The question of how one of India’s leading IT companies deals with ‘shareholder activism’ has come into focus, given the experience of Infosys in recent days and weeks.
In that context, the experience of Cognizant Technology Solutions, which has “been there and done it”, is illustrative. Late last year, one of its shareholders, hedge fund Elliot Management Capital Corp asked the company to change its business model, bring in new directors and return $3.4 billion to shareholders.
Cognizant successfully brought a closure to some of the issues raised. “The board drafted an approach saying that we have to run the company for all of our shareholders and Elliot as a shareholder has a voice. It had about 4 per cent of shareholding at the time of writing that letter. So, we listened to them and then we engaged with them and took their inputs very seriously,” Cognizant CEO Francisco D’Souza said in an interview with
D’Souza said that while it was important to take note of shareholders’ activism, it was equally important to take all other stakeholders, including employees, along. “We... consulted with a broad range of shareholders because we knew (that) as board members, our obligation is to the entire shareholder community and to do things we believe are in the best interests of our shareholders and long-term interest of the company. At the same time, we reached an agreement with Elliot.”
Read full interview here: Our obligation is to all shareholders