8-KLeadership ChangesOther EventsExhibits & Filings

COGNIZANT TECHNOLOGY SOLUTIONS CORP 8-K Report, Executive Changes (Dec 7, 2007)

Filed December 7, 2007For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation (CTSH) filed an 8-K on December 7, 2007, primarily detailing two significant corporate actions. Firstly, the Board of Directors appointed John Fox as a Class III Director to fill an existing vacancy. Mr. Fox brings extensive experience from Deloitte & Touche LLP and its consulting arm, and has been deemed independent by the Board. His appointment is effective until the 2009 Annual Meeting of Stockholders, and he will receive standard Board compensation, including a grant of 25,000 nonqualified stock options with a two-year vesting schedule. Secondly, the company announced an increase of $100 million to its existing stock repurchase program. This augmentation, to be funded by cash on hand and operational cash flow, signals management's confidence in the company's financial position and its commitment to returning value to shareholders. Additionally, the filing disclosed performance unit awards granted to certain named executive officers, designed to align management's goals with stockholder interests through performance-based vesting tied to annual net sales growth targets over the next three fiscal years.

Key Highlights

  • 1Appointment of John Fox as a new independent Director to the Board, effective until the 2009 Annual Meeting.
  • 2John Fox brings significant prior experience from Deloitte & Touche LLP.
  • 3Mr. Fox was granted 25,000 stock options vesting over two years.
  • 4Increase of $100 million authorized for the company's stock repurchase program.
  • 5The stock repurchase program increase will be funded by existing cash and cash generated from operations.
  • 6Performance Unit awards granted to key executives (Francisco D’Souza, Gordon J. Coburn, Rajeev Mehta, Ramakrishnan Chandrasekaran) tied to future net sales growth targets.
  • 7The performance units vest based on achieving specific annual net sales growth percentages for calendar years 2008, 2009, and 2010, and continued employment.

Frequently Asked Questions

John Fox, age 65, was appointed to Cognizant's Board of Directors as a Class III Director to fill an existing vacancy. He brings substantial experience from his prior roles as Vice Chairman of Deloitte & Touche LLP and Global Director of Strategic Clients for Deloitte Consulting. His appointment is intended to strengthen the Board's expertise.

The authorization of an additional $100 million for share repurchases indicates the company's management believes its stock is undervalued and that repurchasing shares is a prudent use of capital. This action can increase earnings per share and signal financial strength and confidence in future performance to investors.

Performance Units were granted to senior executives, including the CEO and CFO, with vesting contingent on achieving specific annual net sales growth targets for the years ending December 31, 2008, 2009, and 2010. The number of shares vesting is determined by these growth percentages, with straight-line interpolation for performance between targets, and requires the executive to remain employed with the company through December 31, 2010.

The grant of 25,000 nonqualified stock options to John Fox serves as part of his compensation for joining the Board. The options have an exercise price equal to the fair market value on the grant date and vest over two years (50% after one year, 50% after two years), aligning his financial interests with the long-term performance and stock price appreciation of Cognizant.