Cognizant CEO saw performance bonus slip by 20% on slow business growth

Joins rival Infosys' CEO Vishal Sikka in losing incentives as IT firms struggle with business shifts

Cognizant Technology Solutions chief executive Francisco D’Souza saw his performance bonus dip 20 per cent in 2016 as the software exporter slipped on targets and faced investors’ ire over its business model.

The US-headquartered firm with a large offshore base grew its revenue 8.6 per cent to $13.49 billion in 2016, lower than its projection of 10-14 per cent.  

D'Souza saw his cash payout reduce to $450,332 from the targeted $564,655 for the year, according to regulatory filings on Friday. 

However, his base pay increased three per cent to $664,300 for 2016. Sixty three per cent of his annual compensation is linked to performance.

Besides slowing business, Cognizant saw activist investor Elliott Management asking for change in business model, asking for firm to repay investors’ cash, and seeking change in board composition to address future challenges. In January, the company complied with the plea. 

Senior executives of Cognizant got lesser variable pay due to weak performance against its own target. In 2015, D'Souza got 140 per cent of his variable pay due to 21 per cent growth in revenue.

In 2016, Cognizant performed posted 8.6 per cent growth in revenues, better than Tata Consultancy Services (6.2 per cent) and Infosys (7.4 per cent). 

D'Souza joins Vishal Sikka, chief executive of Infosys, in taking home smaller package due to shift in business conditions.

Sikka’s annual compensation dropped 40 per cent on poor business performance, even as he struggled to push for large deals.

Sikka took home $6.7 million in FY17, against the contracted $11 million, as he slipped on his target of double-digit growth. Sikka has a fixed pay of $3 million, the remaining being variable, based on performance targets. He earned a compensation of $7.08 million in the previous financial year. 

Cognizant in its disclosure to the US regulator, said it is introducing a new incentive plan that would offer employees and directors stocks instead of cash, so that their performance is linked to overall organisation growth. 

The plan will be effective from June after shareholders’ approval.