Cognizant executive pay for 2013 hints at 16% revenue growth
BANGALORE, Dec 05, 2012 (Menafn - Mint - McClatchy-Tribune Information Services via COMTEX) --Cognizant Technology Solutions Corp. shared compensation details of its top executives in a regulatory filing on Tuesday night, indicating a revenue growth of around 16% for 2013, lower than the 20% revenue growth it expects to achieve this year.
After Infosys Ltd, India's second biggest software exporter, stopped giving any quarterly revenue guidance from March this year, Cognizant became the only India-based software exporter to provide annual and quarterly earnings forecast. For experts and investors tracking the sector, Cognizant's forecast of its earnings is now becoming an indication of the demand ahead.
In the Form 8K filed with the US Securities and Exchange Commission on Tuesday, Cognizant said its top executives -- CEO Francisco D'Souza, president Gordon J. Coburn, group chief executive for industries and markets Rajeev Mehta, group chief executive of technology and operations Ramakrishnan Chandrasekaran, chief financial officer Karen McLoughlin and senior vice-president Steven Schwartz will receive 100% of their performance-based stock options only if the company achieves 16% revenue growth during 2013. They will not receive any performance-linked stock incentives if the company does not grow its revenue by at least 12% during calendar year 2013.
For these top executives to earn 100% of their stock-linked incentives next year, Cognizant will have to grow its revenue to 8.515 billion, a rise of 16% over 2012.
"We believe that the 8K filed today containing the equity compensation targets for our executives set forth by our board aligns well with this goal, and the revenue target at 100% payout would represent industry-leading growth," said a Cognizant spokesman in an email reply on Wednesday morning. "Based on the current knowledge of the economic context and business demand, coupled with the discussions we have had with our clients, we think the targets are appropriate," he added.
Analysts such as David J. Koning, Timothy Wojs and Nathan J. Novak of US-based Robert W. Baird and Co. had expected Cognizant to set 15-16% growth in revenue target for 2013, lower than 23% revenue target the company had set for 2012.
Cognizant had reported a 21.9% year-on-year increase in net profit to 276.9 million for the three months ended September this year, the third quarter of fiscal 2012 for the US-based company that has most of its employees in India. Cognizant follows a January-December accounting period. Overall revenue grew 18.2% to 1.89 billion.
Cognizant competes with India's biggest software outsourcing firms, including Tata Consultancy Services Ltd and Infosys Ltd, for business from top customers such as Pfizer Inc. and UBS AG. Over the past 13 quarters, Cognizant has grown its revenue faster than Indian rivals TCS, Infosys and Wipro Ltd by an average margin of 3.4%, according to brokerage Jefferies and Co. Inc.
Cognizant does this, say analysts, by investing higher on sales and marketing. While top Indian tech firms spend up to 14% of their revenue on sales and marketing, Cognizant spends 21%.
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