Cognizant Technology Solutions said it has reached a proposed settlement in a stockholder derivative suit that had been pending in federal court since 2021, with the deal set to deliver a payment to the company rather than to shareholders.
The case was filed on June 1, 2021, after a demand made to Cognizant’s board on April 29, 2019 was rejected by the company’s demand review committee and later by the board itself. The complaint accused current and former directors and officers of breaching fiduciary duties, wasting corporate assets, unjust enrichment and violating federal securities law.
The litigation moved through a series of court rulings and discovery fights. On Nov. 30, 2022, the court denied motions to dismiss without prejudice and said more discovery was needed on whether the board had wrongfully refused the demand. A discovery order followed on March 2, 2023, and an appeal of that order was denied on Oct. 17, 2023. Additional document production and privilege-log exchanges continued into 2024 and 2025, with the discovery dispute declared resolved on April 14, 2025.
Settlement talks began in earnest after an Oct. 15, 2024 mediation session. The sides later accepted a double-blind proposal in July 2025 covering a monetary payment by the company’s directors and officers insurers. The notice says the settlement will fully resolve the released claims and lead to dismissal of the derivative action with prejudice.
The notice also ties the derivative case to Cognizant’s related securities class action, which the company settled for $95 million, with a substantial majority of that amount paid by insurers under directors and officers policies.
A settlement hearing is scheduled for Sept. 14, 2026, at 11:00 a.m. in Newark, New Jersey. As a result of these announcements, the company's shares have moved -1.91% on the market, and are now trading at a price of $42.57. If you want to know more, read the company's complete 8-K report here.
