Former Chief Executive Officer of Cognizant Brian Humphries was involuntarily terminated without cause, the company said as part of its stock exchange filings. It was widely speculated that Humphries had been fired after the sudden surprise appointment of Ravi Kumar S as CEO, as well as Humphries’ own post on LinkedIn that it “was announced” that he would be stepping down as CEO.
In its proxy filing, the company said that Humphries’ separation “was considered an involuntary termination without cause”. When an executive is involuntarily terminated without cause, it doesn’t have to do with any misconduct or malfeasance, and they are entitled to severance payment.
It came after the company’s multi-year underperformance, where it had ceded market share in key verticals and saw skyrocketing attrition levels for a company that was once considered to be the barometer of growth for the industry.
Also Read: Cognizant’s Ravi Kumar needs to hire seniors, stem attrition to see growth: Moshe Katri
In January, Ravi Kumar S, who was initially supposed to join the company as President of Cognizant Americas, was appointed as CEO, along with Stephen J Rohleder as the Chairman of the Board.
In his letter to shareholders, Rohleder said that the Board saw 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,” he said, and it was after this that Kumar was named as CEO in January 2023 effective immediately.
Humphries stayed on in the company till March 15 for the transition.
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 company, in the proxy statement, said that its relative total shareholder return (TSR) performance has not met expectations. “ Because relative TSR is a 3-year measure in our PSUs [Performance stock units], any benefits from this change will take a period of time to result in significant changes to the previously disappointing performance and related payouts,” it read.
The statement also noted that the company had fired Gregory Hyttenrauch, the Former EVP and President for Americas, on June 28, 2022, due to “behavior inconsistent with company policy,” resulting in his severance payment being lower than if he was involuntarily terminated without cause.
Ursula Morgenstern, who served as the former president of global growth markets, was involuntarily terminated without cause on June 30, 2022.
Kumar, who had taken over the mantle of Cognizant CEO after exiting Infosys, in a note to shareholders spoke about the company’s large presence in India in terms of its workforce.
As of December 31, 2022, out of 3,55,300 employees worldwide, 2,58,500 were in India.
“I believe India will be the world’s technology talent hub for the next decade. Its population has a demographic profile and digital talent pool currently unmatched by any other country. We plan to continue capitalizing on India’s rich IT talent pool as we intensify efforts to recruit not only in the largest cities but also in midsize metropolitan areas. The Cognizant brand is well-known on India’s college campuses,” Kumar said.
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