Cognizant: Why Cognizant's CEO didn't earn his full 137 Cr compensation package

Cognizant CEO Ravi Kumar's annual compensation for fiscal year 2024 rose to ₹70 crore ($8.2 million), as revealed in the company's recent filing with the US Securities and Exchange Commission (SEC). However, this figure fell notably short of his target compensation of ₹137 crore ($16.1 million), drawing attention to the evolving structure of executive pay in global technology firms. According to the filing, the gap between Kumar's actual and target earnings was primarily due to his Performance Share Unit (PSU) grants not having vested within the financial year. These PSUs, which are tied to long-term performance goals, are scheduled to vest only after specific criteria are met in future periods. As a result, the realised component of his 2024 pay package mainly consisted of base salary, Annual Cash Incentive (ACI), and quarterly vesting of Restricted Stock Units (RSUs). The company's Compensation Committee noted that Kumar's target direct compensation for 2024 was increased by 11% compared to the previous year. This decision was attributed to his performance in his first full year as CEO, and was designed to bring his remuneration more in line with peer CEOs across the industry. "Mr Kumar's target direct compensation for 2024 was set at $16.1 million to better align with compensation trends and to reflect his leadership impact since assuming the role," the company stated in its proxy filing. In comparison, Kumar earned $22.6 million in 2023. However, that year's figure was significantly inflated by a one-time equity award he received upon joining the company. Stripping away that one-off bonus, his 2024 earnings reflect a steadier structure with performance-linked metrics playing a key role. The company also disclosed that its CEO-to-median employee pay ratio for 2024 stood at 378:1. This means that Kumar earned 378 times more than the median Cognizant employee-a figure that has once again reignited conversations about executive pay equity, particularly within firms with a substantial workforce based in India. Cognizant employed approximately 336,800 people as of December 2023, including over 241,000 in India. Despite the shortfall in realised earnings, Kumar remains one of the highest-paid executives in India's tech sector. A graduate of Shivaji University in engineering and an MBA holder from Xavier Institute of Management, Bhubaneswar, he previously held the role of President at Infosys between 2016 and 2022 before taking the reins at Cognizant. The disclosure underscores a broader trend in executive compensation-shifting away from guaranteed packages towards pay linked to long-term business performance. It also reflects growing expectations for leadership to deliver sustained value, rather than just short-term gains. As companies continue to navigate economic uncertainty and rising scrutiny around income inequality, Kumar's case provides a clear example of how compensation models are evolving to strike a balance between rewarding leadership and maintaining accountability.