NEWS A proposal to claw back bonuses paid to executives under the cloud of an accounting scandal has been rejected by Computer Associates' shareholders.
More than three-quarters (76 per cent) of voting shareholders decided to side with CA's management and turn down a stockholder proposal from Amalgamated Bank LongView Collective Investment Fund. The proposal called on CA to return to shareholders bonuses paid to the company's top executives in 2000. The bonuses were based on company performance.
The complaint noted that in 2000, then-president Sanjay Kumar earned a bonus of 80,000 shares and $3.2m, based on meeting financial targets. As part of the ongoing investigation into the company's accounting practices, CA restated the more than $2bn in earnings for 2000 and 2001. Because of the restatement, Amalgamated is calling on CA to take back bonuses and other money paid to Kumar and other executives.
During the shareholder meeting, Amalgamated legal counsel Cornish Hitchcock complained that CA's management has still not addressed executive compensation during the period of the accounting scandal.
Hitchcock said: "Avoidance is not a good long-term strategy for dealing with problems or growing a company. If you don't like our formulation, in what circumstances is the company willing to say, 'if you didn't earn it, you shouldn't keep?' We're still waiting for an answer."
Hitchcock's statements were met by long applause. A handful of other shareholders peppered company management with similar questions.
Board members of CA responded by saying the company is still in the process of reviewing the findings from its internal investigation, which it concluded earlier this year. Board chairman Lewis Ranieri said that if the company finds that any people were compensated based on "ill-gotten gains", CA will take action.
"When we conclude our review, we will take actions. You will simply have to be patient," Ranieri said.
At the meeting, CA's shareholders also voted in Laura Unger, the former commissioner of the US Securities and Exchange Commission, as a new member of the board, replacing Alex Serge Vieux, who did not run for re-election.
In response to a question, Ranieri said interim-chief executive Kenneth Cron is "in the running" for a permanent chief executive job but that the company is continuing its search.
Martin LaMonica writes for News.com
