8-KLeadership Changes

COGNIZANT TECHNOLOGY SOLUTIONS CORP 8-K Report, Executive Changes (Dec 4, 2012)

Filed December 4, 2012For Securities:CTSH

Summary

This 8-K filing from Cognizant Technology Solutions Corporation (CTSH) on December 4, 2012, primarily details the Compensation Committee's decision to grant restricted stock units (RSUs) and performance units to key executive officers. These grants, effective December 3, 2012, are designed to incentivize and retain top leadership by linking a portion of their compensation to the company's future performance and continued service. The RSUs vest over a three-year period, providing a steady reward for ongoing commitment. The performance units are more directly tied to specific 2013 revenue milestones, with vesting contingent on achieving revenue targets ranging from $8.22 billion for 50% vesting to $9.175 billion for 200% vesting. This structure aims to align executive interests with shareholder value creation through revenue growth.

Key Highlights

  • 1Cognizant granted Restricted Stock Units (RSUs) to executive officers on December 3, 2012.
  • 2RSUs vest in quarterly installments over three years, fully vesting by December 3, 2015.
  • 3Performance Units were also awarded to executive officers, contingent on achieving specific 2013 revenue milestones.
  • 4Vesting of Performance Units ranges from 0% to 200% based on 2013 revenue between less than $8.22 billion and $9.175 billion.
  • 5The top executive receiving the largest grants is CEO Francisco D'Souza, followed by President Gordon J. Coburn.
  • 6All grants were made under the Company's 2009 Incentive Compensation Plan.
  • 7The Compensation Committee retains discretion in determining the achievement of performance milestones.

Frequently Asked Questions

The primary purpose of these grants is to incentivize and retain key executive officers by linking a portion of their compensation to the company's performance and their continued service. The performance units, in particular, are designed to align executive goals with achieving specific revenue targets for 2013.

The Restricted Stock Units (RSUs) will vest in quarterly installments over three years, with full vesting expected by December 3, 2015, provided the executive remains employed. The Performance Units will vest based on the achievement of 2013 revenue milestones and are subject to additional service requirements at 18-month and 36-month anniversaries of the grant date.

The vesting of Performance Units is tied to 2013 revenue: 0% vesting if revenue is less than $8.22 billion, 50% vesting if revenue reaches $8.22 billion, 100% vesting if revenue reaches $8.515 billion, and 200% vesting if revenue reaches $9.175 billion. Performance between these thresholds will be interpolated.

The Compensation Committee of the Board of Directors will determine the achievement and extent of the Performance Milestones based on the company's audited financial statements for the 2013 fiscal year. The Committee has sole discretion in this determination, subject to adjustments outlined in the Plan.