![](20060910_report-ISS_files/image002.gif)
Publication Date :
August 31, 2006 |
|
CA Inc |
Recommendations - US Standard Policy |
|
|
Item |
Code*
Proposal |
Mgt.
Rec. |
ISS Rec. |
1.1
|
M0201
Elect Director Alfonse M. D'Amato |
FOR |
WITHHOLD |
1.2
|
M0201
Elect Director Gary J. Fernandes |
FOR |
FOR |
1.3
|
M0201
Elect Director Robert E. La Blanc |
FOR |
FOR |
1.4
|
M0201
Elect Director Christopher B. Lofgren |
FOR |
FOR |
1.5
|
M0201
Elect Director Jay W. Lorsch |
FOR |
FOR |
1.6
|
M0201
Elect Director William E. McCracken |
FOR |
FOR |
1.7
|
M0201
Elect Director Lewis S. Ranieri |
FOR |
FOR |
1.8
|
M0201
Elect Director Walter P. Schuetze |
FOR |
FOR |
1.9
|
M0201
Elect Director John A. Swainson |
FOR |
FOR |
1.10 |
M0201
Elect Director Laura S. Unger |
FOR |
FOR |
1.11
|
M0201
Elect Director Ron Zambonini |
FOR |
FOR |
2
|
M0101
Ratify Auditors |
FOR |
FOR |
3
|
S0332
Amend Terms of Existing Poison Pill |
AGAINST |
FOR |
*S
indicates shareholder proposal |
|
*** |
|
|
[Pages 6-7]
Items 1.1-1.11:
Elect Directors |
SPLIT |
The Corporate Governance
Committee serves as the nominating committee.
Board Independence
A substantial majority of
the board members are independent outsiders. The key board committees
include no insiders or affiliated outsiders.
Option Backdating
Issue
Option backdating has
serious implications and in some cases have resulted in financial
restatements, delisting of companies or termination of executives or
directors. Institutional investors are deeply concerned when there is an
option backdating allegation. In this case, CA started an internal
investigation on its option grant practices and found that certain option
grants made between 1996 to 2001 had not been communicated to employees in a
timely manner. As a result, CA reported that it will recognize additional
stock-based compensation expense of $342 million on a pretax basis.
As disclosed in the
company's 10-K, prior to fiscal year 2002, the Stock Option and Compensation
Committee generally approved grants to executives and other employees
receiving options, the terms of which were generally set on the date that
the Committee acted, including the exercise price, vesting schedule and
term. However, in a number of cases, these approvals involved pools of
options that were not allocated to specific individuals at the time of such
approvals. It also appears that communication of these grants by management
to individual employees was not made until some time after the Committee
acted, including in some cases up to two years after such Committee action.
In almost all cases, this earlier date had an exercise price that was lower
than the market price of the company’s common stock on the date the award
was formally communicated to employees. The grants which were not
communicated on a timely basis were made primarily to non-executive
employees and this grant practice was changed after fiscal year 2001.
In response to the above
issue, the company stated that the problem was not option backdating but
delayed communication of grants to employees by management, following the
Stock Option and Compensation Committee's authorization of the grants,
during fiscal years prior to 2002. The company's internal review did not
find any deficiencies in its internal controls and procedures with respect
to the granting of options during fiscal 2002 through fiscal year 2006. The
company believes that its current policies and procedures with respect to
the granting of options are sound.
ISS has concerns with the
internal controls and procedures of option grants prior to 2002. The
duration of the misdated options is five years and the magnitude of
restatement is approximately 9% of 2005 revenue. ISS is concerned that the
board would approve option grants that were not allocated to specific
individuals. While the company's current practice is to communicate promptly
after an option grant is approved by the Committee, the company has not
adopted any option grant practices to prevent any misdating or timing of
options in the future. ISS recommends a vote to WITHHOLD from members of the
compensation committee who failed to provide adequate oversight to the
option grant process for the concerned period. Several Compensation
Committee members are no longer present on the board with the exception of
director nominee, Alfonse M. D'Amato. Mr. D'Amato joined the board towards
the end of fiscal year 1999 and was part of the Stock Option and
Compensation Committee in 2000.
ISS recommends voting FOR
all directors with the exception of Alfonse M. D'Amato for not providing
adequate oversight on the approval process of stock options in 2000.
Vote FOR Items
1.2-1.11.
WITHHOLD a vote on Item 1.1. |
US
Standard Policy |
***
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proponents of a shareholder proposal at the upcoming meeting may be a client
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sponsors of the shareholder proposal(s) played a role in preparing this
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CA Inc
August 31, 2006
© 2006, Institutional
Shareholder Services Inc. All Rights Reserved. The information contained in
this ISS Proxy Analysis may not be republished, broadcast, or redistributed
without the prior written consent of Institutional Shareholder Services Inc. |