CA co-founder to leave board

Russell Artzt will remain as executive vice president; Islandia firm also releases past year’s financial data

BY MARK HARRINGTON
STAFF WRITER

July 27, 2005

After years of resisting occasional calls for him to be replaced, Computer Associates International Inc. yesterday said co-founder Russell Artzt will leave the board in August but remain an executive vice president.

CA said the decision was based on the board's desire to have fewer executives from management serving as directors. But corporate governance experts and share.holder activists have long bemoaned .Artzt's directorship, noting he was one of three executives granted a controversial $1.1-billion stock award in 1998 that was later reduced after shareholder suits. Most recently, calls for his ouster came earlier this year, from dissident shareholder Sam Wyly.

Artzt, whose contributions to CA have centered on the software development arena, attended Queens College with CA co-founder Charles Wang, and they and two associates launched CA on a shoestring in 1976.

But Wang hasn't spoken to Artzt since Wang left the board in 2002, when Artzt threw his support behind then-chief executive Sanjay Kumar.

"Consistent with industry practices, the board has elected to minimize the number of management directors serving on the board," CA said in a proxy filing. "Consequently, the term of Mr. Artzt, who is a current director, will expire at the 2005 annual meeting."

In other news in the proxy filing, CA outlined generous executive pay and bonus packages during the past year, detailed how much each would receive if the company were bought or taken over, and listed other management perks.

The board said it granted CA chairman Lewis Ranieri pay over and above his standard board pay for "extraordinary service," for a total $272,500 in fiscal 2005. About $160,000 of the amount entailed personal use of company aircraft for himself and his family.

Newly named CA chief executive John Swainson earned $359,853 in salary, $333,334 in bonus, $6 million in restricted stock and $5.3 million in other compensation during his six months in office. CA also paid $22,379 for legal fees for the negotiation of Swainson's employment agreement.

Artzt earned $750,000 in sal.ary, $522,375 in bonus, $1.8 million in restricted stock and $15,650 in other compensation.

Swainson and chief operating officer Jeff Clarke have use of a company car and driver, the filing states, "to help maintain the confidentiality of business matters when outside of the office."

In addition, Swainson, former CEO Kenneth Cron, former CEO Sanjay Kumar and executive vice president Greg Corgan used the corporate aircraft and helicopter for personal travel, to the tune of $39,204, $13,021, $23,080 and $22,020, respectively.

CA treated as perks the relocation and housing ex.penses of $10,655 for Swainson and $33,660 for Clarke. Cron received $22,000 for office space provided by CA while he was interim CEO, and he and Kumar received security ser.vices valued at $2,040 and $3,850, respectively.

In February the company granted Cron a special performance bonus of $500,000 for his work as interim CEO and said it would "indemnify and hold Mr. Cron harmless for acts and omissions in connection with Mr. Cron's service as interim chief executive officer to the maximum extent permitted under applicable law."

If there's a change in control of the company, for example a buyout or takeover, here's what top CA executives will receive: Swainson, $5.9 million; Artzt, $1.4 million; Clarke, $4.6 million; Corgan, $2.6 million, and Quinn, $2.1 million.

CA's annual shareholders meeting will be held in Manhattan at the Roosevelt Hotel, a change after years of holding it near company headquarters at a hotel in Islandia. It's scheduled for Aug. 24 at 10 a.m.