Cognizant’s phenomenal performance in 2013 has prompted the Nasdaq-listed company to award its top five executives with dollar bonuses that are at approximately 163% of the target bonus amount.
The executives are CEO Francisco D’Souza, president Gordon Coburn, CFO Karen McLoughlin, executive vice-president Malcolm Frank and CEO of IT services Rajeev Mehta.
D’Souza and Coburn, for instance, had target bonuses of $516,800 and $491,300, but the compensation committee awarded them payouts of $844,812 and $803,127 respectively in 2013.
The bonus paid was decided based on three metrics which the company says are valued by its stockholders.
These are revenue (with a 50% weightage), earnings (40% weightage) and days sales outstanding (a measure of the average number of days a company takes to collect revenue after a sale has been made, with 10% weightage). “Due to the high growth objectives set for the revenue and earnings components, there was substantial uncertainty at the time the compensation committee established the performance goals for 2013 as to the likelihood of the company’s attainment of the targeted levels of performance,” a Cognizant filing with the US Securities and Exchange Commission (SEC) said.
The executives can earn a maximum of 200% of the target bonus amount and for performance below the threshold level, no bonus would be paid for a particular component.
Last year, Cognizant raised the revenue guidance twice to nearly $9 billion, achieving eventually a growth of 20.3% over 2012. This was substantially higher than the 12-14 % industry growth that Nasscom forecast for 2013-14 .
D’Souza had said that last year played out better than the company originally expected as it saw an uptick in spending on discretionary projects, particularly towards the middle of the year.
The US-based IT services firm has forecast a 16.5% revenue growth for 2014. Cognizant is betting big on newer technologies, newer markets and industries (such as public sector business and Latin America as a market).
“It’s very clear that we’re now in the midst of a once in a decade shift in the technology landscape. And the shift we are experiencing is propelled by a confluence of technologies: social, mobile, analytics and cloud, or SMAC.
In addition, development in areas like centre technologies, the internet of things, machine learning and 3D printing, promise to further disrupt the status quo in many industries,” said D’Souza in an investor call in February this year.
