Cognizant settles stockholder derivative action for $5.5 million

TEANECK, N.J. – Cognizant (Nasdaq: CTSH) has reached a settlement agreement to resolve a stockholder derivative lawsuit brought on behalf of the company. The proposed settlement requires approval from the U.S. District Court for the District of New Jersey and involves a payment of $5.5 million to Cognizant through its insurers.

The lawsuit, titled Palempalli v. Patsalos-Fox, et al., was filed derivatively for the benefit of Cognizant. Under the terms of the settlement stipulation, the $5.5 million payment will be reduced by court-approved attorneys' fees and expenses. Plaintiff's counsel will seek approval for fees and expenses not to exceed $1.83 million, along with a service award of up to $15,000 for the named plaintiff, to be paid from the approved fee amount.

The settlement acknowledges that the efforts of the plaintiff and their counsel resulted in the agreement by defendants' insurers to make the cash payment to Cognizant. The notice states that this settlement confers a substantial benefit upon Cognizant due to the actions taken in the derivative action.

A hearing to determine whether to approve the settlement is scheduled for September 14, 2026. Stockholders who wish to object to the settlement must file a written notice of objection with the court by August 31, 2026. The notice clarifies that this is a derivative action, not a class action, and therefore no common fund exists for individual claims.