Cognizant CEO Ravi Kumar's pay package for FY24 was ₹137 crore but what he actually got will shock you

CEO pay package: Cognizant CEO Ravi Kumar's targetted pay package for FY24 was set at ₹137 crore, but he earned around half that number — ₹70 crore, as per a company filing. Here's why and other details…

Reportedly, a the company filing with the United States Securities and Exchange Commission (US SEC) revealed that, Cognizant CEO Ravi Kumar's annual pay for FY24 rose to over ₹70 crore ($8.2 million). Ironically, while this year's realised salary was up 14 per cent year-on-year (YoY), it was about 50 per cent less than Kumar's ₹137 crore targeted pay package for FY24.

Cognizant CEO Ravi Kumar's Pay Package — Details

Components breakdown of the ₹137 crore pay package:

• Base salary: ₹10.25 crore ($1.2 million), up 20 per cent year-on-year (YoY), compared to FY23 salary.
• ACI target: ₹20.49 crore ($2.4 million), also up 20 per cent YoY.
• Performance share units (PSUs) worth ₹64 crore ($7.5 million), up 9 per cent YoY.
• Restricted stock units (RSUs) worth ₹42.68 crore ($5 million), also up 9 per cent YoY.

Why Did Ravi Kumar's Receive Nearly Half Salary?

As per the filing, According while Kumar's pay package was ₹137 crore, his realised salary was ₹70 crore because, the PSUs granted this year are only set to vest in the future, subject to the satisfaction of performance criteria.

Here's what it said: “The Compensation Committee, at its meeting in February 2024, evaluated Mr. Kumar's prior year performance and the updated information provided by Pay Governance for CEOs in the Company's peer group. Based on these considerations, the Compensation Committee determined that Mr. Kumar's target direct compensation for 2024 should be increased to $16,100,000 (11% increase vs. 2023) to reflect his performance in his first year as CEO and to better align his target compensation with CEOs in the 2024 peer group, taking into account compensation trends for CEOs. ”

“Mr. Kumar's realized compensation was significantly lower than his target direct compensation primarily because his 2024 PSU grants are scheduled to vest, subject to the satisfaction of performance criteria, in future periods. His 2024 realized compensation consisted principally of his base salary, 2024 ACI award payout at 107.3% of target and quarterly vestings of RSUs in the aggregate amount of approximately $4,492,000,” it added.

Notably, the ratio of Cognizant's CEO-to-median employee pay in 2024 is 378:1, the filing showed — i.e Ravi Kumar earned 378x more than the IT major's average employees. Till December 2024, Cognizant had around 3,36,800 global employees, including 2,41,500 in India and another 42,800 in North America.