Proxy Blog

Cognizant Technology Solutions Corporation 

May 13, 2019

The annual proxy for this technology services company had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on political spending and independent chairman 

Magni voted as follows: 

  1. For and against the proforma proposals.
    -For directors  The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against say-on-pay” – The proxy materials do not address shareholder engagement. Good governance on executive compensation requires more than publishing the peer group. 
  2. For and against shareholder proposals.
    -Against political spending – The company already provides good disclosures of political activities. This proposal mostly seeks to lump industry group activities with political activities. There are good reasons for a company to participate in an industry group. Many of those reasons are unrelated to lobbying. Assuming all such industry activity as political is wrong.
    -For independent chairman – An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., a visionary founder where a material portion of the company value is connected to the founder). This company does not have one of those situations.