Compensation to top agenda of CA's annual meeting
Tue Aug 24,
2004 12:07 PM ET
By Wei Gu
NEW YORK, Aug 24 (Reuters) Computer
Associates International Inc., the software maker tarred by an
accounting scandal, will face off on Wednesday at its annual meeting
against shareholders who want current and former executives to return
bonuses based on restated results.
A shareholder proposal by Amalgamated
Bank Long View Fund, an activist fund which owns less than 1 percent of
CA shares, calls for the company to recoup all performance-based awards
made to senior executives during periods that were later restated.
Computer Associates (CA.N:
Quote,
Profile,
Research) , which restated $2.2 billion in revenue and forced out
more than 15 senior executives in the past year stemming from a
long-running criminal investigation into its accounting, has said it
opposes the proposal and has recommended that shareholders vote against
it.
The board says the proposal would imperil
bonuses that were legitimately earned by executives who had nothing to
do with any impropriety. The company also said the board awarded bonuses
that were less than the maximum allowed in the employment contracts.
The company, meanwhile, has been
reviewing the past compensation for four months but has yet to make any
decision on whether action should be taken against any individuals,
partly because the government probes are still ongoing.
Richard Sherman, an analyst with Janney
Montgomery Scott, said investors want a quick resolution. "The company's
fundamentals are strong but governance issues are holding the stock
back," he said.
Computer Associates has brought in high
profile experts to strengthen its board. Institutional Shareholder
Services, a leading proxy adviser, ranked CA's governance above 87
percent of S&P 500 companies and 99.7 percent of software and services
companies.
But many investors are still avoiding CA.
"This is a company that had some ethical stumbles in the past," said
Patrick McGurn, special counsel for ISS. "They really need to go the
extra mile to indicate to the market that the company will aggressively
recoup any of the ill-gotten gains."
Private Capital Management, which owns
about 10 percent of CA and is its second-largest stockholder after Swiss
investor Walter Haefner, opposes the proposal on bonsues. Private
Capital said it agrees in spirit with Amalgamated's concern but plans to
vote against the proposal partly due to concerns about employee morale.
Proxy advisory firm Glass Lewis & Co.
backed the company on the compensation issue but recommended
shareholders to withhold their votes for two long-time directors --
former U.S. Sen. Alfonse D'Amato and and co-founder Russell Artzt --
because they served on the board when CA had accounting problems.
CA shares are down 20 percent from a
one-year high reached in April, when it restated results for two years
and announced that Sanjay Kumar had stepped down as chief executive.
Kumar made a complete exit from the
company in June, but remains a shareholder. He could not be reached for
comment on whether he will attend the shareholders meeting.
Also at the meeting, shareholders are
expected to elect a well-respected former Securities and Exchange
Commission official, Laura Unger, as a director.
Computer Associates said in its proxy
statement that it still employs immediate family members of Kumar and
Stephen Richards, former global sales head who resigned related to the
probes. Their relatives, who serve as vice presidents, received total
cash compensation of $295,000 and $903,867, respectively, last year.
The company declined to provide any
further detail about the family members. |
