IT outsourcing company Cognizant Technology Solutions today said it has agreed to refresh the Board by appointing three new independent directors – thanks to orders from Elliott Management.
Elliott Management, a significant shareholder in Cognizant, earlier asked the IT services provider to make significant changes in the Board of Cognizant to improve revenue and profit.
Cognizant said it will name two board directors prior to the mailing of the company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders and one in connection with the 2018 Annual Meeting of Stockholders.
Three existing members of the Board will concurrently not stand for reelection.
“As part of today’s full-year earnings release, we announced a plan to accelerate our shift to digital, expand margin targets and launch a robust new capital return program. Taken together, these initiatives will make Cognizant even stronger,” said Cognizant CEO Francisco D’Souza.
“Frank and his team have been terrific partners in this process and have developed a thoughtful, balanced and highly attractive plan. In an evolving industry, Cognizant must continue to invest for growth and the digital transition, while further optimizing operations and returning capital to its shareholders,” said Jesse Cohn, senior portfolio manager at Elliott Management.
Cognizant’s Board will form a Financial Policy Committee, which will assist and advise the Board on issues relating to Cognizant’s operating plan and capital allocation policy. The Financial Policy Committee will be comprised of three directors, including D’Souza, an incumbent director with previous operational experience and one of the new directors.
Elliott has also agreed to certain customary standstill provisions, as well as to support the integrated plan announced today.
Cognizant said its revenue in the fourth quarter of 2016 rose 7.1 percent to $3.46 billion. Net income of Cognizant fell to $416 million from $424 million.
“The time is right for us to accelerate the shift to digital services and solutions to meet the growing demands from our clients to transform their business models in the face of the rapid business and technology shifts disrupting their industries,” said Francisco D’Souza, chief executive officer of Cognizant.
Cognizant said its revenue in 2016 8.6 percent to $13.49 billion. Net income of Cognizant for 2016 was $1.55 billion against $1.62 billion in 2015.
Cognizant said its first quarter 2017 revenue is expected to be in the range of $3.51 billion to $3.55 billion.