The statement said that its relative total shareholder return (TSR) performance had not met expectations leading to the decision to change leadership.
On January 12, 2023, the board named former Infosys president Ravi Kumar S as CEO and member of the board, effective immediately.
“ The Board has monitored this evolution (Cognizant’s) closely and seen sustained strategic and operational progress. In preparing for 2023, however, the Board recognized the need for Cognizant to progress faster, increase its commercial momentum and accelerate revenue growth. We believed that doing so required a CEO transition,” said Stephen J. Rohleder, chair of the board of directors, Cognizant in a letter to shareholders.
Rohleder took over as chairman on the same day when Kumar was appointed CEO.
The company said that Humphries’ separation “was considered an involuntary termination without cause”.
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When an executive is involuntarily terminated without cause, it means the termination is not related to any misconduct or malfeasance, and they are entitled to severance payment. Humphries remained an employee of the organisation till March 15 as special advisor, said the filing. Humphries’ termination followed multiple years of underperformance by the company compared to peers. ET had reported in August 2022, that the company’s board was likely to assess Cognizant’s loss of senior executives, ‘inability’ to hire leaders from technology companies, the decision to stay away from large deals, and ‘relative underperformance’ compared to tier I offshore and global peers. Further the board was likely to make leadership changes for the same.
The company recently adopted a policy that caps cash severance benefits to executive officers at 2.99 times annual salary and bonus. This was not in effect at the time that Humphries had taken over, and he received severance pay as per agreement as he was terminated without cause.
The filing further reported that Gregory Hyttenrauch, the Former EVP and President for Americas, was terminated on June 28, 2022, due to “behavior inconsistent with company policy”. Ursula Morgenstern, former president of global growth markets, was also “involuntarily terminated” without cause on June 30, 2022.
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