Political funding: Cognizant opposes more transparency

BENGALURU: Cognizant’s board has recommended a vote against two shareholder proposals – one for greater disclosure of political funding and the other for choosing an independent board chairman – ahead of its AGM on June 4.

Shareholders James McRitchie^[1] and Myra K Young^[2] intend to submit a resolution to make comprehensive disclosures on policies and procedures that support transparency and accountability in corporate electoral spending or referendum. The shareholders’ proposal says it should include “any activity considered intervention in a political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organisations, and independent expenditures or electioneering communications on behalf of federal, state, or local candidates.”

The shareholders have quoted publicly available records which show Cognizant^[3] has contributed at least $100,000 in corporate funds since the 2010 election cycle.

Cognizant’s board, however, says the company has incorporated practices to ensure appropriate disclosures and oversight of Cognizant’s political activities. The board said it “believes the expanded disclosure requested in this proposal could place Cognizant at a competitive disadvantage by revealing our strategies and priorities...If adopted, the proposal would cause us to incur undue cost and administrative burden, as well as competitive harm, without commensurate benefit to our shareholders.”

Another shareholder, John Chevedden, plans to submit a proposal for an independent board chairman. Chevedden points to five major US companies where the proposal won 50% plus support in 2013, including 73% support at Netflix.
Cognizant’s board, however, noted that independent directors constitute a significant majority of the board (currently 9 of 11 directors), and the board’s policy provides the independent directors with the flexibility to implement the board leadership structure that they believe is best suited for the board, and to make changes in the structure as appropriate over time.
“Cognizant has had an independent chairman for the past 15 years. Although the board does not have a formal policy mandating an independent chairman, the board has consistently determined that an independent chairman was in the best interests of the company and shareholders," the board said.
John Klein, it said, is an independent director, who served as its chairman from 2003 to September 2018. Patsalos-Fox, another independent director, succeeded Klein as chairman in September 2018 and currently serves as chairman.

References

1. ^{^} James McRitchie (timesofindia.indiatimes.com)
2. ^{^} Myra K Young (timesofindia.indiatimes.com)
3. ^{^} Cognizant (timesofindia.indiatimes.com)

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