The moves comes after Cognizant joined hands with Elliot Management to follow a strategic plan inclusive of expanding non-GAAP operating margins to 22 percent, in 2019.
IT giant Cognizant Technology has asked employees at certain level to take cash instead of giving stock options as has been the trend. The new offer is for its senior employees who have received Exceeds ALL in their current appraisal, reports the Times of India.
Under this, the company will give its high performing emplyees cash instead of shares offered to them every quarter by the American firm.
The company said the decision has been taken post its buyback program. Earlier this year, Cognizant announced its buyback program - where it plans to return USD 3.4 billion to shareholders over the next two years. This will be done through dividends and share repurchase.
It has already kickstarted the share repurchase program worth USD 1.5 billion in first quarter of 2017. The company also announced USD 0.15 per share of dividend every quarter.
After this share repurchase programme is completed, Cognizant will buyback USD 1.2 billion shares in 2017-18.
"I believe that it is driven by a need to support the stock price. The equity grants, and stock options dilute the outstanding equity. By converting these to cash they are able to accomplish a version of stock buyback, a strategy which they already agreed to with Elliot," Peter Bendor-Samuel, CEO, Everest Group told TOI.
The US-headquartered company has been in news because of its share buyback and voluntary separation scheme. These announcements were made after activist investor Elliot Mangaement, which holds 4 percent stake in the company, put pressure on Cognizant.
The firm came under the scanner when its growth slowed down after a high speed growth over the past two decades. Cognizant also lowered its growth guidance three times last year. For 2016, the company registered revenues of USD 13.5 billion, up 8.6 percent from USD 12.42 billion for 2015.To get back in the game, the company has joined hands with Elliott Management to follow a strategic plan inclusive of expanding non-GAAP operating margins to 22 percent in 2019.