security and reputational risks. The Board exercises its oversight responsibility for risk management both directly and through its committees. We believe this division of responsibilities optimizes the Board’s ability to address risks in a focused and proactive manner, assess interrelationships among the various risks we face and make informed cost-benefit decisions. In addition, we believe this division allows our independent Directors, through our fully independent Audit Committee, Compensation Committee and Governance Committee and our majority independent Financial Policy Committee, to exercise effective oversight of the actions of management in identifying risks and implementing effective risk management policies and controls. Management provides regular updates to the Board or relevant committees on risk exposures and mitigation efforts.
Recent Activities and Key Focus Areas • Reviewing and approving the 2020 financial statements and disclosure enhancements • Reviewing and selecting the independent auditor for the year ending December 31, 2021 • Overseeing the internal audit deparment’s annual audit plan and budget • Assisting the board with respect to overseeing the company’s response to the April 2020 ransomware attack • Overseeing the company’s security remediation and IT and security infrastructure enhancement activities • Overseeing material litigation and potential litigation • Approving a new company code of | • Transitioning committee chair from Maureen Breakiron-Evans to Sandra Wijnberg
Audit Committee Financial Experts and Ms. Breakiron-Evans and Ms. Wijnberg are “audit committee financial experts” (per SEC rules), and all members of the committee | ||||||||||
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Management is responsible for the day-to-day management of the | |||||||||||
• Treasury matters, including hedging strategies • Service delivery • Investor Relations • Insurance Recent Activities and • Overseeing the capital structure and allocation program, with $1.6 billion in share repurchases in 2020 (see page 3) | • Overseeing the deployment of $1.2 billion in capital in 2020 for 9 acquisitions aligned with our digital and globalization strategic priorities (see page 3) • Overseeing tax strategy and planning, including the $2.1 billion dividend from | ||||||||||
Recent Activities and Key Focus Areas • Developing a revised incentive compensation program for 2020 (see page 28) • Granting additional equity awards to select officers for retention purposes (see page 28) • Revising the targets for the 2020 annual cash incentive (ACI) program in July 2020 in light of the • Undertaking a detailed review of our management development program, talent engagement and diversity and inclusion efforts • Transitioning committee chair from John N. Fox, Jr. to Leo S. Mackay, Jr.
| Compensation Committee Interlocks and Insider Participation During the year ended December 31, 2020, Ms. Bali, 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. | COMMITTEE CHARTERS Each of the board’s four standing committees — the Audit Committee, Finance and Strategy Committee (“Finance Committee”), Management Development and Compensation Committee (“Compensation Committee”) and Governance and Sustainability Committee (“Governance Committee”) — operates under a charter that has been approved by the board and is available on the company’s website. See “Helpful Resources” on page 73. | |||||||||
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• Corporate governance structure and practices, including the company’s corporate governance guidelines • Public affairs and public policy initiatives • Environmental, social and governance (ESG) program Recent Activities and Key Focus Areas • Overseeing the board’s 2020 self-evaluation process (see page 8) • Reviewing the company’s exposure to potential changes in immigration laws and regulations | • Reviewing and approving the 2020 political spend disclosures and 2021 U.S. political contributions budget • Overseeing the company’s enhancement of its ESG program and disclosures | ||||||||||
2018 Proxy Statement 17
| 2021 Proxy Statement | 19 |
CommitteesBoard Engagement Activities
Shareholder EngagementOur 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. It also engages in a formal governance-focused engagement process where select directors meet directly with a number of our large shareholders to solicit the input of shareholders on a proactive basis.Fall 2020 EngagementATTENDANCEMichael Patsalos-Fox Leo S. Mackay, Jr. Our board chair and Compensation Committee chair led the engagement process and meetings with shareholders, supported by representatives from the company’s legal and investor relations functions.FORMATVideoconference; 30 minutes – 1 hourTOPICS DISCUSSED AND FEEDBACK RECEIVED Business and StrategyMost meetings involved significant focus on the progress of the Boardcompany’s transformation agenda since our CEO joined in 2019, the impact of the Covid-19 pandemic and the April 2020 ransomware incident on the business, the company’s four strategic priorities designed to enable continued success in the evolving enterprise digital market, the company’s recent digital acquisitions and overall acquisition strategy, and the board’s engagement with management and oversight of the foregoing. Shareholders expressed general satisfaction with the direction of the business, strategy and execution.
The Board has four standing committees —Composition and RefreshmentBoard composition and refreshment was a frequent topic, including recent board additions, changes in committee chairs, changes in committee composition and our ongoing process to ensure that the Audit Committee,board continues to have the right skills, expertise and diversity of thought and experiences to fulfill its strategic and oversight responsibilities going forward. Shareholders were generally supportive of the board’s approach and recent changes with respect to composition and refreshment.Executive CompensationAll of the meetings touched upon the company’s executive compensation program, with much of the focus on the significant changes made to the performance-based compensation components (Annual Cash Incentive (ACI) and PerformanceStock Units (PSUs)) for 2020 to better align the program with our short and long-term strategic goals. As noted in our 2020 proxy statement, these changes were discussed with shareholders in our 2019 shareholder engagement process and were made with consideration given to the feedback received from shareholders. Also discussed was the mid-2020 adjustment to the 2020 ACI program in light of the unanticipated business impact of the Covid-19 pandemic. Shareholders gave positive feedback with respect to the revised design of the performance-based compensation components for 2020 and were generally supportive of the company’s intention to maintain substantially the same design for 2021. Some shareholders suggested the inclusion of environmental and social metrics, including with respect to diversity and inclusion, in the executive compensation program design. The Compensation Committee Financial Policy Committeeis evaluating potential metrics for 2022 (see page 29).SustainabilityMost meetings involved significant focus on the company’s human capital management, diversity and Governance Committee — eachinclusion efforts and environmental, social and governance (ESG) program, including the company’s plans to increase its disclosures in these areas in 2021. Shareholders were supportive of which operates undersuch plans, noting in many cases their desire for increased disclosure aligned to established standards, company-defined metrics and targets, and reporting against such targets.Evaluate Annual Meeting ResultsThe board evaluates the voting results from the annual meeting, including with respect to shareholder proposals.Response to 2020 Proposal – Shareholder Action by Written ConsentNo ActionOur board continues to believe that the proposed addition of a charter that haswritten consent process 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 approvedrepeatedly rejected by shareholders; • the Board. See “Helpful Resources” on page 74.company is aligned with market practice (69% of S&P 500 companies effectively do not permit shareholder action by written consent); and • the company’s 10% threshold for a shareholder-called special meeting ensures shareholder democracy and board accountability.
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| Cognizant |
18 Cognizant Technology Solutions Corporation
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Corporate GovernanceDirector Attendance > Board Engagement Activities
There were 9 meetings
Employee Engagement and Global Delivery Operations ReviewTravel to India Every other year, our board travels to India, where 2/3rds of our employees and the core of our global delivery operations are located. Over the course of a week, directors meet with employees in a variety of forums, tour a number of our global delivery centers and engage in an in-depth review of our people and operations in India. The board’s most recent visit to India was in February 2020. Keeping Up-to-Date with Trends and Legal DevelopmentsNACD Membership 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 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. Corporate Governance Policymaking Certain of our board members are actively involved in shaping policy around public company governance. For example, Ms. Breakiron-Evans, one of our Audit Committee financial experts, 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 Board during 2017. Each Director standingCenter for electionAudit Quality. Updates from Advisors 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 registered public accounting firm and third-party advisors. Employee Engagement1-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. With quarterly board meetings held virtually since the start of the Covid-19 pandemic, the 1-on-1 meetings have been held via videoconference. Shareholder Proposals at Annual Meeting The board reviews and takes positions with respect to any shareholder proposals submitted for consideration at the Annual Meeting attended at least 95% ofannual meeting. 2020 Proposal – Shareholder Action byWritten Consent For the aggregate of (i) all meetings of2020 annual meeting, we received a proposal requesting that the Board held duringboard undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the period in which he or she served as a Director and (ii) the totalminimum number of meetings heldvotes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. The proposal, which was advisory to our board, received the for / against vote split as set out below. 17.1% For 82.9% Against 2021 Proposal – ShareholderAction by Written Consent As in 2020, for the committees on which he or she served during the period, if applicable.
Our Corporate Governance Guidelines provide that Directors are expected to attend the2021 annual meeting, we received a proposal requesting that the board undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of stockholders. Forvotes that would be necessary to authorize the 2017 Annual Meeting, Mr. D’Souza acted as Chairmanaction at a meeting at which all shareholders entitled to vote thereon were present and all but twovoting. See page 62 for the proposal and the board’s statement of the 11 then current Directors attended (participating by teleconference).opposition.
Strong Director Engagement
Average Director nominee attendance at 2017 meetings
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2018 Proxy Statement 19
We are focused on embedding environmental, social and governance (ESG) considerations into our thinking, decisions, and actions.
| Supporting 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 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 280,000 associates through programs overseen by management and reported on to the board and its committees that are designed to identify, train and grow future leaders.
LEADERSHIP AND TECHNICAL TRAINING
We provide our associates with opportunities to develop through a robust learning ecosystem that includes our award-winning Global Academy and Global Leadership Development programs and My.Learning.Studio.
HIGH PERFORMANCE CULTURE
We continue to make strong progress in our evolution towards a high performance culture. In 2020 we made changes to further shift to a performance-based system for promotions and merit increases.
COVID-19
We equipped our associates for virtual working, instituted a paid leave program for those affected by Covid-19 and paid additional bonuses to a large portion of our associates in India and the Philippines to support families and enable delivery operations to continue uninterrupted.
EMPLOYEE WELLNESS
We are committed to caring for our associates and their families through multiple stages of life. Select wellness benefits include: paid parental leave, back-up childcare, adoption and surrogacy programs, flexible work arrangements, counseling and relationship support, and work-life balance services.
| Board | Management | ||
| Executive Officers | |||
| • Compensation Committee oversees the evaluation process and management development program for senior executives. | • CEO, CFO and chief people officer, as appropriate, participate in and assist the Compensation Committee in executive officer evaluations. | ||
| • Governance Committee oversees CEO and senior executive succession planning. | |||
| Senior Leadership | |||
• The Compensation Committee oversees management’s strategies for and progress in building a robust and diverse leadership pipeline, including hiring, development and movement of senior talent (AVP+, top ~1,000 leaders). • The Governance Committee periodically reviews the pipeline of potential internal successors to the members of the Executive Committee (~50 leaders). | • Executive Committee (consisting of our CEO and his direct reports) meets monthly, reviews VP+ leadership (including diversity of executive candidate slates) and oversees global leadership development strategies and approach for managing senior talent (AVP+, top ~1,000 leaders). • Fast-track development for high- performing and high-potential leadership talent through personalized assessments, executive coaching and executive education programs. | ||
| Leadership Pipeline and Professionals | |||
| • The Compensation Committee oversees the Company’s management development, talent engagement (including retention, development and training) and diversity and inclusion programs and policies. | • Executive Committee includes talent management and development as an agenda item at its monthly meetings, which includes deep dives on senior leadership talent, voluntary and involuntary attrition, areas of talent for investment, performance management and meritocracy, diversity and inclusion and driving high performing teams. • Annual global talent review of our leadership pipeline, plus a diverse set of leadership development opportunities, with targeted investments for our ~4,000 director and above leaders. | ||
| 22 | Cognizant |
Corporate Governance > Sustainability
| Running a Responsible Business |
At Cognizant, we believe diversity and inclusion are at the heart of our ability to execute successfully and consistently over the long term. We continue to drive diversity and inclusion throughout our organization to unlock the insights, imagination and innovation of our associates and reflect the diversity of our clients and communities. We have diversity and inclusion training and other programs in every geography where our employees are located, fostering inclusivity throughout our organization and culture. In recognition of our efforts, we are proud to have been certified as a 2021 top employer in 17 countries.
Cognizant is proud to be a founding member of the World Economic Forum’s Partnership for Racial Justice in Business. This initiative, which was launched in January 2021, brings together a global coalition of companies to tackle racism in business, with a starting point on Black inclusion and addressing anti-Blackness. We also recently joined the Valuable 500, a CEO community working to revolutionize disability inclusion through business leadership and opportunity.
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.
 | 2019: Targeted employing 100,000 women around the world by the end of 2020, a milestone that was reached ahead of schedule. |  | 2020 – 2021: On track to put 1,000 high performing women in leadership levelsthrough Propel—our signature women’s global leadership initiative—by the end of 2021. In 2020, we hit the half-way mark, with 500 women completing Propel. |
We strive to provide our diverse talent with the support and tools needed to thrive through affinity groups in our organization. Executive Committee sponsors and executive leaders help shape the strategy and direction of each group.
| • | AALG (African American and Latinx Group) supports programming and initiatives that promote career development, mentoring, recruitment, retention and community building. |
| • | Embrace (LGBTQ+) provides a positive, supportive environment for lesbian, gay, bisexual, transgender, queer and other (“LGBTQ+”) colleagues to be their authentic selves at work and creates a strong community among LGBTQ+ associates and allies, including by connecting with our clients’ LGBTQ+ networks to strengthen our client relationships. |
| • | Pan-Asian Group fosters a safe environment for open dialogue, provides resources to the community for career growth and leadership development and celebrates Pan-Asian heritage. |
| • | Unite (People with Disabilities & Caregivers) brings together people with disabilities and elevates the dialogue amongst the disabled and caregivers. |
| • | 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. |
| • | Working Parent Group provides a place to share experiences, resources, and voice support for all types of families. |
Board and Management Oversight
| Running a responsible business starts with our board and management setting a cultural “tone at the top.” |
Our board takes an active role in the oversight of our environmental and sustainability initiatives, ethics and compliance and risk management, and our management promotes and monitors implementation of such initiatives and provides regular progress reports to the board.
Environmental Impact and Sustainable Business
Our Governance and Sustainability Committee is responsible for overseeing our ESG program. We recently hired a new chief sustainability officer and are undertaking investments to enhance our ESG program to, among other things, consider climate change in our business thinking and provide more comprehensive ESG disclosures to our shareholders. In 2021, we intend to publish an ESG report inclusive of the most applicable elements of third-party ESG reporting frameworks, enhance our infrastructure for future reporting and evaluate potential future short and long-term greenhouse gas emissions reduction targets.
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 is available on our website. See “Helpful Resources” on page 73. 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.
| 2021 Proxy Statement | 23 |
Supporting Our Communities
At Cognizant, we care deeply about unlocking human potential and living out our purpose to improve everyday life. We know that our success depends on delivering value to all of our stakeholders. We contribute to the progress and prosperity of communities across the globe through our corporate foundations, philanthropic efforts and associate volunteering efforts. Building on our longstanding investments in corporate social responsibility, Cognizant recently announced a new, five-year $250 million initiative to advance economic mobility, educational opportunity, diversity and inclusion, and health and well-being in communities around the world. Learn more about our work to build resilient communities around the globe at https://www.cognizant.com/impact.
$50 Million
…committed to date to organizations working to educate and train the workforce of today and tomorrow
Covid-19
…relief in the form of protective gear and critical medical equipment provided to 90 frontline departments across India
$10 Million
…philanthropic commitment to support communities addressing the immediate and long-term impacts of Covid-19
31,000 Volunteers
…in 40 locations globally invested over 221,000 volunteering hours in 2020
Corporate Foundations
UNITED STATES
Cognizant U.S. Foundation was launched in 2018 with an initial $100 million grant and works to inspire, educate and prepare individuals across the country for success in the workforce of today and tomorrow. Through its grantmaking, including approximately $50 million committed to date, the foundation supports those working to advance technical education, workforce training and research and thought leadership designed to ensure all communities have equitable opportunities in the digital economy. In 2020, the foundation specifically dedicated additional resources to Covid-19 relief and to support communities of color.
INDIA
Cognizant Foundation, launched in 2005, focuses on fulfilling the education, healthcare and livelihood needs of the underprivileged sections of society. In 2020, the foundation supported over 70 projects in partnership with over 40 not-for-profit organizations aimed at access to quality education and healthcare and improved livelihood.
| • | Healthcare. The foundation enables access to quality healthcare for the under-privileged, focusing on preventing avoidable blindness and promoting women and children’s health. In 2020, the foundation’s Covid-19 relief focused on protecting the frontline workers and strengthening healthcare systems. |
| • | Education. The foundation focuses on enabling access to quality education for students from under-served communities through scholarships for higher education, digital learning, science, technology, engineering and math (STEM) and vocational-technical education. |
| • | Livelihood. The foundation’s initiatives in livelihood enable disadvantaged youth, women and the disabled to gain employment through short-term skills training programs. |
Corporate Philanthropy
Cognizant’s Making the Future initiative strengthens the K-12 STEM pipeline by advancing maker-centered learning as the catalyst for life-long learning and an equitable, inclusive future-ready workforce. To date, Making the Future has invested $16 million in youth-serving non-profit organizations in communities across 42 states in the United States, providing hands-on learning focused on computational making skills and creative problem solving. National Making the Future partners include the New York Hall of Science, Engineering is Elementary, Maker Education Initiative, FIRST Robotics Equity and Inclusion grants and the Boy Scout Jamboree.
Volunteering
The Cognizant Outreach program mobilizes our associates’ expertise and enthusiasm through volunteer work. We believe our community work is a key value proposition for our associates. Associates leverage their professional skills and personal talents to volunteer with programs that support inclusion in technology and accelerate community impact. Cognizant Outreach also seeks collaborations with Cognizant clients in causes of mutual interest and leverages partner expertise to scale social value, strengthen our reputation and extend our relationships beyond business. From 2015 to 2020, over 165,000 associates were involved in Cognizant Outreach. During 2020, over 31,000 unique volunteers in 40 global locations invested over 221,000 volunteering hours as part of Cognizant Outreach.
| 24 | Cognizant |
Corporate Governance > Share Ownership
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 2020 (“NEOs”), and directors and executive officers as a group. Information is as of March 31, 2021 except for Karen McLoughlin and Matthew W. Friedrich, for whom the information is based on the most recent information available to the company. The table also sets forth the stock-based holdings of beneficial owners of more than 5% of our common stock as of December 31, 2020. 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 | 8,672 | 11,294 | 23,905 | ||
| Vinita Bali | 868 | - | 4,807 | ||
| Maureen Breakiron-Evans | 3,063 | 13,297 | 49,852 | ||
| Archana Deskus | 880 | - | 4,819 | ||
| John M. Dineen | - | 1,827 | 15,464 | ||
| John N. Fox, Jr. | 36,628 | - | 48,189 | ||
| Leo S. Mackay, Jr. | 21,703 | 7,797 | 37,945 | ||
| Michael Patsalos- Fox | 59,363 | 21,764 | 91,583 | ||
| Joseph M. Velli | 10,079 | - | 14,018 | ||
| Sandra S. Wijnberg | - | - | 6,766 | ||
| Total | 141,256 | 55,979 | 297,348 | ||
| Named Executive | Common Stock | ||||
| Officers | Stock | Options | Total | ||
| Brian Humphries | 64,974 | - | 522,931 | ||
| Jan Siegmund | 15,626 | - | 138,259 | ||
| Karen McLoughlin | 132,801 | - | 132,801 | ||
| Becky Schmitt | 27,689 | 127,701 | |||
| Malcolm Frank | 45,894 | - | 187,145 | ||
| Matthew W. Friedrich | 5,043 | 5,043 | |||
| Total | 292,027 | - | 1,113,880 | ||
| Current Directors and | Common Stock | ||||
| Executive Officers | Stock | Options | Total | ||
| As a group (20 people) | 356,316 | 55,979 | 1,664,569 | ||
| 5% Beneficial Owners | Common Stock | % Outstanding | |||
| BlackRock, Inc. | 51,047,733 | 9.5% | |||
| The Vanguard Group | 41,515,977 | 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. The Stock subcolumn includes shares directly or indirectly held and shares underlying RSUs that will vest within 60 days of March 31, 2021. Mr. Patsalos-Fox’s stock holdings include 10,000 shares of common stock over which there is shared voting and investment power by Mr. Patsalos-Fox through family trusts or other accounts. Ms. McLoughlin’s stock holdings include PSUs and RSUs that vested upon her retirement on December 31, 2020 and will settle on later dates in accordance with the applicable terms of the company’s retirement, death and disability policy (see page 47). For Ms. Mcloughlin and Mr. Friedrich, their stock holdings exclude PSUs and RSUs that were forfeited upon their departure from the company. The Options subcolumn includes shares that may be acquired under stock options that were exercisable as of or within 60 days of March 31, 2021.
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 of March 31, 2021, 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 Ms. McLoughlin’s and Mr. Friedrich’s shares as they were no longer executive officers of the company after August 31, 2020 and January 1, 2021, respectively. This table includes: (i) 36,411 RSUs that vest within 60 days of March 31, 2021 (Stock subcolumn and Total column), (ii) 10,000 shares of common stock over which there is shared voting and investment power by Mr. Patsalos-Fox through family trusts or other accounts (Stock subcolumn and Total column), (iii) 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 (Stock subcolumn and Total column), and (iv) 55,979 shares that may be acquired under stock options that are exercisable as of or within 60 days of March 31, 2021 (Options subcolumn and Total 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 | 44,803,028 | 0 |
| Shared voting power | 0 | 900,580 |
| Sole dispositive power | 51,047,733 | 39,148,745 |
| Shared dispositive power | 0 | 2,367,232 |
The information in this table is based solely on a Schedule 13G/A filed by BlackRock with the SEC on January 29, 2021 and a Schedule 13G/A filed by Vanguard with the SEC on February 10, 2021.
| 2021 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 of
| 2020 NON-EMPLOYEE DIRECTOR COMPENSATION STRUCTURE | ||||||
| Annual Cash Retainer for serving on the Board | $90,000 | |||||
| Additional Annual Cash Retainers | ||||||
| For serving as Chair of the Board | $150,000 | |||||
| For serving as a Member or Chair of a Board Committee | Committee Member | Committee Chair | ||||
| Audit Committee | $20,000 | $35,000 | ||||
| Finance and Strategy Committee | $10,000 | $20,000 | ||||
| Management Development and Compensation Committee | $15,000 | $25,000 | ||||
| Governance and Sustainability Committee | $7,500 | $20,000 | ||||
| Annual RSU Award | Board Member | Board Chair | ||||
| $210,000 | $260,000 | |||||
| Annual restricted stock unit award on or as soon as practicable following the date of the annual meeting of shareholders with a grant date fair value as set out above. 100% of the restricted stock units vest on the 1st anniversary of the date of the award.
Retirement Upon a director’s retirement while in good standing, the board’s intent is to accelerate the vesting of such director’s outstanding equity awards.
Advance Payment and Partial Year Service For new members of the board or of a committee or a new chair of the board or a committee, compensation in the initial year of service is prorated based on the length of service during the twelvemonth period following the company’s most recent annual meeting. All cash retainers are paid in advance on an annual basis following the annual meeting or other triggering event. | ||||||
Director Compensation Consultantvs. Peer Group
For purposes of establishing 2020 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 2020. See “Compensation Committee and Engagement of Compensation Consultant” and “Peer Group and Market Data”Review” on page 28.32.
Director Compensation Analysis and Changes for 2017
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.2020 annual meeting. Based on the 2020 analysis:
| Our additional annual board and committee chair retainers were low relative to our peer |
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 | Our use of meeting fees was atypical among our peer group. |
As a result, for the director year starting with the 2020 annual meeting, we made the following changes to better align with peer group practices:
| • | Increased the annual RSU award for the board chair and additional annual committee chair retainers; and | ||
| • | |||
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| replaced them with additional annual committee member retainers. | |||
The additional annual Board and committee chair retainers, provided to certain of the chairs 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 Guidelines
 | Under our stock ownership guidelines, |  |
Hedging, Short Sale, Margin Account and Pledging Prohibitions
NO HEDGING, SHORT SALES, MARGIN ACCOUNTS OR PLEDGING
All Directorsdirectors are subject to the same insider trading policies of the Companycompany that apply to employees thatand provide for:
| 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” on page 35 48 for additional information on these restrictions.
| 26 | Cognizant |
Corporate Governance > Related Person Transactions
Director Compensation Table
The following table sets forth certain information regarding the compensation of each of our non-employee directors who served during 2020. The table also sets forth the aggregate number of RSUs and the aggregate number of stock options held by each such non-employee director at December 31, 2020 (for Mr. D’Souza and Mr. Klein, who left the board during 2020, the information is based on the most recent information available to the company).
| 2020 Director Compensation | Director Stock and Option Awards Outstanding | |||||||
| Name | Fees Earned or Paid in Cash | Stock Awards | Total | Aggregate Number of Stock Awards | Aggregate Number of Stock Options | |||
| Zein Abdalla | $129,000 | $209,949 | $338,949 | 3,939 | 11,294 | |||
| Vinita Bali | $135,808 | $268,469 | $404,277 | 4,807 | — | |||
| Maureen Breakiron-Evans | $144,500 | $209,949 | $354,449 | 33,492 | 13,297 | |||
| Archana Deskus | $132,623 | $262,687 | $395,310 | 4,819 | — | |||
| John M. Dineen | $142,000 | $209,949 | $351,949 | 13,637 | 1,827 | |||
| Francisco D’Souza | $ 3,000 | — | $ 3,000 | — | — | |||
| John N. Fox, Jr. | $128,500 | $209,949 | $338,449 | 11,561 | — | |||
| John E. Klein | $ 6,000 | — | $ 6,000 | 11,871 | — | |||
| Leo S. Mackay, Jr. | $145,651 | $209,949 | $355,600 | 8,445 | 7,797 | |||
| Michael Patsalos-Fox | $284,500 | $259,997 | $544,497 | 10,456 | 21,764 | |||
| Joseph M. Velli | $138,500 | $209,949 | $348,449 | 3,939 | — | |||
| Sandra S. Wijnberg | $142,726 | $209,949 | $352,675 | 6,766 | — | |||
Stock Awards. Represents the aggregate grant date fair value of RSUs granted in the 2020 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 Mr. D’Souza, Mr. Klein and Mr. Patsalos-Fox received an award of 3,939 RSUs with a grant date fair value of $53.30 per share on June 2, 2020. As board chair, Mr. Patsalos-Fox received an award of 4,878 RSUs with a grant date fair value of $53.30 per share on June 2, 2020. Ms. Bali received an additional award of 868 RSUs with a grant date fair value of $67.42 per share upon her joining the board on February 24, 2020. Ms. Deskus received an additional award of 880 RSUs with a grant date fair value of $59.93 per share upon her joining the board on March 5, 2020. 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, 2020 (“2020 Annual Report”).
Aggregate Number of Stock Awards. Includes the RSUs granted in 2020 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 (29,553), Mr. Dineen (9,698), Mr. Fox (7,622), Mr. Mackay (4,506), Mr. Patsalos-Fox (5,578) and Ms. Wijnberg (2,827) to be settled upon the director’s termination of service on the board. | ||||||||
Deferral of Restricted Stock Units
Non-employee 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 2020 the two deferral options available and the Directorsdirectors that elected such deferral options, for 2017.options.
| RSUs Deferred Until Earliest to Occur of | ||||||||||
| Company Change in Control or | ||||||||||
| Director’s Death or Permanent Disability | Director Leaves the Board | Directors Electing Option | ||||||||
| Option 1 |  | | Immediate settlement | 100% settles on next July 1st | ||||||
| Option 2 | | | 1/3rdsettles on each of next three July 1sts | Breakiron-Evans | ||||||
|
2018 Proxy Statement 21
Director Tables
The 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 Outstanding | |||||||||||||||||
| Name | Fees Earned or Paid in Cash | Stock Awards1 | Option Awards1 | All Other Compensation | Total | Aggregate Number of Stock Awards2 | Aggregate Number of Stock Options | |||||||||||
| Zein 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 | — | |||||||
22 Cognizant Technology Solutions Corporation
Other Board and Corporate Governance Information
Corporate Governance Policies and Practices
Corporate Governance Guidelines
The 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 Ethics
We 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 Boards
Under 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 Transactions
Review of Related Person Transactions
TheUnder 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 our 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.
In addition, our 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. See “Helpful Resources” on page 74.
2017 Transactions with Related Persons
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, theregeneral counsel. There have been no related person transactions since January 1, 2017.2020.
Communications to the Board from Stockholders
| 27 |
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2018 Proxy Statement 23
Common Stock and Total Stock-Based Holdings Table
The 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% | ||||
|
24 Cognizant Technology Solutions Corporation
| 28 | Cognizant |
Common Stock.This column shows beneficial ownershipTable of Contents
Compensation > Letter from the Management Development and Compensation Committee
| Guide to Compensation | ||||||
| Compensation Program Objectives | 30 | Performance-Based Compensation – by Award | 38 | |||
| Compensation Calendar | 32 | Compensation of CEO and other NEOs | 40 | |||
| Shareholder Engagement | 32 | Perquisites | 48 | |||
| Peer Group | 32 | Executive Stock Ownership Guidelines | 48 | |||
| Independent Compensation Consultant | 33 | Clawback Policy | 49 | |||
| Say-on-Pay | 33 | Executive Compensation Tables | 51 | |||
| Primary Compensation Elements | 34 | CEO Pay Ratio | 57 | |||
| Performance-Based Compensation – by Metric | 36 | Termination and Change in Control Payments | 58 | |||
target to ensure the lowered expectations for the year did not result in an above-target payout and a minimum payout of 50% of target to ensure at least the threshold level of payout in a year of extraordinary business challenges. The company’s ultimate 2020 performance would have resulted in a 0% payout based on the original targets but exceeded the revised targets (including as to Mr. Frank’s BU-specific targets), resulting in our common stock as calculated under SEC rules. Except toNEOs receiving the extent noted below, everyone included in the table has sole voting and investment power over the shares reported. Nonemaximum 85% payout.
PSU Achievement
The committee did not adjust any of the shares is pledgedPSU awards for Covid-19. In February 2021, the committee determined a 0% achievement for the 2019/20 PSUs (performance measurement period covering 2019 through 2020) as security by the named person, although standard brokerage accounts may include non-negotiable provisions regarding set-offs or similar rights.threshold levels of performance were not achieved. TheStocksubcolumn includes shares directly or indirectly held committee also determined, based on company performance, that the 2020/21 PSUs (2-year) 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,2020/22 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(3-year) should have 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 Compliance
Section 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 Persons0% achievement for year 1 (2020) with respect to the company performance metrics: revenue (50% weighting) and adjusted diluted EPS (25% weighting). Performance for each year ended Decemberfor such PSUs is measured separately, with equal weighting, against targets set upfront in 2020. The relative TSR metric (25% weighting) for such PSUs is not determined until the end of the respective performance periods, though as of March 31, 2017, except that one Form 42021 the company was at the 39.7th percentile relative to the peer group, between the threshold and target.
New Compensation Committee Chair and Member
In September 2020, Leo S. Mackay, Jr. succeeded John N. Fox, Jr. as chair of the committee, a planned rotation of committee leadership following over three years of service by Mr. Fox. Also in September 2020, Vinita Bali joined the committee as a member.
Consideration of Environmental and Social (E&S) Metrics
In our fall 2020 shareholder engagement, some shareholders suggested the inclusion of environmental and social (E&S) metrics, including diversity and inclusion goals, in the executive compensation program design (see page 20). The committee did not include such metrics in the 2021 program design due to significant enhancements to the company’s E&S efforts in process for Mr. Chintamaneni, reporting a sale2021 (see page 23). However, the committee has an ongoing evaluation underway for the potential inclusion of shares,such metrics in the 2022 program design as new long-term company E&S goals are established.
The committee believes the compensation program design is essential to attracting top talent, driving company performance in alignment with corporate strategies and one Form 4 for Srinivasan Veeraraghavachary, also reporting a saleensuring the appropriate level of shares, were filed one day late and one charitable giftrisk-taking in pursuit of shares by Ms. Breakiron-Evans in 2016 that should have been reportedlong-term shareholder value creation.
Performance-Based Compensation
See Performance-Based Compensation on a Form 5 in early 2017 was reported late on a Form 5 in early 2018.pages 36 to 39.
2018 Proxy Statement 25
2020 ACI
| Completed | Target | Achieved | Achievement (% earned) |
| Revenue | 85% Maximum established with Covid-adj. in mid-2020
| ||
| Initial | 3.7% | -2.0% | |
| Covid-adj | -4.5% | ||
| Adj. Income from Operations | |||
| Initial | 3.1% | -14.2% | |
| Covid-adj | -17.8% | ||
| 2019/20 PSUs | |||
| Completed | Target | Achieved | Achievement (% earned) |
| Revenue | 8.0% | 1.4% | 0% |
| Adj. EPS | 9.4% | -3.7% | |
| 2020/21 PSUs (2-year) and 2020/22 PSUs (3-year) | |||
| Year 1 | Target | Achieved | Achievement (% earned) |
| Revenue | 3.7% | -2.0% | 0% |
| Adj. EPS | 3.3% | -12.5% | |
| Relative TSR to date | 39.7th percentile | ||
| 2019/23 CEO PSUs (New Hire) | |
| Absolute TSR to date | 9.8% |
| Relative TSR to date | 15.4th percentile |
 |  |  |  |  | ||||
| LEO S. MACKAY, JR. | VINITA BALI | JOHN N. FOX, JR. | MICHAEL PATSALOS-FOX | JOSEPH M. VELLI | ||||
| Chair | Member | Member | Member | Member | ||||
| 2021 Proxy Statement | 29 |
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| Cognizant |
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Background
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The Say-on-Pay vote is a non-binding vote on the compensation of our NEOs, as described in the 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 our executive compensation programs 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, to the extent there is any significant vote against the NEO compensation 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.
26 Cognizant Technology Solutions Corporation
Compensation Discussion and Analysis> CD&A > Compensation Program Objectives
This
Key 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 NEOs.
Overview of Executive Compensation Program
Compensation Committee
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 Compensation Committee operates under a written charter adopted by the Board and is comprised entirely of independent, non-employee directors as determined in accordance with various Nasdaq and SEC rules. The Compensation Committee has the authority to engage its own independent advisor to assist in carrying out its responsibilities under its charter.
Key Program Features
The following tables summarize key elements of our executive compensation program and where they are described in the Compensation Discussion and Analysis section.
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 Use appropriate peer groups and market data when establishingcompensation | |
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See page Program Objectives
No hedging, speculation, short sales, margin accounts or pledging of Cognizant securities
No tax “gross ups” on severance or other change in control benefits
The Compensation Committee has designed the executive compensation program to meet the following objectives:
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Company Performance and Impact on Compensation Program
See page 50
The 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:
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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.
| 3 | 4 | 5 | 6 |
Long-Term Continued Employment Provide an incentive for long-term continued employment with our company | Balanced Mix Create an appropriate balance between current and long-term compensation and between performance and non-performance-based compensation | Competitive Provide competitive compensation packages in order to attract, retain and motivate top executive talent | No Unnecessary Risk-Taking Ensure that compensation arrangements do not encourage unnecessary risk-taking |
| LONG-TERM EQUITY | PERFORMANCE-BASED | PEER GROUP POSITIONING | CEO |
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| A substantial percentage of our NEOs’ target direct compensation consists of long-term equity: (i) restricted stock units (“RSUs”), which vest quarterly over a 3-year period, to reward continued service and long-term performance of our common stock, and (ii) PSUs that have a 3-year performance period with vesting shortly thereafter (►see pages 34 and 35). | Our NEOs’ target direct compensation includes current compensation in the form of cash, divided between base salary and ACI, and long-term compensation in the form of equity, divided between PSUs and RSUs. Both current and long-term compensation are mixed between stable (base salary and RSUs) and performance-based (ACI and PSUs) compensation (►see pages 34 and 35). | To ensure our compensation remains competitive, the Compensation Committee engaged Pay Governance as its independent consultant in 2020 and prior years to review and benchmark the compensation we provide relative to our peer group and other market data. Our 2020 peer group was comprised of 17 technology, software and professional service companies selected based on industry, comparable business operations and scale (►see pages 32 and 33). | We set stock ownership guidelines to help mitigate potential compensation risk and further align the interests of our NEOs with those of shareholders (►see page 48). We also create a balance between performance and non-performance-based compensation and set performance targets that we believe are aspirational but achievable (►see pages 34 to 39). |
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2018 Proxy StatementTable of Contents
| 32 | Cognizant |
Compensation 27 > CD&A > Compensation Setting Process
| 2021 Proxy Statement | 33 |
Role of Stockholder Say-on-Pay Votes
The 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:
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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 Process
Compensation Committee and Engagement of Compensation Consultant
To achieve the objectives of our executive compensation program, the Compensation Committee evaluates our executive compensation program with the goal of setting compensation at levels the committee believes are competitive with those of other technology-related growth companies that compete with us for executive talent. The committee has periodically engaged an independent compensation consultant to provide additional assurance that the Company’s executive compensation program is reasonable and consistent with its objectives. The consultant reports directly to the Compensation Committee, periodically 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 Committee 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 Committee considers various factors in exercising its discretion to determine compensation, including the experience, responsibilities and performance of each NEO as well as the Company’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.
Since 2010, the Compensation Committee has engaged Pay Governance, an independent executive compensation advisory firm, to review all elements of executive compensation, benchmark such compensation in relation to 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 and 2017, 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’s peer group.
The Compensation Committee 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.
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 and our President provide the committee with a review of the performance of other executive officers. While the Compensation Committee utilizes this information and values management’s observations with regard to compensation, the committee makes the ultimate decisions regarding executive compensation.
Peer Group and Market Data
The Compensation Committee, with assistance from Pay Governance, establishes the Company’s peer group that is used for market comparisons and benchmarking of the compensation for Mr. D’Souza, Mr. Mehta and Ms. McLoughlin. The peer group used in the compensation-setting process for 2017 is comprised of a group of technology-related firms selected based on revenue, headcount and market capitalization.
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For the other two NEOs, Mr. Chintamaneni and Mr. Friedrich, the Compensation Committee used market data that the Company obtained from third party benchmarking services for similar roles 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 evaluated and utilized by the Compensation Committee with the assistance of Pay Governance.
28 Cognizant Technology Solutions Corporation
Direct Compensation of Named Executive Officers
Primary Compensation Elements for 2017 – Overview
Our 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.
The Compensation Committee makes decisions on executive compensation from a total direct compensation perspective. Each element is considered by the committee to be important 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.
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Historical ACI award achievements by year | ||
| 2015 | 2016 | 2017 |
| 142.0% | 79.8% | 114.8% |
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Reward continued service and long-term performance of our common stock | |
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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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Performance Stock Units (PSUs) Incentivize shareholder return and reward achievement of long-term company financial objectives and performance of our common stock Our Compensation Committee designed the 2020/22 PSU awards granted to our NEOs to tie a substantial portion of executive compensation to the attainment of long-term goals across three metrics that it believes are valued by our shareholders: • constant currency revenue growth (50% weighting); • adjusted diluted EPS (25% weighting); and • total shareholder return (TSR) (25% weighting) of our common stock on a relative basis as compared to a peer group detailed in the “Total Shareholder Return (TSR)” graphic on page 37. |
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Note:
As further described in “Performance-Based Compensation – Performance by Award” on page 38, the 2020/22 PSU awards have a 3-year performance measurement period. The above presentation seeksCompensation Committee established targets for the revenue and adjusted diluted EPS components upfront in March 2020 as three separate 1-year goals, one for each fiscal year during the performance period (1/3rd weighting each), in each case measured as a percentage increase over prior year actuals. For 2020, the targets were for 3.3% constant currency revenue growth and a 3.7% increase in adjusted diluted EPS as compared to provide a view2019.
The relative TSR component is measured over the full 3-year performance period, with payout with respect to the metric capped at 100% in the event the TSR of 2017 total direct compensationthe company’s common stock on an absolute basis of share price growth and dividends over the performance period is negative. The relative TSR target was set at the 50th percentile vis-à-vis the comparator group of companies. The maximum possible number of PSUs that may vest is 200% of target.
The Compensation Committee established the 2020/22 PSU targets to incentivize the company’s management to prioritize continued growth in revenue, increased levels of adjusted diluted EPS and favorable TSR relative to other technology and consulting companies. There was substantial uncertainty at the time the committee established the targets as reviewedto the likelihood of the company’s attainment of the targeted levels of performance and vesting of the PSUs. Whether and to what extent performance is achieved is determined by the Compensation Committee. As such, it uses grant date share prices for RSUs and PSUs and the target level of achievementcommittee in its sole discretion based on actual company results for the ACI2020, 2021 and PSUs. The above presentation excludes additional grants2022 fiscal years and relative TSR results for the full 2020-2022 period. Prior to determining the performance by the company against the revenue and adjusted diluted EPS targets for 2020, 2021 and 2022, the committee adjusted for 2020, and expects to adjust for 2021 and 2022, the revenue and adjusted diluted EPS targets by the amount of RSUsrevenue and PSUsadjusted diluted EPS derived from acquisitions completed during the respective years 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.ensure goals are not attained through acquisitions.
Annual Compensation Evaluation and Target Direct Compensation The Compensation Committee utilizes target direct compensation as the principal manner in which it reviews, evaluates and makes decisions with respect to executive compensation. Target direct compensation is the annual compensation that would be delivered to an NEO in a theoretical, steady-state environment where the same annual compensation was granted in multiple years and the company’s performance was at target across all such years. The committee believes this approach is most appropriate for its decision-making, including evaluation against the compensation practices of comparable companies with which we compete for talent, as it is designed to capture the annual compensation an NEO would be expected to earn, assuming company performance at target, based on the decisions of the committee in the year of such decision. The Compensation Committee reviews the target direct compensation of our NEOs on an annual basis and makes periodic adjustments based on individual performance and contributions, market trends and competitive environment for talent, increases in the cost of living, internal pay equity, the scope, responsibility and business impact of the individual’s position, the individual’s potential for increased responsibility and promotion over the award term, and the value of equity compensation that the individual has previously been awarded. No specific weight is assigned to any of the above criteria relative to the others, but rather the committee uses its judgment in |
| 34 | Cognizant |
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2018 Proxy Statement 29
Compensation Base Salary > CD&A > Primary Compensation Elements
 | Base Salary Stable source of cash income at competitive levels 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. Annual Cash Incentive (ACI) Motivate and reward achievement of short-term company financial objectives Prior to the onset of the Covid-19 pandemic, the Compensation Committee designed our 2020 ACI program to stimulate and support a high-performance environment by tying such incentive compensation to the attainment of short-term goals across two metrics aligned with our company’s financial objectives that it believed are valued by our shareholders: • constant currency revenue growth (60% weighting); and • adjusted income from operations (40% weighting). The maximum award each NEO could receive was 200% of target. |
In July 2020, in light of the unanticipated business impact of the Covid-19 pandemic, the committee revised the 2020 ACI program to measure Q1 performance (25% weighting) based on the original pre-Covid-19 targets established in March 2020 and Q2 through Q4 performance (75% weighting) based on revised targets for each component, and established a maximum payout of 85% of target to ensure the lowered expectations for the year did not result in an above-target payout and a minimum payout of 50% of target to ensure at least the threshold level of payout in a year of extraordinary business challenges.
The Compensation Committee reviewsinitially established targets for 2020 of 3.7% constant currency revenue growth and a 3.1% increase in adjusted income from operations as compared to 2019. The committee established these targets to incentivize the base salaries of our NEOs on an annual basis. The primary objectivecompany’s management to prioritize continued growth in revenue and adjusted income from operations. There was substantial uncertainty at the time the committee established the targets as to the likelihood of the base salary componentcompany’s attainment of an executive’s total direct compensation is to provide financial stability and certainty. The committee makes periodic adjustments to base salary based on individualthe targeted levels of 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 anypayout of the above criteria relative toACI. As revised in July 2020, the others, but rather the committee uses its judgment in combination with market and other data provided by Pay Governance and the Company.
Annual Cash Incentive (ACI)
2017 Annual Cash Incentive
The Compensation Committee has designed our ACI program to stimulate and supporttargets were for a high-performance environment by tying such incentive compensation to the attainment of organizational 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 NEOs4.5% revenue decline on the achievement of financial goals tied to metrics that it believes are valued by our stockholders. The committee believes that our stockholders value and measure the performance of these executives based principally on the growth of Company revenue, earnings and cash flow. Consequently, as in past years, the committee believed it appropriate to establish three components to the annual cash incentive: revenue, non-GAAP Income from Operations (see “Non-GAAP Financial Measures and Forward-Looking Statements” on page 65) and days sales outstanding (“DSO”).
The Compensation Committee determined a target for each component (revenue, non-GAAP Income from Operations and DSO)constant currency basis and a weighting for the various components17.8% decrease in adjusted income from operations as a percentage of the total award such thatcompared to 2019. The achievement of the targeted leveltargets remained uncertain except with respect to the minimum payout of performance for all three components would result in the executives receiving their target awards. 50% that was established.
The committee set threshold, or minimum, levels for each ofdetermined the components below which no annual cash incentive would be paid2020 ACI payout based upon actual company results for the particular component. The committee also set maximum levels for each of the components above which no additional annual cash incentive would be paid for the particular component and that collectively result in a maximum possible annual cash incentive equal to 200% of the target awards for the executives. Achievement for performance between the threshold and target levels or between the target and maximum levels for any of the components is calculated using straight-line interpolation.
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2020 fiscal year. Prior to determining the performance by the Companycompany against the targets for 2017,2020, the Compensation Committee increasedcommittee adjusted the revenue and non-GAAP Incomeadjusted income from Operationsoperations targets by the amount of revenue and income from operations derived from acquisitions completed during 2017.2020 to ensure goals were not attained through acquisitions.
30 Cognizant Technology Solutions Corporation
| combination with market and other data. 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 market practices and compensation program objectives. |
| Target direct compensation excludes additional awards that may be made from time to time for retention purposes or individual achievement (see additional equity awards (RSUs and 2020/21 PSUs (2-year)) granted to Ms. McLoughlin, Mr. Frank and Mr. Friedrich in 2020). It also excludes new hire awards, such as sign-on bonuses or one-time equity grants, upon joining the company that are not intended to be recurring and are designed to compensate a new hire for compensation being lost as a result of leaving a prior employer or additional costs of joining the company, or are needed as additional incentive for a new hire to join the company (see awards granted to Mr. Siegmund and Ms. Schmitt in 2020). Equity accelerations upon retirement are also not included in target direct compensation. See pages 40 to 46 for additional details on target direct compensation and any excluded awards. |
| 2021 Proxy Statement | 35 |
Stock-Based AwardsPerformance-Based Compensation – Performance by Metric
| • Strong, consistent revenue growthis a key company objective |
| • Aspirational but achievable targets and significant weighting; revenue weighting for 2020 ACI increased to 60% as days sales outstanding (DSO) metric, previously weighted 10%, was dropped as a metric in 2020 |
| • M&A- targets increased by the amount of revenue derived from acquisitions during the applicable performance periods |
| COVID-19 |
| • 2020 ACI target adjusted in mid-2020for unanticipated business impact of the Covid-19 pandemic |
| • 2020 ACI award payout limited to 85% of targetnotwithstanding the company significantly exceeding the Covid-adjusted targets |
| • Increased profitabilityis a key company objective |
| • Aspirational but achievable targets and significant weightingfor ACI |
| • Adjusted income from operations utilized for 2019 and 2020 awardsto align with the company’s revised non-GAAP financial metric |
| • M&A- targets adjusted by the amount of income from operations derived from acquisitions during the applicable performance periods |
| COVID-19 |
| • 2020 ACI target adjusted in mid-2020for the unanticipated business impact of the Covid-19 pandemic |
| • 2020 ACI award payout limited to 85% of target notwithstanding the company significantly exceeding the Covid-adjusted targets |
Presentation Notes | |
| 1 | Targets for 2017/18 PSUs, 2018/19 PSUs and 2019/20 PSUs were based on combined performance of the company across multiple years. For presentation purposes, 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. |
| 2 | Target increases in the tables are as initially set by the Compensation Committee (compound annual growth for 2017/18 PSUs, 2018/19 PSUs and 2019/20 PSUs) and assume no acquisitions. Achieved increases are as reported less acquisitions (for comparability to target increases). |
| 3 | Target and achieved revenue increases for the 2020 ACI, 2019/20 PSUs, 2020/21 PSUs and 2020/22 PSUs are based on constant currency revenue growth. |
| 4 | 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” on page 68 for more information. |
| Key | GAAP or market metric | |
| Actual company revenue (GAAP) and total shareholder return (TSR) (market metric) | ||
| 36 | Cognizant |
OverviewCompensation > CD&A > Performance-Based Compensation – Performance by Metric
We provide long-term incentive
The graphs below show actual company performance versus the corresponding performance targets for the company’s performance-based compensation through stock-basedelements.
| • Increased profitabilityis a key company objective |
| • Aspirational but achievable targets |
| • Weighting decreased from 50% to 25% in 2020with the addition of a relative TSR metric |
| • Adjusted diluted EPS utilized for 2019 and 2020 awardsto align with the company’s revised non-GAAP financial metric |
| • M&A- targets adjusted by the amount of income from operations derived from acquisitions during the applicable performance periods |
| COVID-19 |
| • No adjustmentmade to PSU targets notwithstanding the unanticipated business impact of the Covid-19 pandemic |
| • Zero attainment for the 2020 performance periodfor both the 2020/21 PSUs (2-year) and the 2020/22 PSUs (3-year) |
• To incentivize shareholder return, absolute TSR and relative TSR were utilized as performance metrics for the PSUs awarded to Mr. Humphries in 2019 upon his joining the company and relative TSR was utilized as a performance metric for all PSU awards in the form of PSUs and RSUs. The Compensation Committee believes that such stock-based grants provide our executive officers with a strong incentive to manage the Company from the perspective of an owner with an equity stake in the long-term success of the business, create an ownership culture, and help align the interests of our executives to those of our stockholders. In addition, the committee believes the vesting features 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 during the vesting period.2020
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, including the value of PSUs and RSUs that each of our executive officers has previously been awarded, 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 potential 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.
PSUs
PSUs granted in 2017 have a 2-year performance measurement period (fiscal years 2017 and 2018) over which the Company’s performance is measured across two performance metrics: revenue and non-GAAP EPS. See “Non-GAAP Financial Measures and Forward-Looking Statements” on page 65. Revenue and non-GAAP EPS each determine 50% of the award.
For each metric, the Compensation Committee established at the time of the award:
| Actual company non-GAAP income from operations and | Actual company adjusted income from operations and adjusted diluted earnings per share (EPS) |
Whether and to what extent the performance as to either metric has been achieved will be determined by the Compensation Committee in its sole discretion based upon the audited financials for the 2017 and 2018 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 is utilized to calculate the payout level for the component.
Performance across the two metrics determines 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 Company through such dates:
| 2021 Proxy Statement | ||
For information on 2016 PSUs that in part vested in, and 2016/17 PSUs that had a performance measurement period during, 2017, see “Aligning Pay with Performance” 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.
RSUs
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 31
2017Performance-Based Compensation – Performance by Award
| Presentation Notes | |
| 1 | Target increases in the tables (compound annual growth rate for 2017/18 PSUs, 2018/19 PSUs and 2019/20 PSUs) are as initially set by the Compensation Committee and assume no acquisitions. Achieved increases are as reported less acquisitions (for comparability to target increases). |
| 38 | Cognizant |
Compensation > CD&A > Performance-Based Compensation – Performance by Award
The timelines and tables below show the performance-based compensation awards in 2020 and those awarded in prior years with performance periods covering or vestings during 2020.
| 2 | Target and achieved revenue increases for the 2020 ACI, 2020/21 PSUs, 2020/22 PSUs and 2019/20 PSUs are based on constant currency revenue growth. |
| 3 | Covid-19 adjustments limited to 2020 ACI; no such adjustments made to any of the PSUs. |
| 2021 Proxy Statement | 39 |
This section includes compensation information for Our Named Executive Officersand 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. Target direct compensation excludes additional cash and equity awards that are made for new hires, retention or other purposes that are not intended to be recurring.
The table to the right summarizes the manner in which the various compensation elements for a given year are included in target direct compensation, SEC compensation and realized compensation. | |||||||||
 | Compensation | SEC Compensation | Realized Compensation | ||||||
| Other | All other compensation as required by SEC rules, including sign-on bonuses upon joining the company and perquisites | All other reported W-2 income | |||||||
| RSUs | Humphries, McLoughlin and Frank: Grant date fair value of the RSUs granted during the year, excluding additional awards | Grant date fair value of the RSUs granted during the year | Actual value as of the vesting date of RSUs that vested during the year | ||||||
| Siegmund, Schmitt and Friedrich: Grant date fair value of the RSUs targeted to vest during the year | |||||||||
| PSUs | Grant date fair value of the PSUs granted during the year, excluding additional awards | Grant date fair value of the PSUs granted during the year, calculated with respect to relative TSR as an award with a “market condition” under applicable accounting rules | Actual value as of the vesting date of PSUs that vested during the year | ||||||
| ACI | Target ACI for the year | Actual ACI earned for the year | Actual ACI earned for the year | ||||||
| Base Salary | Target base salary for the year (generally equal to actual base salary) | Actual base salary for the year | Actual base salary for the year |
| 40 | Cognizant |
Compensation > CD&A > Compensation by NEO
Brian Humphries CEO Age 47 Education University of Northern Ireland - B.A. Cognizant Tenure 2 years |  | KEY RESPONSIBILITIES AND CAREER HIGHLIGHTS Mr. Humphries joined Cognizant
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COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
The Compensation Committee, at its meeting in March 2020, evaluated Mr. Humphries’ performance during 2019 and the compensation information provided by Pay Governance for CEOs in the company’s peer group. The committee considered his performance as CEO in 2019, the company’s growth and transformation initiatives and strategic priorities, and the compensation information for CEOs in the peer group for 2020 (see “Peer Group Review” on page 32). Based on these considerations, the committee determined that his target direct compensation for 2020 should be increased to $13,480,000 (31% increase vs. 2019) to reflect performance in his first year as CEO and compensation trends for CEOs in the peer group.
The specific components of Mr. SEC COMPENSATION Mr. Humphries’ SEC compensation in 2020 was lower than in 2019 primarily due to his receipt in 2019 of buy-out awards upon joining the company: (i) RSUs of $3,000,000 The ACI amounts in SEC compensation are lower than the |
(of which he was required to utilize $1,000,000 of the after-tax amount to purchase shares of our common stock in 2019). Such awards were partially offset by the overall increase in equity awards granted to him as part of his target direct compensation in 2020 as compared to 2019 ($10,400,000 vs. $8,000,000) and higher ACI achievement in 2020.
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| REALIZED COMPENSATION In 2020, Mr. Humphries’ realized compensation was substantially lower than his target direct compensation Certain numbers shown in the |  | ||
32 Cognizant Technology Solutions Corporation
| 2021 Proxy Statement | 41 |
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| Age | Cognizant Tenure | Public Company Boards | |||
| 56 | 1 year | The Western Union | |||
| Company (WU) | |||||
| Education | |||||
| Technical University Karlsuhe - M.A. | |||||
| University of California, Santa Barbara - M.A. | |||||
| Technical University of Dresden, Germany - Doctorate | |||||
COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
Mr. Siegmund was selected by the board to serve as the company’s CFO based on his extensive financial experience as a senior executive in the technology sector. In connection with his appointment as CFO, the company entered into an offer letter with him on July 7, 2020, and subsequently entered into an executive employment and non-disclosure, non-competition, and invention assignment agreement on September 1, 2020, pursuant to which he agreed to serve as the company’s CFO. The Compensation Committee reviewed and approved the compensation arrangements set forth in the offer letter and employment agreement after considering compensation information provided by Pay Governance for CFOs in the company’s peer group (see “Peer Group Review” on page 32) and other information on compensation arrangements for new CFOs.
The committee approved, and Mr. Siegmund’s 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 $267,000 for 2020), (ii) ACI target of 1x base salary ($800,000, prorated to $267,000 for 2020), (iii) 2020/22 PSUs (3-year) of $2,250,000 (prorated to $750,000 for 2020) and (iv) RSUs of $2,250,000 (prorated to $562,000 for 2020). In addition, he was entitled to additional RSUs of $1,500,000 as a sign-on award, which amount is not included in target direct composition. SEC COMPENSATION Mr. Siegmund’s SEC compensation was substantially higher than his target direct compensation as it included the full grant date fair value of $3,375,000 in RSUs for his initial grant to achieve the target direct compensation of $2,250,000 in RSUs on an annual grant cycle. His SEC compensation also REALIZED COMPENSATION Mr. Siegmund’s realized compensation was lower than his target direct compensation in 2020 as nearly all of the equity awards made in 2020 will vest in future periods. His realized compensation consisted principally of his prorated base salary, prorated 2020 ACI award payout at target and one quarter’s vesting of RSUs, of which $663,000 was from vesting of his RSU sign-on award |  |
| 42 | Cognizant |
Compensation > CD&A > Compensation by NEO
| Karen McLoughlin |  | KEY RESPONSIBILITIES AND CAREER HIGHLIGHTS Ms. McLoughlin served as our CFO from 2012 through August 31, 2020. As CFO she oversaw the company’s worldwide financial planning and analysis, accounting, controllership, tax, treasury and internal audit functions. Other areas under her purview included our corporate development, investor relations, enterprise risk management, procurement and real estate functions. Prior to joining Cognizant in 2003, | |||
| Former CFO (through August 31, 2020) | |||||
| Age | Cognizant Tenure | Public Company Boards | |||
| 56 | 17 years | Best Buy Co., Inc. | |||
| (BBY) | |||||
| Education | |||||
Wellesley College | |||||
| Columbia University - M. B. A. | |||||
COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
The Compensation Committee, at its meeting in March 2020, evaluated Ms. McLoughlin’s performance during 2019 and prior years and the compensation information provided by Pay Governance for CFOs in the company’s peer group. The committee considered her performance as CFO in 2019, the company’s growth and transformation initiatives and strategic priorities, and the compensation information for CFOs in the peer group for 2020 (see “Peer Group Review” on page 32). Based on these considerations, the committee determined that her target direct compensation for 2020 should remain at $5,800,000, the same as in 2019.
The specific components of Ms. McLoughlin’s 2020 target direct compensation were as follows (all unchanged vs. 2019): (i) base salary of $750,000, (ii) ACI target of 1x base salary ($750,000), (iii) 2020/22 PSUs (3-year) of $2,300,000 and (iv) RSUs of $2,000,000.
Also in March 2020, the committee granted additional equity awards due to the additional efforts required of Ms. Ms. McLoughlin retired from the company on December 31, 2020. In connection with such retirement, she received ACI for 2020 at the SEC COMPENSATION In 2020, Ms. McLoughlin’s SEC compensation was substantially higher than her target direct compensation primarily due to the additional equity awards not included in target direct compensation: (i) 2020/21 PSUs (2-year) of $1,116,000 The ACI amounts in SEC compensation are lower than the amounts in target direct compensation |
and (ii) RSUs of $1,075,000
REALIZED COMPENSATION Ms. McLoughlin’s realized compensation was lower than her target direct compensation in both 2019 and | |||
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| 2021 Proxy Statement | 43 |
| Becky Schmitt |  | KEY RESPONSIBILITIES AND CAREER HIGHLIGHTS Ms. Schmitt has been our Executive Vice President, Chief People Officer since February 2020. In this role, she leads all aspects of people management and company culture, including attracting world-class, diverse talent and developing a future-ready workforce. Prior to joining Cognizant, she was the Chief People Officer of Sam’s Club, a division of Walmart, from 2018 to 2020 and in various other senior human resources roles at Walmart before that. Prior to joining Walmart in 2016, | ||
| Chief People Officer | ||||
| Age | Cognizant Tenure | |||
| 47 | 1 year | |||
| Education | ||||
| University of | ||||
| Arbor - B.A. | ||||
COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
Ms. Schmitt was selected by the board to serve as the company’s chief people officer based on her extensive human resources experience as a senior executive. In connection with her appointment as chief people officer, the company entered into an offer letter and executive employment and non-disclosure, non-competition, and invention assignment agreement with her on November 25, 2019, pursuant to which she agreed to serve as the company’s chief people officer. The Compensation Committee reviewed and approved the compensation arrangements set forth in the offer letter and employment agreement after considering compensation information provided by Pay Governance for chief people officers in the company’s peer group (see “Peer Group Review” on page 32) and other information on compensation arrangements for new chief people officers.
The committee approved, and Ms. Schmitt’s employment agreement provided for (by way of SEC COMPENSATION Ms. Schmitt’s SEC compensation was substantially higher than her target direct compensation as it included the full grant date fair value of $3,750,000 in RSUs |  . It also included $811,000, included in “Other”, comprised of her sign-on bonus ($600,000), relocation expenses ($162,000) and a tax gross-up on the relocation expenses ($49,000).The ACI amount in SEC compensation is lower than the amount in target direct compensation due to the ACI achievement being 85% of target in 2020. The grant date fair value of the PSUs required to be included in SEC compensation is slightly higher than the target award value due to the relative TSR component being an award with a “market condition” under applicable accounting rules. REALIZED COMPENSATION Ms. Schmitt’s realized compensation was |  | ||
| 44 | Cognizant |
Compensation > CD&A > Compensation by NEO
| Malcolm Frank |  | KEY RESPONSIBILITIES AND CAREER HIGHLIGHTS Mr. Frank became our Executive Vice President and President, Digital Business & Technology in January 2021. In this role, Mr. Frank is responsible for overseeing our Digital Business & Technology practice that helps clients build modern enterprises that deliver exceptional customer experiences that are created at the | ||
| President, Digital Business & Technology | ||||
| Age | Cognizant Tenure | |||
| 55 | 15 years | |||
| Education | ||||
| Yale University - B.A. | ||||
| Public Company Boards FactSet Research Systems Inc. (FDS) | ||||
COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
The Compensation Committee, at its meeting in March 2020, evaluated Mr. Frank’s performance during 2019 and prior years and compensation information provided by Pay Governance for executives with similar responsibilities based on a size and industry-appropriate peer group and market data. The committee considered his performance in 2019, the company’s growth and transformation initiatives and strategic priorities, including in the digital business areas under Mr. Frank’s leadership, and the compensation information for executives at other companies with similar responsibilities, including companies in the company’s peer group for 2020 (see “Peer Group Review ” on page 32). Based on these considerations, the committee determined that Mr. Frank’s target direct compensation for 2020 should remain at $4,800,000, the same as in 2019.
The specific components of Mr. Frank’s 2020 target direct compensation were as follows (all unchanged vs. 2019): (i) base salary of $650,000, (ii) ACI target of 1x base salary ($650,000), (iii) 2020/22 PSUs (3-year) of $1,900,000 and (iv) RSUs of $1,600,000. His ACI award was based 40% on the overall company ACI metrics and targets like the other NEOs, with the remaining 60% based on metrics and targets specific to the Digital Business practice: (i) 35% based on constant currency revenue growth of the practice and (ii) 25% based on adjusted income from operations of the practice.
Also in March 2020, the committee granted additional equity awards due to the additional efforts required of Mr. Frank during the ongoing changes in company leadership and transformation initiatives underway, the need to bridge the transition from 2-year to 3-years PSUs that occurred between 2019 and 2020 and the retention concerns presented by the 0% payout for the 2018/19 PSUs and anticipated 0% payout for the 2019/20 PSUs. As such, the committee approved an additional equity award of $1,882,000, calculated as 50% of the combined grant date fair values of 2018/19 PSUs and 2019/20 PSUs previously awarded to him as to which there was expected to be a SEC COMPENSATION In The ACI amounts in SEC compensation are lower than the amounts in target direct compensation due to the ACI achievement being lower than target in both years (42.8% in 2019 and 85% in 2020). Mr. Frank’s 2020 ACI achievement was determined in part based on the performance of the Digital Business practice, as described above, but after the mid-2020 Covid-19 adjustment was limited to a maximum 85% achievement as was the case for the other NEOs. The grant date fair values of the PSUs in 2020 required to be REALIZED COMPENSATION Mr. Frank’s realized compensation was higher than his target direct compensation in 2020 primarily due to the quarterly vestings of his additional equity awards: (i) RSUs of $271,000 |  |
.| 2021 Proxy Statement | 45 |
| Matthew W. Friedrich |  | KEY RESPONSIBILITIES AND CAREER HIGHLIGHTS Mr. Friedrich served as our Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary | ||
 |
| |||
| Former General Counsel (through January 1, 2021) | ||||
| Age | Cognizant Tenure | |||
| 54 | 4 years | |||
| Education | ||||
| University of Virginia - B.A. University of Texas School of Law - J.D. | ||||
COMMITTEE ASSESSMENT AND TARGET DIRECT COMPENSATION
The Compensation Committee, at its meeting in March 2020, considered Mr. Friedrich’s performance during 2020 and prior years and compensation information provided by Pay Governance for general counsels in the company’s peer group. The committee considered his performance as general counsel in 2019, the company’s growth and transformation initiatives and strategic priorities, and the compensation information for general counsels in the peer group for 2020 (see “Peer Group Review” on page 32). Based on these considerations, the committee determined that Mr. Friedrich’s target direct compensation for 2020 should be $4,176,000 to reflect performance and general market trends.
The specific components of Mr. Friedrich’s 2020 target direct compensation were as follows: (i) base salary of $650,000, (ii) ACI target of 1x base salary ($650,000), (iii) 2020/22 PSUs (3-year) of $1,175,000 and (iv) RSUs of $1,701,000. Also in March 2020, the committee granted additional equity awards due to the additional efforts required of Mr. Friedrich during the ongoing changes in company leadership and transformation initiatives underway, the need to bridge the transition from 2-year to 3-years PSUs that occurred between 2019 and 2020 and the retention concerns presented by the 0% payout for the 2018/19 PSUs and anticipated 0% payout for the 2019/20 PSUs. As such, the committee approved an additional equity award of $974,000, calculated as 50% of the combined grant date fair values of 2018/19 PSUs and 2019/20 PSUs previously awarded to him as to which there was expected to be a 0% payout. The additional equity award consisted of $487,000 of 2020/21 PSUs (2-year) and $487,000 of RSUs. Also, in recognition of his contributions to successfully resolving the company’s Foreign Corrupt Practices Act matter in 2019, the committee provided a further additional equity award in 2020 consisting of $1,000,000 of RSUs. The additional equity awards are not included in target direct compensation. In February 2021, in recognition of his contributions during 2020, the committee determined to pay him the 2020 ACI at the achieved level (85% of target) notwithstanding his departure from the company prior to the March 2021 payout date. The unvested portions of the additional equity awards (all portions not included in realized compensation below) were forfeited upon Mr. Friedrich’s departure from the Company in January 2021. SEC COMPENSATION In 2020, Mr. Friedrich’s SEC compensation was significantly higher than The ACI amount in SEC compensation is lower than the amount in target direct compensation due to the ACI achievement being 85% of target. The grant date fair values of the PSUs required to be included in SEC compensation are slightly higher than the target award value due to the relative TSR component being an award with a “market condition” under applicable accounting rules. REALIZED COMPENSATION Mr. Friedrich’s realized compensation was higher than his target direct compensation in 2020 primarily due to the quarterly vestings of his additional equity awards: (i) RSUs of $140,000 We have excluded Mr. Friedrich’s compensation |  |
2018 Proxy Statement 33
| 46 | Cognizant |
Compensation > CD&A > Other Elements of Compensation
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, 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.
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 eligible 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.
The 401(k) savings plan, CSRP, U.K. group personal pension 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.
| 2021 Proxy Statement | 47 |
Supplemental Retirement Programs
We do not have any nonqualified deferred compensation programs, pension plans or pre-tax supplemental executive retirement plans for our NEOs, except for the CSRP described under “Broad-Based Programs” on page 47.
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 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 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.our New York office.
Company Policies Impacting Compensation
Executive Stock Ownership Guidelines
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34 Cognizant Technology Solutions Corporation
Hedging, Short Sale, Margin Account and Pledging Prohibitions
The Company’sOur insider trading policies include the following prohibitions:
| No | All of the | |
| No | All of the | |
| No | All of the company’s directors, | |
| No | All of |
| 48 | Cognizant |
Compensation > CD&A > Company Policies Impacting Compensation
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 restatement due 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 an employee’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 conduct that 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 | ||
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 equity and short 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 (see page 48). Additionally, prior to determining the performance by the company against the targets for performance-based compensation (ACI and properly accountsPSUs), the committee adjusts the targets for the time horizonimpact of risk.
The Compensation Committeeacquisitions completed during the performance period, which discourages excessive risk-taking with respect to M&A transactions. In sum, the committee 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.company.
2018 Proxy Statement 35
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.
| 2021 Proxy Statement | 49 |
Ongoing and Post-Employment CompensationSeverance Benefits
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 (see page 58). 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. 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 the yearsmarket practices for executives of servicea similar level of experience as our NEOs, have rendered us (average tenure of over 15 years), the level of dedication and commitment they have rendered us over that period,of our NEOs, the contributions theyour NEOs have made to our growth and financial success and the value we expect to receive from retaining theirthe continued services of our NEOs, including during challenging transition periods following a change in control.
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 |
Compensation Committee Report
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, as amended, 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’scompany’s proxy statement for the 2018 Annual Meeting2021 annual meeting of Stockholders.shareholders. The Compensation Committee has recommended to the Boardboard of Directorsdirectors 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’scompany’s Annual Report on Form 10-K for the year ended December 31, 2017.2020.
By the Compensation Committee of the Board of Directors of Cognizant Technology Solutions Corporation
Betsy S. AtkinsJohn N. Fox, Jr.John E. KleinMichael Patsalos-Fox
 |  |  |  |  |
| VINITA BALI | JOHN N. FOX, JR. | LEO S. MACKAY, JR. | MICHAEL PATSALOS-FOX | JOSEPH M. VELLI |
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 2017, Ms. Atkins and Messrs. Fox, Klein, Patsalos-Fox and Robert E. Weissman 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 serve 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 the Board or the Compensation Committee of the Company.
36 Cognizant Technology Solutions Corporation
| 50 | Cognizant |
Compensation > Executive Compensation Tables
Executive Compensation Tables and Pay Ratio
20172020 Summary Compensation Table
The following 20172020 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, 20162018, 2019 and 20172020 by our CEO, CFO, our former CFO and each of our three other most highly compensated executive officers who were serving as executive officers at the end of the 20172020 fiscal year (collectively, the “NEOs”). No executive officers who would have otherwise been includable in such table on the basis of total compensation for the 20172020 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 | ||||||||||
| Non-Equity | |||||||||||||||||||||||||||||
| Name and | Stock | Incentive | All Other | ||||||||||||||||||||||||||
| Principal Position | Year | Salary | Bonus | Awards | Plan Comp. | Comp. | SEC Total | ||||||||||||||||||||||
| Brian Humphries | 2020 | $ | 1,026,681 | — | $ | 10,692,541 | $ | 1,745,358 | $ | 343,360 | $ | 13,807,940 | |||||||||||||||||
| CEO | 2019 | $ | 769,649 | $ | 4,000,000 | $ | 10,346,672 | $ | 658,819 | $ | 182,862 | $ | 15,958,002 | ||||||||||||||||
| Jan Siegmund | 2020 | $ | 266,667 | $ | 266,667 | $ | 5,656,360 | — | — | $ | 6,189,694 | ||||||||||||||||||
| CFO | |||||||||||||||||||||||||||||
| Karen McLoughlin | 2020 | $ | 750,000 | — | $ | 6,599,285 | $ | 637,500 | $ | 9,062 | $ | 7,995,847 | |||||||||||||||||
| Former CFO | 2019 | $ | 750,000 | — | $ | 4,299,924 | $ | 321,000 | $ | 9,746 | $ | 5,380,670 | |||||||||||||||||
| 2018 | $ | 700,000 | — | $ | 4,199,928 | $ | 613,900 | $ | 9,327 | $ | 5,523,155 | ||||||||||||||||||
| Becky Schmitt | 2020 | $ | 595,845 | $ | 600,000 | $ | 7,558,558 | $ | 506,468 | $ | 211,263 | $ | 9,472,135 | ||||||||||||||||
| Chief People Officer | |||||||||||||||||||||||||||||
| Malcolm Frank | 2020 | $ | 650,000 | — | $ | 6,507,688 | $ | 552,500 | $ | 8,000 | $ | 7,718,188 | |||||||||||||||||
| President, Cognizant | 2019 | $ | 650,000 | — | $ | 3,499,919 | $ | 278,200 | $ | 7,750 | $ | 4,435,869 | |||||||||||||||||
| Digital Business | 2018 | $ | 535,000 | — | $ | 3,667,159 | $ | 469,195 | $ | 5,750 | $ | 4,677,104 | |||||||||||||||||
| Matthew Friedrich | 2020 | $ | 650,000 | — | $ | 4,972,408 | $ | 552,500 | $ | 8,000 | $ | 6,182,908 | |||||||||||||||||
| Former General Counsel | |||||||||||||||||||||||||||||
Year. Under applicable SEC rules, we have excluded compensation for Mr. Siegmund, Ms. Schmitt and Mr. Friedrich for 2019 and 2018, and Mr. Humphries for 2018, as they were not NEOs during those years. Mr. Humphries, Mr. Siegmund and Ms. Schmitt were first employed by the company on April 1, 2019, September 1, 2020 and February 3, 2020, respectively. Mr. Friedrich became an NEO in 2020. 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, 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, the twelve-month average exchange rate for fiscal year 2020. 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. 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 (see page 41). Mr. Siegmund. As he joined the company on September 1, 2020, Mr. Siegmund’s offer letter provided him a prorated 2020 ACI award payout at target in lieu of such award payout being based on company performance. As such, the amount of such award is included in “Bonus” instead of under “Non-Equity Incentive Plan Compensation”. Ms. Schmitt. Ms. Schmitt received a one-time cash sign-on bonus upon her joining the company on February 3, 2020 that was designed to compensate her for a portion of the long-term compensation at Walmart that she forfeited upon joining Cognizant. Stock Awards. Amounts shown in this column represent the aggregate grant date fair value of | |
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| 2021 Proxy Statement | 51 |
2018 Proxy Statement Table of Contents
The grant date fair value of stock awards granted in 2020 resulted from PSU and RSU awards with the grant date fair values set out below. The 2020/22 PSUs (3-year) were part of the target direct compensation (“TDC”) for all NEOs. The 2020/21 PSUs (2-year) were part of additional equity awards made to certain longer-serving NEOs.
| Mr. Humphries | Mr. Siegmund | Ms. McLoughlin | Ms. Schmitt | Mr. Frank | Mr. Friedrich | |||||||
| PSUs | ||||||||||||
| 2020/22 PSUs (3-year) (included in TDC) | $6,532,560 | $ 781,413 | $ 2,407,841 | $1,308,577 | $1,989,049 | $1,230,026 | ||||||
| 2020/21 PSUs (2-year) (additional equity awards) | — | — | $ 1,116,496 | — | $ 977,495 | $ 505,618 | ||||||
| RSUs | ||||||||||||
| Included in TDC | $4,159,981 | $ 4,874,947 | $ 1,999,963 | $6,249,981 | $1,599,961 | $1,749,960 | ||||||
| Additional equity awards | — | — | $ 1,074,985 | — | $1,941,183 | $1,486,804 |
The grant date fair values of PSUs granted to our NEOs during 2020, assuming maximum performance (200%), would be as set out below.
| PSUs, settlement at maximum – 200% | Mr. Humphries | Mr. Siegmund | Ms. McLoughlin | Ms. Schmitt | Mr. Frank | Mr. Friedrich |
| 2020/22 PSUs (3-year) (included in TDC) | $11,212,494 | $ 1,343,894 | $ 4,132,807 | $ 2,246,002 | $ 3,414,005 | $ 2,111,177 |
| 2020/21 PSUs (2-year) (additional equity awards) | — | — | $ 1,922,674 | — | $ 1,683,351 | $ 870,712 |
The grant date fair value of the portion of the 2020/22 PSUs (3-year) and 2020/21 PSUs (2-year) relating to relative TSR (see pages 34 to 38) 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.
37Non-Equity Incentive Plan Compensation. Amounts shown in this column represent cash incentive awards earned for each respective fiscal year and paid in the first quarter of the following year under our ACI program (see pages 34 to 46). ACI is paid in the local currency of the resident jurisdiction of each NEO. The local currency for all NEOs, other than Mr. Humphries, 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, the twelve-month average exchange rate for fiscal year 2020.
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 2020 are shown in the table below.
| Mr. Humphries | Mr. Siegmund | Ms. McLoughlin | Ms. Schmitt | Mr. Frank | Mr. Friedrich | |
| Corporate apartment | $ 217,439 | — | — | — | — | — |
| Home security services | $ 23,253 | — | $ 512 | — | — | — |
| Pension allowance | $ 99,139 | — | — | — | — | — |
| U.K. group personal pension plan | ||||||
| matching contribution | $ 3,529 | — | — | — | — | — |
| 401(k) matching contribution | — | — | $3,750 | — | $8,000 | $8,000 |
| CSRP matching contribution | — | — | $4,800 | — | — | — |
| Relocation expense (estimated) | — | — | — | $161,913, plus $49,350 gross-up for taxes | — | — |
For Mr. Humphries, (i) the value of the pension allowance represents the amount of employer contributions under the U.K. group personal pension plan in excess of the statutory annual allowance limit that are paid to Mr. Humphries as a cash allowance, subject to applicable income tax, and (ii) the value of the U.K. group personal pension plan matching contribution represents the employer contributions to such plan (see page 47). The value of home security services provided to Mr. Humphries is converted to US$ from CHF at exchange rate of 1 CHF = $1.07, the twelve-month average exchange rate for fiscal year 2020, and the values of pension allowance and the employer contributions under the U.K. group personal pension plan are converted to US$ from GBP at an exchange rate of £1 = $1.28, the twelve-month average exchange rate for fiscal year 2020.
| 52 | Cognizant |
Compensation2017 > Executive Compensation Tables
2020 Grants of Plan-Based Awards Table
The following table provides certain summary information concerning each grant of an award made to an NEO in the 20172020 fiscal year under a compensation plan.
| Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | Estimated Future Payouts Under Equity Incentive Plan Awards2 | All Other Stock Awards: Number of Shares of Stock or Units3 | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/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 | |||||||||||||||||||||
| Estimated Future Payouts | All Other | |||||||||||
| Estimated Future Payouts | Under Equity Incentive | Stock Awards: | Grant Date | |||||||||
| Under Non-Equity Incentive | Plan Awards: Number of Shares | Number of | Fair Value | |||||||||
| Plan Awards | of Stock or Units | Shares of | of Equity | |||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or Units | Awards | |||
| Brian Humphries | 3/5/2020 | $ 1,026,681 | $2,053,363 | $4,106,726 | ||||||||
| 3/5/2020 | 52,061 | 104,121 | 208,242 | $6,532,560 | ||||||||
| 3/5/2020 | 69,414 | $4,159,981 | ||||||||||
| Jan Siegmund | 9/1/2020 | 5,600 | 11,199 | 22,398 | $ 781,413 | |||||||
| 9/1/2020 | 72,793 | $4,874,947 | ||||||||||
| Karen McLoughlin | 3/5/2020 | $ 375,000 | $ 750,000 | $1,500,000 | ||||||||
| 3/5/2020 | 19,189 | 38,378 | 76,756 | $2,407,841 | ||||||||
| 3/5/2020 | 8,969 | 17,937 | 35,874 | $1,116,496 | ||||||||
| 3/5/2020 | 51,309 | $3,074,948 | ||||||||||
| Becky Schmitt | 3/5/2020 | $ 297,922 | $ 595,845 | $1,191,690 | ||||||||
| 3/5/2020 | 10,429 | 20,857 | 41,714 | $1,308,577 | ||||||||
| 2/3/2020 | 99,824 | $6,249,981 | ||||||||||
| Malcolm Frank | 3/5/2020 | $ 325,000 | $ 650,000 | $1,300,000 | ||||||||
| 3/5/2020 | 15,852 | 31,703 | 63,406 | $1,989,049 | ||||||||
| 3/5/2020 | 7,852 | 15,704 | 31,408 | $ 977,495 | ||||||||
| 3/5/2020 | 59,088 | $3,541,144 | ||||||||||
| Matthew Friedrich | 3/5/2020 | $ 325,000 | $ 650,000 | $1,300,000 | ||||||||
| 3/5/2020 | 9,803 | 19,605 | 39,210 | $1,230,026 | ||||||||
| 3/5/2020 | 4,062 | 8,123 | 16,246 | $ 505,618 | ||||||||
| 3/5/2020 | 24,809 | $1,486,804 | ||||||||||
| 5/19/2020 | 33,993 | $1,749,960 | ||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards. Represents the range of | ||
| Represents the range of shares that could vest pursuant to | |
| Represents | |
| Represents the grant date fair value of the | |
38 Cognizant Technology Solutions Corporation
| 2021 Proxy Statement | 53 |
Outstanding Equity Awards at Fiscal Year-End 20172020 Table
The following table provides certain summary information concerning outstanding equity awards held by the NEOs as of December 31, 2017.2020. Our NEOs did not hold any outstanding option awards as of December 31, 2020.
| Option Awards1 | 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 | |||||||||||||||
| Exercisable | Unexercisable | ||||||||||||||||||||||
| Francisco D’Souza | 240,000 | — | — | $ | 9.11 | 12/08/18 | — | — | — | — | |||||||||||||
| — | — | — | — | — | 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 | — | — | — | — | |||||||||||||
| — | — | — | — | — | 5,062 | 3 | $ | 359,503 | — | — | |||||||||||||
| — | — | — | — | — | 12,940 | 3 | $ | 918,999 | — | — | |||||||||||||
| — | — | — | — | — | 7,182 | 4 | $ | 510,066 | — | — | |||||||||||||
| — | — | — | — | — | 29,147 | 5 | $ | 2,070,020 | — | — | |||||||||||||
| — | — | — | — | — | — | — | 32,691 | 6 | $ | 2,321,715 | |||||||||||||
| 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 | |||||||||||||
| Stock Awards | ||||||
| Equity Incentive | Equity Incentive | |||||
| Plan Awards; | Plan Awards; Market | |||||
| Number of | or Payout Value of | |||||
| Number of | Market Value of | Unearned Shares, | Unearned Shares, | |||
| Shares or Units of | Shares or Units of | Units or Other | Units or Other | |||
| Stock That Have | Stock That Have | Rights That Have | Rights That Have | |||
| Name | Not Vested | Not Vested1 | Not Vested | Not Vested1 | ||
| Brian Humphries | 20,3112 | $1,664,486 | ||||
| 52,0612 | $4,266,399 | |||||
| 108,3273 | $ 8,877,398 | |||||
| 104,1215 | $ 8,532,716 | |||||
| Jan Siegmund | 20,5322 | $1,682,597 | ||||
| 41,9962 | $3,441,572 | |||||
| 11,1995 | $ 917,758 | |||||
| Karen McLoughlin | 38,4822 | $3,153,600 | ||||
| 12,7945 | $1,048,4685 | |||||
| 8,9696 | $ 735,0106 | |||||
| Becky Schmitt | 74,8682 | $6,135,433 | ||||
| 20,8575 | $ 1,709,231 | |||||
| Malcolm Frank | 1,0052 | $ 82,360 | ||||
| 1,7102 | $ 140,135 | |||||
| 9,2542 | $ 758,365 | |||||
| 44,3162 | $3,631,696 | |||||
| —4 | — | |||||
| 31,7035 | $2,598,0615 | |||||
| 15,7046 | $1,286,9436 | |||||
| Matthew Friedrich | 1,7282 | $ 141,610 | ||||
| 1,7012 | $ 139,397 | |||||
| 18,6072 | $1,524,844 | |||||
| 24,2812 | $1,989,828 | |||||
| —4 | — | |||||
| 19,6055 | $1,606,6305 | |||||
| 8,1236 | $ 665,6806 | |||||
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Market value was determined based on | |||
Amounts shown represent the following with respect to RSUs: | |||
| Mr. | |||
| Mr. | |||
| Ms. McLoughlin. Awards shown are time-based RSUs that were granted on March 5, 2020 and vested on December 31, 2020 upon her retirement in accordance with the applicable terms of the retirement, death and disability policy. A total of 17,103 shares will be settled in March, June, September and December of 2021; a total of 17,103 shares will be settled in March, June, September and December of 2022; and 4,276 shares will be settled in March of 2023, subject in each case to continued compliance with the applicable terms of the retirement, death and disability policy. | |||
| Ms. Schmitt. Awards shown are time-based RSUs that were granted on February 3, 2020 and vest on specified dates if Ms. Schmitt is still employed by the company. A total of 33,274 shares are scheduled to vest in February, May, August, and November of 2022; a total of 33,275 shares are scheduled to vest in February, May, August, and November of 2022; and 8,319 shares are scheduled to vest in February of 2023. | |||
| 54 | Cognizant |
Compensation > Executive Compensation Tables
| Mr. Frank. Awards shown are time-based RSUs that were granted on February 26, 2018, June 12, 2018, February 26, 2019 and | |
| Mr. | |
| |
| 3 | 2019/23 CEO PSUs (New Hire). Represents the number of unearned shares not vested equal to the threshold award for PSUs granted in 2019 with a market condition, as described in FASB ASC Topic 718, and |
2018 Proxy Statement 39
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| 6 | 2020/21 PSUs (2-year). Represents the number of unearned shares not vested equal to the target award for PSUs granted in 2020 with a 2-year performance measurement period (combined performance of the company for 2020 and 2021). See |
2017
2020 Option Exercises and Stock Vested Table
None of our NEOs held or exercised any options during 2020. 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, 2017.2020.
| 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 | ||||
| Number of Shares | Value Realized | |||
| Name | Acquired on Vesting Date | on Vesting | ||
| Brian Humphries | 30,894 | $ 1,989,574 | ||
| Jan Siegmund | 10,265 | $ 809,703 | ||
| Karen McLoughlin | 64,061 | $ 4,203,209 | ||
| Becky Schmitt | 24,956 | $ 1,645,441 | ||
| Malcolm Frank | 59,928 | $ 3,938,138 | ||
| Matthew Friedrich | 50,470 | $ 3,290,866 | ||
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| The number of shares shown in the table reflects the gross number of shares | |
26,622 ($1,692,911). 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 2020 Nonqualified Deferred Compensation Table None of the NEOs participated in any nonqualified defined contribution or other nonqualified deferred compensation plan in 2020. 2020 Pension Benefits Table None of the NEOs participated in any defined benefit pension plan in 2020. | ||
40 Cognizant Technology Solutions Corporation
| 2021 Proxy Statement | 55 |
Equity Compensation Plan Information
The following table provides information as of December 31, 2020 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 Pension Benefits 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 2020 Annual Report.
| Number of | Number of Securities | ||||
| Securities to be | Available for Future | ||||
| Issued Upon | Weighted-Average | Issuance Under | |||
| Exercise of | Exercise Price | Equity Compensation | |||
| Outstanding | of Outstanding | Plans (excludes | |||
| Options, Warrants | Options, Warrants | securities reflected in | |||
| Plan Category | and Rights | and Rights | first column) | ||
| Equity compensation plans approved by security holders | 6,124,667 | $ 60.23 | 34,707,546 | ||
| Equity compensation plans not approved by security holders | – | N/A | — | ||
| Total | 6,124,667 | $60.23 | 34,707,546 | ||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights. The securities 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, 2020, 55,979 shares may be issued pursuant to stock options upon exercise, 1,664,542 shares may be issued pursuant to PSUs upon vesting and 4,404,146 shares may be issued pursuant to RSUs 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 (200% of the target number of award shares). The actual number of shares that may vest may 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 pages 34 to 39. Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights. As of December 31, 2020, the weighted-average exercise price of outstanding options to purchase common stock was $60.23. 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 securities listed in this column include 28,805,003 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 5,902,543 shares available for future issuance under the ESPP. As of December 31, 2020, there were no outstanding purchase periods under the ESPP. | ||
| 56 | Cognizant |
Compensation > CEO Pay Ratio
We are required by SEC rules and regulations to disclose the annual total compensation for our CEO and an estimate of the NEOs participated in any defined benefit pension plan in 2017.
2017 Nonqualified Deferred Compensation Table
Nonemedian 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. As further described below, we have also included supplemental pay ratio information to show the ratios of the NEOs participatedannual total compensation of our CEO to the annual total compensation of our median employees in any nonqualified defined contribution or other nonqualified deferred compensation plan in 2017.the United States and the United Kingdom and Western Europe, respectively.
2017 Pay Ratio
The following table provides information, based on our reasonable estimates, about the relationship between the annual total compensation of our CEO and the annual total compensation of our median employees as offor the year ended December 31, 2017.
| 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) |
Employees Included.The Company had approximately 260,000 employees worldwide as of December 31, 2017, including approximately 50,400 in North America, approximately 13,800 in Europe and approximately 195,800 in various other locations throughout the rest of the world, including approximately 180,000 in India. In identifying the worldwide median employee, we included all of such employees, except for our CEO and approximately 600 employees of Netcentric and Zone, which businesses we acquired during the fourth quarter of 2017. In identifying the U.S. median employee, we included all U.S. employees, except for our CEO. We did not include any independent contractors in either calculation.2020.
Compensation Included.In identifying the worldwide and U.S. median employees, we used the actual salary, bonus, and annual cash incentive (in each case annualized for full-time employees who joined during 2017) and the grant date fair value of PSUs and RSUs awarded during 2017 for each applicable employee as of December 31, 2017. Where there were multiple employees with the resulting median compensation, we calculated each of such employees’ annual total compensation in the same manner as the “SEC Total” of compensation shown for our CEO in the “2017 Summary Compensation Table” on page 37. We used such annual total compensation to identify the median of such employees and for disclosure of median employee pay herein.
| Median | |||||
| Employee | CEO | Pay Ratio | |||
| Annual Total | Annual Total | (CEO : median | |||
| Category | Compensation | Compensation | employee) | ||
| CEO Pay to Worldwide Median Employee Pay (SEC-required pay ratio disclosure) | $ 33,358 | 414 : 1 | |||
| CEO Pay to U.S. Median Employee Pay (Supplemental pay ratio information) | $ 87,375 | $13,807,940 | 158 : 1 | ||
| CEO Pay to U.K. and Western Europe Median Employee Pay (Supplemental pay ratio information) | $ 72,253 | 191 : 1 | |||
Employees Included. The company had approximately 289,500 employees at the end of 2020, with 43,500 in North America, 13,400 in Continental Europe, 6,800 in the United Kingdom and 225,800 in various other locations throughout the rest of the world, including 204,500 in India. In identifying the worldwide median employee, we included all such employees, except for our CEO and approximately 2,500 employees of Bright Wolf, Code Zero, Collaborative Solutions, El Technologies, Levementum, New Signature, 10th Magnitude and Tin Roof, which businesses we acquired during 2020 (the “2020 Acquired Companies”). In identifying the U.S. median employee and the U.K. and Western Europe median employee, we included all employees in the United States and in the United Kingdom and Western Europe, respectively, except for our CEO and employees of the 2020 Acquired Companies. We did not include any independent contractors in either calculation. Compensation Included. In identifying the median employees, we used the actual salary, bonus and ACI for 2020 (in each case annualized for full-time employees who joined during 2020) and the grant date fair value of PSUs and RSUs awarded during 2020 for each applicable employee as of December 31, 2020. Where there were multiple employees with the resulting median compensation, we calculated each such employee’s annual total compensation in the same manner as the “SEC Total” of compensation shown for our CEO in the “2020 Summary Compensation Table” on page 51. We used such annual total compensation to identify the median of such employees and for disclosure of median employee pay herein (averaged where the median fell between two employees). Currency Conversion. For employees receiving their compensation in a currency other than US$, including our CEO, we translated such compensation to US$ at twelve-month average exchange rates for 2020. Cost-of-Living 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 CEO is based (the United Kingdom) in order to adjust the compensation of such employees to the jurisdiction in which our CEO is based. In making such cost-of-living adjustments, we used the cost-of-living index for the country in which the employee was based for all employees not based in the United Kingdom. Each such cost-of-living index, including that for India (24.12), the location of the worldwide median employee, the United States (72.47), the location of the U.S. median employee, and the United Kingdom (65.67), the location of the U.K. and Western Europe median employee, was used to adjust the applicable compensation of employees to the cost-of-living index for the United Kingdom (65.67). All cost-of-living indexes used were as published by Numbeo.com for mid-year 2020. Without application of a cost-of-living adjustment, and after otherwise utilizing the same process described above to identify the worldwide median employee, the worldwide median employee would have been a full-time, salaried employee located in India with annual total compensation of $13,460. The ratio of the annual total compensation of our CEO to such median employee’s annual total compensation was 1,026 : 1. Supplemental U.S. Median Employee and U.K. and Western Europe Median Employee Pay Ratios. The form and amount of our CEO’s annual total compensation is largely influenced by prevailing compensation practices in the United States and in the United Kingdom and Western Europe and the competitive market for senior executive talent. While the market for such talent is global, given that the company is a U.S.-headquartered, publicly-traded company with revenues derived principally from the United States, the United Kingdom and Western Europe, we believe that it is useful to understand the relationship between the annual total compensation of our CEO and the annual total compensation of our median employees in the United States and the United Kingdom and Western Europe, respectively. As noted above, the medians of the annual total compensation of our employees included in these calculations were adjusted to the cost-of-living index for the United Kingdom. | ||
Currency Conversion.For employees receiving their compensation in a currency other than U.S. dollars, we translated such compensation to U.S. dollars at average monthly exchange rates for 2017.
Cost-of-Living 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 CEO resides (the United States) in order to adjust the compensation of such employees to the jurisdiction in which our CEO resides. In making such cost-of-living adjustments, we used the cost-of-living index for the country in which the employee is based for all employees not based in the United States. 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). All cost-of-living indexes used were as published by Numbeo.com for mid-year 2017. 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. The ratio of the annual total compensation of our CEO to such median employee’s annual total compensation was 1,024 : 1.
Supplemental U.S. Median Employee Pay Ratio.The form and amount of our 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 Company is a U.S.-headquartered, publicly traded company, we believe that it is useful to understand the relationship between the annual total compensation of our CEO and the median of the annual total compensation of our U.S. employees.
2018 Proxy Statement 41
| 2021 Proxy Statement | 57 |
Potential Payments Upon Termination or Change in Control
Overview of Potential Payments
We have entered into Employment Agreementsemployment 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 review by the Compensation Committee of the terms of such Employment Agreements against the Company 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 in February 2018. The table below summarizes the benefits under such Employment Agreementsthe 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 | |||||||||||
| Performance | |||||||||||
| Measurement | |||||||||||
| Unvested | Period Ended; | Performance | |||||||||
| Employment | RSUs / | Performance | Measurement | ||||||||
| Termination | Agreement | Time-Based | Objectives | Period Not | |||||||
| Event | Version | Salary and | Benefits | Awards | Satisfied | Ended | |||||
| 1x | 18 months of | ||||||||||
| Siegmund | …base salary, payable | reimbursement for | |||||||||
| Qualifying | and Schmitt | over 12 months | COBRA premiums, | Acceleration | Acceleration | ||||||
| Termination – | …ACI (100% of target), | as applicable | of awards that | of awards that | |||||||
| no Change in | would otherwise | would otherwise | Forfeited | ||||||||
| Frank | vest in the next | vest in the next | |||||||||
| …base salary, payable | reimbursement for | 12 months | |||||||||
| in installments | COBRA premiums | ||||||||||
| 2x | of | ||||||||||
| Siegmund | …base salary, | reimbursement for | |||||||||
| COBRA premiums, | Acceleration | ||||||||||
| Qualifying | … | as applicable | of entire award | ||||||||
| Termination – | payable in a lump sum | Acceleration of | Acceleration of | (based on | |||||||
| within 12 months | Frank | 12 months of | performance | ||||||||
| …base salary, payable | reimbursement for | as of change | |||||||||
| COBRA premiums | control date) | ||||||||||
| … | |||||||||||
| payable in a lump sum | |||||||||||
| WHAT IS A “QUALIFYING TERMINATION”? | |||
Termination without “Cause” | |||
“Cause” is defined as:
• • • • • | Leaving for “Good Reason” “Good Reason” is defined as:
• • • | ||
42 Cognizant Technology Solutions Corporation
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 | NO EXCESS PARACHUTE PAYMENTS | |
The employment agreements applicable to Mr. Humphries, Mr. Siegmund and Ms. Schmitt (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 |
| 58 | Cognizant |
Compensation > Potential Payments Upon Termination or Change in Control
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.
covenant (subject to administrator discretion and where permitted by law). 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 Agreementsemployment agreements in effect on December 31, 2017 (i.e., prior2020 (as opposed to the amendment and restatementdate of such Employment Agreements in February 2018)this proxy statement for the table on page 58) 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, 20172020 Qualifying Termination date and, where applicable, using the closing price of our common stock of $71.02$81.95 on December 29, 2017,31, 2020, 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 | — | — | — | — | ||||||||||
2018 Proxy Statement 43
| Awards | |||||||
| Salary and | Acceleration / | ||||||
| Name | Trigger | Bonus | Benefits | Extension | Total | ||
| Brian Humphries | Qualifying Termination Prior to Change in Control | $3,080,044 | — | $ 3,005,762 | $ 6,085,806 | ||
| Qualifying Termination Following Change in Control | $6,160,089 | — | $ 8,337,593 | $14,497,682 | |||
| Death or Disability | $2,053,363 | — | $ 8,337,593 | $10,390,956 | |||
| Retirement | — | — | — | — | |||
| Termination for Other Reasons | — | — | — | — | |||
| Jan Siegmund | Qualifying Termination Prior to Change in Control | $1,600,000 | — | $ 2,676,651 | $ 4,276,651 | ||
| Qualifying Termination Following Change in Control | $3,200,000 | — | $ 5,382,968 | $ 8,582,968 | |||
| Death or Disability | $ 800,000 | — | $ 5,382,968 | $ 6,182,968 | |||
| Retirement | — | — | — | — | |||
| Termination for Other Reasons | — | — | — | — | |||
| Karen McLoughlin | Qualifying Termination Prior to Change in Control | — | — | — | — | ||
| Qualifying Termination Following Change in Control | — | — | — | — | |||
| Death or Disability | — | — | — | — | |||
| Retirement | — | $ 19,753 | $ 3,656,691 | $ 3,676,444 | |||
| Termination for Other Reasons | — | — | — | — | |||
| Becky Schmitt | Qualifying Termination Prior to Change in Control | $1,300,000 | $ 11,302 | $ 2,726,804 | $ 4,038,106 | ||
| Qualifying Termination Following Change in Control | $2,600,000 | $ 11,302 | $ 6,617,544 | $ 9,228,846 | |||
| Death or Disability | $ 650,000 | — | $ 6,617,544 | $ 7,267,544 | |||
| Retirement | — | — | — | — | |||
| Termination for Other Reasons | — | — | — | — | |||
| Malcolm Frank | Qualifying Termination Prior to Change in Control | $1,191,667 | $ 18,330 | $ 2,443,257 | $ 3,653,254 | ||
| Qualifying Termination Following Change in Control | $1,300,000 | $ 18,330 | $ 5,708,309 | $ 7,026,639 | |||
| Death or Disability | — | — | — | — | |||
| Retirement | — | — | — | — | |||
| Termination for Other Reasons | — | — | — | — | |||
| Matthew Friedrich | Qualifying Termination Prior to Change in Control | $1,300,000 | — | $ 2,124,472 | $ 3,424,472 | ||
| Qualifying Termination Following Change in Control | $2,600,000 | — | $ 4,436,609 | $ 7,036,609 | |||
| Death or Disability | $ 650,000 | — | $ 4,436,609 | $ 5,086,609 | |||
| Retirement | — | — | — | — | |||
| Termination for Other Reasons | — | — | — | — | |||
Ms. McLoughlin. Ms. McLoughlin retired on December 31, 2020. In accordance with the applicable terms of the company’s retirement, death and disability policy, she was entitled to retirement benefits upon her departure (see page 47). Mr. Friedrich. Mr. Friedrich left the company in January 2021 and, as such, does not remain eligible for the benefits listed in this table. This table provides the SEC-required information as of December 31, 2020. | ||
| 2021 Proxy Statement | 59 |
 |
| ||||
| Ratification of Appointment of Independent Registered Public Accounting Firm | ||||
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021. WHAT ARE YOU VOTING ON? | ||||
 | shareholders. | |||
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 Chairpersonchair are directly involved in the selection of the lead audit partner at the start of each rotation.
To ensure continuing audit independence:
The members of the Audit Committee 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.
44 Cognizant Technology Solutions Corporation
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
Fees
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 | |||||
| Audit Fees | $ | 7,681,100 | $ | 6,421,600 | |||
| Audit-Related Fees | $ | 3,486,100 | $ | 4,063,100 | |||
| Tax Fees | $ | 879,400 | $ | 710,200 | |||
| All Other Fees | $ | 238,000 | $ | 911,000 | |||
| Total Fees | $ | 12,284,600 | $ | 12,105,900 | |||
Audit Fees
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), the review of our interim quarterly financial statements, and other professional services provided in connection with statutory and regulatory filings or engagements. The decrease in audit fees from 2016 to 2017 was principally due to a reduction in fees in 2017 related to matters that are the subject of the Company’s ongoing internal investigation that is being conducted under the oversight of the Audit Committee, with the assistance of outside counsel, focused on whether certain payments relating to Company-owned facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act and other applicable laws.
Audit-Related Fees
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 concerning financial accounting and reporting matters, and independent assessment of controls related to outsourcing services. The increase in audit-related fees from 2016 to 2017 was principally due to services related to the independent assessment of the Company’s controls related to outsourcing services.
Tax Fees
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.
All Other Fees
For 2017, other fees primarily relate to advisory fees for immigration services outside the United States and benchmarking services. For 2016, other fees primarily relate to advisory fees for immigration services.
Audit Committee Pre-Approval Policy and Procedures
The Audit Committee has adopted policies and procedures relating to the approval of all audit and non-audit servicesa policy that are to be performed by our independent registered public accounting firm. This policy 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 Audit Committeecommittee or the engagement is entered into pursuant to one of the pre-approval procedures described below.
From time to time, the Audit Committeecommittee 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 Audit Committeecommittee has also delegated to Maureen Breakiron-Evans, the current Audit Committee Chair,its chair 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 Audit Committeecommittee meeting. During 20162019 and 2017,2020, the Audit Committeecommittee approved all services provided to us by PwC that are subject to the pre-approval policies and procedures described above.in accordance with our pre-approval policy.
46 Cognizant Technology Solutions Corporation
| 60 | Cognizant |
|
Overview
Our stockholders approved the ESPP in 2013. On February 27, 2018, the Board adopted the Amended and Restated ESPP upon the recommendation of the Compensation Committee and following a review by the Compensation Committee and 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
Audit MattersFrequently Asked Questions About the Amended and Restated ESPP > Auditor Fees
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?Auditor Fees
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. In addition, the Board may, without the consent of the participants, amend the Amended and Restated ESPP at any time, provided 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 may 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 participants 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 tosummarizes the fees of PwC, our independent registered public accounting firm, for each of our NEOsthe last two fiscal years.
| Fee Category | 2019 | 2020 | ||
| Audit Fees | $ 5,990,300 | $ 6,147,400 | ||
| Audit-Related Fees | 1,325,600 | 5,775,300 | ||
| Tax Fees | 1,240,300 | 641,600 | ||
| All Other Fees | 596,300 | 79,200 | ||
| Total | $ 9,152,500 | $ 12,643,500 | ||
Audit Fees. Audit fees consist of fees for the audit of our consolidated financial statements (including 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. Audit-Related Fees. Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and are not reported under “Audit Fees”, including independent assessments for service organization control reports and acquisition financial due diligence services. The increase in audit-related fees from 2019 to 2020 was principally due to increased financial due diligence services related to business combinations, with a higher number of service organization control reports also contributing to the increase. Tax Fees. 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 2019 to 2020 was principally related to decreased local tax advisory services. All Other Fees. All other fees consist of fees not reported under the categories above and primarily include immigration services, assessment of non-financial metrics and documentation, non-financial due diligence services related to acquisitions and accounting research software. The decrease from 2019 to 2020 is attributable to a reduction in fees for non-financial due diligence services related to acquisitions. | ||
The Audit Committee has furnished 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 at www.cognizant.com. The members of the committee are independent directors, as defined in its charter and the other individualsrules of The Nasdaq Stock Market LLC. The committee held 15 meetings during 2020. Management is responsible for establishing and groups indicated,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 numbercompany’s annual financial statements and management’s assessment of sharesthe effectiveness of our common stock purchased under the ESPP from April 1, 2004 through Marchcompany’s internal control over financial reporting. The 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, 2018,2020 and has discussed these financial statements with management and the weighted average purchase price paid per share.company’s auditor. The Company’s non-employee directors are not entitledcommittee has also received from, and discussed with, the company’s auditor various communications that such auditor is required to participateprovide to the committee, including the matters required to be discussed by, as may be modified or supplemented by, the PCAOB and the SEC. The company’s auditor also provided the committee with written disclosures and the letter from the auditor required by the applicable requirements of the PCAOB regarding the auditor’s communications with the committee concerning independence. In addition, the committee discussed with the auditor 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 representations and information provided by management and the auditor, the committee recommended to the board that the audited financial statements be included 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, 2017.2020.
| 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 | ||||
By the Audit Committee of the Board of Directors of Cognizant Technology Solutions Corporation
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| JOHN DINEEN | LEO S. MACKAY, | JOSEPH M. VELLI | SANDRA S. | |
| JR. | WIJNBERG | |||
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2018 Proxy Statement 51
| 2021 Proxy Statement | 61 |
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The Summary of Proposed Amendment
The Certificate 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):
| WHAT ARE YOU VOTING ON? |
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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.
2018 Proxy Statement 53
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
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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.Shareholder Proposals
PROPOSAL 6 — RIGHT TO ACT BY WRITTEN CONSENT
56 Cognizant Technology Solutions Corporation
The Board’s Statement of Opposition
The BoardUNANIMOUSLY recommends that stockholders voteAGAINST this proposal for the following reasons:
2018 Proxy Statement 572021 Annual Meeting
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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 IMPROVEMENT
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58 Proposal 4 – Adopt a Mainstream Shareholder Right – Written Consent
Shareholders request that our board of directors take the necessary steps to permit written consent by the shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. This includes shareholder ability to initiate any appropriate topic for written consent.
This proposal topic won 95%-support at Dover Corporation and 88%-support at AT&T. Written consent allows shareholders to vote on important matters, such as electing new directors that can arise between annual meetings.
A shareholder right to act by written consent still affords Cognizant Technology Solutions Corporationmanagement strong deference for any lingering status quo management mentality during the current rapidly changing business environment. Any action taken by written consent would still need 58% supermajority approval from the shares that normally cast ballots at the CTSH annual meeting to equal a majority from the CTSH shares outstanding.
And Mr. Zein Abdalla, Chair of the CTSH Governance Committee, seemed to be totally unaware as late as 2020 that written consent can be structured so that all shareholders get notice.
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.
The year 2020 marked the near extinction of in-person shareholder meetings. The new style of tightly controlled online shareholder meetings makes the shareholder right to act by written consent all the more important because almost everything is optional with online shareholder meetings. For instance management reporting on the state of the company is optional. Also management answers to shareholder questions are optional even if management misleadingly asks for questions.
The Goodyear shareholder meeting was spoiled by a trigger-happy management mute button that was used to quash constructive shareholder criticism. AT&T would not even allow shareholders to speak.
Please see:
Goodyear’s virtual meeting creates issues with shareholder
https://www.crainscleveland.com/manufacturing/goodyears-virtual-meeting-creates-issues-shareholder
Please see:
AT&T investors denied a dial-in as annual meeting goes online
https://whbl.com/2020/04/17/att-investors-denied-a-dial-in-as-annual-meeting-goes-online/1007928/
And the CTSH brand of a shareholder right to call a special meeting is deceptive because all shares owned for less than one unbroken year are 100% disqualified.
Now more than ever shareholders need to have the option to take action outside of a shareholder meeting and send a wake-up call to management, if need be, since tightly controlled online shareholder meetings are a shareholder engagement wasteland.
| Please vote yes: Adopt a Mainstream Shareholder Right - Written Consent - Proposal 4 |  |
The Board’s Statement of Opposition
Substantially identical proposals have been rejected by the company’s shareholders at six of the last eight annual meetings, with 83% of shareholders voting against the proposal at the 2020 annual meeting. 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.
| 62 | Cognizant |
The Board’s Statement of OppositionShareholder Proposals
The Board > UNANIMOUSLY recommends that stockholders voteAGAINST this proposal for the following reasons:
2018 Proxy Statement 59
StockholderShareholder Proposals and Nominees for the 20192022 Annual Meeting
Stockholder Proposals
SEC rulesThe company’s current practice with respect to shareholder action by written consent is consistent with market practice. An overwhelming majority of S&P 500 companies, 69%, either do not permit stockholdersshareholders 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 company’s existing corporate governance practices already ensure shareholder democracy and board accountability. 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 company’s stock for at least 3 years may submit proposalsup to 2 director nominees or 25% of the board, whichever is greater, for inclusion in our proxy statement ifstatement.
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 stockholderboard 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 proposal meetopportunity 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 requirements specifiedmeeting. 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 Rule 14a-8 under the Exchange Act (“Rule 14a-8”).best interest of shareholders.
Shareholder Proposals and Nominees for the 2022 Annual Meeting
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.
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Other Proposals or Director Nominees
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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Where | |||||
What | Proposals must conform to | ||||
| 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. | ||||
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.
60 Cognizant Technology Solutions Corporation
| 2021 Proxy Statement | 63 |
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, 2018,1, 2021, 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 our Class A common stock (“common stock”) as of April 5, 2021, 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 585,898,388528,532,227 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.on pages 4 and 5. The Boardboard recommends that you vote your shares as indicated below.on pages 4 and 5. 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 on pages 4 and 5. 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.
2018 Proxy Statement 61
Notice of Internet Availability of Proxy Materials
As permitted by SEC rules, Cognizant is making this proxy statement and its 20172020 Annual Report available to certain of its stockholdersshareholders electronically via the Internet. On or about April 20, 2018,21, 2021, 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 20172020 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 20172020 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, 20172020 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 Meetingmeeting notice 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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Additional Information > Annual Meeting Q&A
Communications to the Board from Shareholders
Under procedures approved by a majority of our independent directors, our chair, 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 chair, 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” on page 73.
Questions and Answers About the 20182021 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, 2018.5, 2021. 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 585,898,388528,532,227 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.
To attend and submit your questions during the virtual meeting, please visit www.virtualshareholdermeeting.com/CTSH2021. 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 chair 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.
| 2021 Proxy Statement | 65 |
Will there be a question and answer session during the annual meeting?
As part of the annual meeting, we will hold a live question and answer session, during which we intend to answer appropriate questions submitted during the meeting that are pertinent to the company and the meeting matters. If there are matters of individual concern to a shareholder and not of general concern to all shareholders, or if a question posed was not otherwise answered, we provide an opportunity for shareholders to contact us separately after the meeting through our investor relations website (see page 73). Only shareholders that have accessed the annual meeting as a shareholder (rather than a “Guest”) by following the procedures outlined in “How do I join the annual meeting live webcast?” on page 65 will be permitted to submit questions during the annual meeting. Each shareholder is limited to no more than two questions. Questions should be succinct and only cover a single topic. We will not address questions that are, among other things:
| • | not pertinent to the business of the company or to the business of the annual meeting; |
| • | related to material non-public information of the company, including the status or results of our business since our last Quarterly Report on Form 10-Q; |
| • | related to any pending, threatened or ongoing litigation; |
| • | related to personal grievances; |
| • | derogatory references to individuals or that are otherwise in bad taste; |
| • | substantially repetitious of questions already made by another shareholder; |
| • | in excess of the two question limit; |
| • | in furtherance of the shareholder’s personal or business interests; or |
| • | out of order or not otherwise suitable for the conduct of the annual meeting as determined by the chair of the meeting or secretary in their reasonable judgment. |
Additional information regarding the question and answer session will be available in the “Rules of Conduct” available on the annual meeting webpage for shareholders that have accessed the annual meeting as a shareholder (rather than a “Guest”) by following the procedures outlined above in “How do I join the annual meeting live webcast?” on page 65.
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.
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:
| 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.May 31, 2021.
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:vote by:
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.annual meeting.
2018 Proxy Statement 63
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,broker.
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Additional Information > Cognizant’s Annual Report on Form 10-K
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 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.other inquiries to our secretary. See “Helpful Resources” on page 73 for how to contact our secretary.
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 on page 61,pages 4 and 5, 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?
| Effect of Abstentions | ||||
| Proposal | Votes required | 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.
64 Cognizant Technology Solutions Corporation
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.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.
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, 2017,2020 (“2020 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, 2018,5, 2021, without charge, upon written request addressed to our Secretary.secretary. See “Helpful Resources” on page 73. A reasonable fee will be charged for copies of exhibits. You may also may access this proxy statement and our 2020 Annual Report on Form 10-K atwww.proxyvote.com. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 is also available and atwww.cognizant.com. www.cognizant.com.
Non-GAAP Financial Measures and Forward-Looking Statements
| 2021 Proxy Statement | 67 |
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. 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 measures used by other companies. In addition, these non-GAAP measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of Cognizant’s non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.
Our non-GAAP Income from Operations and non-GAAP Operating Margin exclude stock-based compensation expense, acquisition-related charges and, in 2017, realignment charges. Our definition of non-GAAP 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. 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.
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into the operating results of the Company. For our internal management reporting and budgeting purposes, we use non-GAAP financial measures for financial and operational 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 these costs provides a meaningful supplemental measure for investors to evaluate our financial performance. Accordingly, we believe that the presentation of non-GAAP Income from Operations, non-GAAP Operating Margin and non-GAAP EPS, when read in conjunction with our reported GAAP results, 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 measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and exclude costs that are recurring, namely stock-based compensation expense, certain acquisition-related charges, and 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 non-GAAP Income from Operations, non-GAAP Operating Margin and non-GAAP EPS to allow investors to evaluate such non-GAAP financial measures.
2018 Proxy Statement 65
Reconciliation to GAAPForward-Looking Statements and Non-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.
| ($ 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 | ||||||||||
|
| 2015 | 2016 | 2017 | |||||||
| Cost of revenues | $ | 39 | $ | 53 | $ | 55 | |||
| Selling, general and administrative expenses | $ | 153 | $ | 164 | $ | 166 | |||
| |
| |
| |
|
| 2015 | 2016 | 2017 | |||||||
| Non-GAAP income tax benefit (expense) related to: | |||||||||
| Stock-based compensation expense | $ | 46 | $ | 49 | $ | 101 | |||
| Acquisition-related charges | $ | 43 | $ | 46 | $ | 48 | |||
| Realignment charges | — | — | $ | 25 | |||||
| Foreign currency exchange gains (losses) | $ | 2 | $ | 5 | $ | 10 | |||
| |
|
66 Cognizant Technology Solutions Corporation
| |
|
Forward-Looking Statements
This proxy statement and the letter to stockholdersshareholders 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 include, but are not limited to, express or implied forward-looking statements relating to our expectations regarding our company vision and strategy, the growth of our business and our anticipated financial performance. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond the Company’sour 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, legal, reputational and financial risks resulting from cyberattacks, the effectiveness of business continuity plans during the COVID-19 pandemic, 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 the Company’sour most recent Annual Report on Form 10-K and other filings with the SEC. The CompanySecurities and Exchange Commission. 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
Portions of our disclosure include non-GAAP 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 our non-GAAP financial measures to the corresponding GAAP measures, set forth below, should be carefully evaluated.
In 2018, Proxy Statement 67we announced a plan to modify our non-GAAP financial measures. Our historical non-GAAP financial measures, non-GAAP operating margin, non-GAAP income from operations and non-GAAP diluted earnings per share (EPS), excluded stock-based compensation expense, acquisition-related charges and unusual items. Our non-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 and the tax impact of 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 company provides enhanced transparency into our operating results. For our internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational 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 certain costs provides a meaningful supplemental measure for investors to evaluate our financial performance. We believe that the presentation of our non-GAAP financial measures along with reconciliations to the most comparable GAAP 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 such 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 financial measures to allow investors to evaluate such non-GAAP financial measures.
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Cognizant Technology Solutions Corporation2004 Employee Stock Purchase Plan(as Amended and Restated Effective as
Reconciliation to GAAP Financial Measures
The following table presents a reconciliation of February 27, 2018)each non-GAAP financial measure to the most comparable GAAP measure for the years indicated
Article 1.Definitions
| (Dollars in millions, except per share data) | 2018 | % of Revenues | 2019 | % of Revenues | 2020 | % of Revenues | ||||||||||||||||||||
| GAAP income from operations and operating margin | $ | 2,801 | 17.4 | % | $ | 2,453 | 14.6 | % | $ | 2,114 | 12.7 | % | ||||||||||||||
| Realignment charges1 | 19 | 0.1 | 169 | 1.0 | 42 | 0.3 | ||||||||||||||||||||
| 2020 Fit for Growth Plan restructuring charges2 | — | — | 48 | 0.3 | 173 | 1.0 | ||||||||||||||||||||
| COVID-19 charges3 | — | — | — | — | 65 | 0.4 | ||||||||||||||||||||
| Incremental accrual related to the India Defined Contribution Obligation 4 | — | — | 117 | 0.7 | — | — | ||||||||||||||||||||
| Initial funding of Cognizant U. S. Foundation5 | 100 | 0.6 | — | — | — | — | ||||||||||||||||||||
| Adjusted income from operations and adjusted operating margin | $ | 2,920 | 18.1 | % | $ | 2,787 | 16.6 | % | $ | 2,394 | 14.4 | % | ||||||||||||||
| Stock-based compensation expense 6 | 267 | 1.6 | — | 14 | — | 14 | — | 14 | — | 14 | ||||||||||||||||
| Acquisition-related charges7 | 158 | 1.0 | — | 14 | — | 14 | — | 14 | — | 14 | ||||||||||||||||
| Non-GAAP income from operations and non-GAAP operating margin | $ | 3,345 | 20.7 | % | — | 14 | — | 14 | — | 14 | — | 14 | ||||||||||||||
| GAAP diluted EPS | $ | 3.60 | $ | 3.29 | $ | 2.57 | ||||||||||||||||||||
| Effect of realignment charges, 2020 Fit for Growth Plan restructuring charges, COVID-19 charges, incremental accrual related to the India Defined Contribution Obligation and initial funding of Cognizant U. S. Foundation, as applicable, pre-tax | 0.20 | 0.60 | 0.52 | |||||||||||||||||||||||
| Effect of non-operating foreign currency exchange losses (gains), pre-tax 8 | 0.26 | 0.11 | 0.22 | |||||||||||||||||||||||
| Tax effect of above adjustments9 | (0.03 | ) | (0.15 | ) | (0.15 | ) | ||||||||||||||||||||
| Tax on Accumulated Indian Earnings10 | — | — | 0.26 | |||||||||||||||||||||||
| Effect of the equity method investment impairment11 | — | 0.10 | — | |||||||||||||||||||||||
| Effect of the India Tax Law12 | — | 0.04 | — | |||||||||||||||||||||||
| Effect of net incremental income tax expense related to the Tax Reform Act13 | (0.01 | ) | — | — | ||||||||||||||||||||||
| Adjusted diluted EPS | $ | 4.02 | $ | 3.99 | $ | 3.42 | ||||||||||||||||||||
| Effect of stock-based compensation expense and acquisition-related charges, pre-tax | 0.73 | 0.75 | — | 14 | ||||||||||||||||||||||
| Tax effect of stock-based compensation expense and acquisition-related charges9 | (0.18 | ) | (0.16 | ) | — | 14 | ||||||||||||||||||||
| Non-GAAP diluted EPS | $ | 4.57 | $ | 4.58 | — | 14 | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 2,592 | $ | 2,499 | $ | 3,299 | ||||||||||||||||||||
| Purchases of property and equipment | (377 | ) | (392 | ) | (398 | ) | ||||||||||||||||||||
| Free cash flow | $ | 2,215 | $ | 2,107 | $ | 2,901 | ||||||||||||||||||||
| 1 | As part of our realignment program, we incurred costs associated with our 2019 CEO transition and the departure of our former president, employee separation costs, employee retention costs and professional fees, as applicable. See Note 4 to the Consolidated Financial Statements in our 2020 Annual Report. |
| 2 | As part of our 2020 Fit for Growth plan, we incurred certain employee separation, employee retention and facility exit costs and other charges, as applicable. See Note 4 to the Consolidated Financial Statements in our 2020 Annual Report. |
| 3 | In 2020, we incurred costs in response to the COVID-19 pandemic, including a one-time bonus to our employees at the designation of associate and below in India and the Philippines and certain costs to enable our employees to work remotely and provide medical staff and additional cleaning services for our facilities. Most of the costs related to the pandemic are reported in “Cost of revenues” in our Consolidated Statements of Operations in our 2020 Annual Report. |
| 4 | 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 2020 Annual Report. |
| 5 | 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 Statements of Operations in our 2020 Annual Report. |
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68 Cognizant Technology Solutions Corporation
| For the years ended | ||||||||||||
| December 31, | ||||||||||||
| (in millions) | 2018 | 2019 | 2020 | |||||||||
| Cost of revenues | $ | 62 | —14 | —14 | ||||||||
| Selling, general and administrative expenses | 205 | —14 | —14 | |||||||||
| 7 | Acquisition-related charges include amortization of purchased intangible assets included in the |
| 8 | Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in “Foreign currency exchange gains (losses), net” in our Consolidated Statements of Operations in our 2020 Annual Report. |
| 9 | Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income: |
| For the years ended | ||||||||||||
| December 31, | ||||||||||||
| (in millions) | 2018 | 2019 | 2020 | |||||||||
| Non-GAAP income tax benefit (expense) related to: | ||||||||||||
| Realignment charges | $ | 5 | $ | 43 | $ | 11 | ||||||
| 2020 Fit for Growth Plan restructuring charges | — | 13 | 45 | |||||||||
| COVID-19 charges | — | — | 17 | |||||||||
| Foreign currency exchange gains and losses | (12 | ) | (1 | ) | 6 | |||||||
| Incremental accrual related to the India Defined Contribution Obligation | — | 31 | — | |||||||||
| Initial funding of Cognizant U.S. Foundation | 28 | — | — | |||||||||
| Stock-based compensation expense | 66 | 32 | —14 | |||||||||
| Acquisition-related charges | 38 | 55 | —14 | |||||||||
| 10 | In 2020, we reversed our indefinite reinvestment assertion on Indian earnings accumulated in prior years and recorded $140 million in income tax expense. See Note 11 to the Consolidated Financial Statements in our 2020 Annual Report. |
| 11 | In 2019, we recorded an impairment charge of $57 million on one of our equity investments as further described in Note 5 to the Consolidated Financial Statements in our 2020 Annual Report. |
| 12 | In 2019, the Government of India enacted a new tax regime (“India Tax Law”) effective retroactively to April, 2019 that enables domestic companies to elect to be taxed at a lower income tax rate of 25.17%, as compared to the current income tax rate of 34.94%. Once a company elects into the lower income tax rate, a company may not benefit from any tax holidays associated with Special Economic Zones and certain other tax incentives, including Minimum Alternative Tax credit carryforwards, and may not reverse its election. As a result of the enactment of the India Tax Law, we recorded a one-time net income tax expense of $21 million due to the revaluation to the lower income tax rate of our India net deferred income tax assets that we expected to reverse after we elected into the new tax regime. |
| 13 | In 2018, we finalized our calculation of the one-time tax expense related to the enactment of the Tax Cuts and Jobs Act (“Tax Reform Act”) and recognized a $5 million income tax benefit, which reduced our provision for income taxes. |
| 14 | Reconciliations, and the associated inputs to such reconcilliations, to 2019 and 2020 non-GAAP income from operations, 2019 and 2020 non-GAAP operating margin and 2020 non-GAAP diluted EPS are not presented as the 2019 and 2020 numbers are not presented in this proxy statement or |
| 70 | Cognizant |
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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. AdministrationTable of Contents
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
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2018 Proxy Statement 69
Article 7. Election to ParticipateHelpful Resources
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 Corporation
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
| Weblinks | ||
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
Weblinks
| Board of Directors | ||
| Cognizant Board | https://www.cognizant.com/ | |
| Board Committee Charters | ||
| Audit Committee | https://www.cognizant.com/about-cognizant-resources/ | |
| Finance and Strategy Committee | https://www.cognizant.com/about-cognizant-resources/finance-and-strategy-committee-charter.pdf | |
| Management Development and | https://www.cognizant.com/about-cognizant-resources/management-development-and- | |
| Compensation Committee | ||
| Governance and Sustainability Committee | https://www.cognizant.com/ | |
| Financial Reporting | ||
| 2020 Annual Report | ||
| Cognizant | ||
| Corporate Website | https://www.cognizant.com/ | |
| https://www.cognizant.com/ | ||
| Investor Relations | ||
| Diversity & Inclusion | https://www.cognizant.com/about-cognizant/diversity-and-inclusion | |
| Public Policy | https://www.cognizant.com/about-cognizant/public-policy | |
| Sustainability | https://www.cognizant.com/about-cognizant/sustainability | |
| Governance Documents | ||
| By-laws | https://www.cognizant.com/about-cognizant-resources/ | |
| Certificate of Incorporation | https://www.cognizant.com/about-cognizant-resources/ | |
| 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 Suite 36, 6th Floor | To Request Copies of the Internet Notice or Proxy Materials Broadridge Financial Solutions, Inc. For Questions or Assistance Voting Morrow Sodali LLC (Proxy Solicitor for the Company) Shareholders in the United States call toll-free: |
| 2021 Proxy Statement | 73 |
|
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONGLENPOINTE CENTRE WEST500300 FRANK W. BURR BLVD.
SUITE 36, 6TH FLOOR
TEANECK, NJ 07666
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
with your smartphone or tablet
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on May 31, 2021. Have your proxy card in hand when you access the day before the cut-off date or meeting date. Followweb site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like- Go to reducewww.virtualshareholdermeeting.com/CTSH2021
You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and vote during the meeting when prompted, indicatethe polls are open. We recommend, however, that you agreevote before the meeting even if you plan to receive or access proxy materials electronicallyparticipate in future years.the meeting, since you can change your vote during the meeting by voting when the polls are open. Have the information that is printed in the box marked by the arrow ➔XXXX XXXX XXXX XXXX available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.on May 31, 2021. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
| KEEP THIS PORTION FOR YOUR RECORDS | ||||
DETACH AND RETURN THIS PORTION ONLY |
| The | ||||||||||
| 1. | Election of | |||||||||
| Nominees | For | Against | Abstain | |||||||
| 1a. | Zein Abdalla | ☐ | ☐ | ☐ | ||||||
| 1b. | ☐ | ☐ | ☐ | |||||||
| 1c. | Maureen Breakiron-Evans | ☐ | ☐ | ☐ | ||||||
| 1d. | ☐ | ☐ | ☐ | |||||||
| 1e. | John M. Dineen | ☐ | ☐ | ☐ | ||||||
| 1f. | ☐ | ☐ | ☐ | |||||||
| 1 | ||||||||||
| Leo S. Mackay, Jr. | ☐ | ☐ | ☐ | |||||||
| 1 | Michael Patsalos-Fox | ☐ | ☐ | ☐ | ||||||
| 1 | Joseph M. Velli | ☐ | ☐ | ☐ | ||||||
| 1j. | 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, 2021. | ☐ | ☐ | ☐ | |||||
| 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. | ☐ | ☐ | ☐ | |||||
Note: To transact such other business as may properly come before the meeting or any continuation, postponement or adjournment thereof. | |||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |||||
| |||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date |
| Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS OF
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CLASS A COMMON STOCK
JUNE 5, 20181, 2021
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,Jan Siegmund, Chief Financial Officer of the Company,company, John Kim, 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 2021 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