Cognizant CEO Francisco D'Souza's annual cash incentive dropped by 21% for 2016.
Cognizant CEO Francisco D’Souza’s annual cash incentive dropped by 21% for 2016. His target variable pay was set at $564,655, but he could net only $450,332 reflecting the company performance during the year. The Nasdaq listed IT services major paid a total compensation of $12.03 million to D’Souza for 2016 as compared to $11.95 million in 2015 revealing an almost negligible increase, according to the regulatory filings of Cognizant with US SEC. This compensation includes the salary, annual cash incentive and performance stock units. Cognizant follows a January-December financial year. In 2015, he had received a variable pay of $778,000, when the company grew by 21% in revenues. It had earlier indicated that the variable component of its employee compensation will be reduced in 2016 and that there will no 100% payment.
In 2016, his base salary rose by 3% to touch $664,300 as compared to $645,000 in 2015. According to the filings, the 3% rise is to reflect the increase in cost of living and general market trends. Cognizant closed calendar year 2016 with a revenue of $13.5 billion recording a growth of 8.6%. This represents a steep fall from 2015 when it recorded revenues of $12.42 billion. However, in the case of Rajeev Mehta, who was appointed as president of Cognizant in September 2016, one witnessed a 14% increase in base salary given his promotion.
His annual cash incentive, though, was reduced just like the CEO. The same pattern is also seen with CFO Karen McLoughlin. Cognizant’s variable payout for the employees based on the performance of 2016 will be in the range of 95%, 75% and 50%. This is a far cry from the times when the company often paid in excess of 100% and in some years going up to 200%. Cognizant is also planning to downsize its headcount by around 6,000 people as part of its annual appraisal exercise which ends in March. The company in a statement had said, “The company conducts regular performance reviews to ensure it has the right employee skill sets necessary to meet client needs and achieve its business goals.”
It also stated, “This process results in changes, including some employees transitioning out of the company. Any actions, as a result of this process, are performance-based and generally consistent with those we’ve made in previous years. In any given year, the numbers may bounce a percentage here and there, but resizing our employee base is a part of our standard practice.” Infosys CEO Vishal Sikka too has received only 61% of his total compensation of $11 million for FY17 given the financial performance of the company during the course of this fiscal. Sikka has received only $6.75 million (`43.2 crore) for FY17 which includes the basic salary, restricted stock units (RSUs), variable pay and stock options.