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Is Cognizant Technology Solutions Corporation’s (NASDAQ:CTSH) CEO Pay Justified?

Brandon Murphy

In 2007 Frank D’Souza was appointed CEO of Cognizant Technology Solutions Corporation (NASDAQ:CTSH). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

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How Does Frank D’Souza’s Compensation Compare With Similar Sized Companies?

Our data indicates that Cognizant Technology Solutions Corporation is worth US$39b, and total annual CEO compensation is US$12m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$669k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Frank D’Souza is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Cognizant Technology Solutions has changed over time.

NasdaqGS:CTSH CEO Compensation January 23rd 19

Is Cognizant Technology Solutions Corporation Growing?

Cognizant Technology Solutions Corporation saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease. In the last year, its revenue is up 9.6%.

The lack of earnings per share growth in the last three years is unimpressive. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Cognizant Technology Solutions Corporation Been A Good Investment?

With a total shareholder return of 9.7% over three years, Cognizant Technology Solutions Corporation has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

Frank D’Souza is paid around the same as most CEOs of large companies.

The company isn’t growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. Shareholders may want to check for free if Cognizant Technology Solutions insiders are buying or selling shares.

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.