Cognizant Technology Solutions rewarded its top management with hefty bonuses and executive compensation packages, after a stellar performance in 2015 when the Nasdaq-listed software services and consulting firm grew at a scorching pace and overshadowed Indian rivals such as Infosys and Tata Consultancy Services.
Chief Executive Francisco D'Souza and his top team received 142% of their target bonuses for the year, resulting in a significant spike to their annual pay packages.
This comes after the US-based company, which has most of its employees working out of India, exceeded its 2015 target with a 21% increase in revenue - its Indian rivals barely managed to grow in single digits in the year through March 2016.
D'Souza, who earned about $11 million in annual compensation in 2014, took home $11.95 million last year, making him the top paid CEO among peers such as Vishal Sikka of Infosys, N Chandrasekaran of TCS and Abidali Neemuchwala of Wipro.
"The compensation committee set the 2015 target awards for the named executives at a level equal to 85% of the named executives' base salaries," Cognizant said in the regulatory filing.
Based on the company's results, "the committee determined that performance under the annual cash incentive programme had been achieved at a level equal to 142% of the target award," it said.
Cognizant also introduced some changes to its performance shares units, or stock compensation, programme for top executives and said it would now move to a two-year performance measurement period, replacing the previous one-year clause.
"PSUs granted in 2015 utilise two weighted performance metrics measured during fiscal year 2016: revenue (75%) and non-GAAP EPS (25%). PSUs granted in prior years utilised a single performance metric (revenue)," Cognizant said.
PSUs granted in 2016 will continue to utilise the same two weighted performance metrics as in 2015 and, in addition, will move to a two-year performance measurement period with vesting of 1/3rd at 30 months and 2/3rds at 36 months, replacing the previous one-year performance measurement period and vesting of 1/3rd at 18 months and 2/3rds at 36 months," it said.
Top executives and veterans of the company such as President Gordon Coburn, finance chief Karen McLoughlin and Raj Mehta, who heads the core IT services business, also raked in handsome multi-million dollar packages for the year, including stock options and bonuses. Coburn, McLoughlin and Mehta took home $6.97 million, $3.7 million and $6.5 million, respectively.
"In 2015, the compensation committee established target long-term incentive compensation values that were, as compared to the values provided in 2014, approximately 3% higher for all of the named executives except Ms McLoughlin, for whom it was approximately 8% higher. The 3% increases were primarily to account for increases in the cost of living and general market trends, reflecting the fact that there were no major changes in the other factors mentioned above," Cognizant said.
To be sure, Cognizant's 2015 performance was buoyed by revenue from its Trizetto acquisition which added at least 5 to 6 percentage points to its overall growth. But even without that, Cognizant's growth comfortably eclipsed that of TCS, Wipro and Infosys.