CA shareholders back management over bonuses issue

Shareholders at Computer Associates' annual meeting have rejected a proposal to reclaim some executive bonuses.

Shareholders at Computer Associates' annual meeting have rejected a proposal to reclaim some executive bonuses.

The proposal, submitted by the Amalgamated Bank Long View Collective Investment  Fund, requested that the company's board adopt a policy of revoking executive bonuses paid based on financial results that are later revised.

CA has had to restate $2.2bn (£1.2bn) of its past revenue following an accounting scandal that wiped out the company's management ranks.

The investment fund took issue with the millions of dollars paid to executives, specifically to former chief executive officer Sanjay Kumar, who served as CA's president and chief operating officer during the period of the accounting scandal.

It was also concerned about the board's silence about whether it will attempt to recoup those bonuses.

The accounting fraud came about because CA recognised sales prematurely that should have been booked later to meet analysts' and investors' expectations. Based on targets that turned out not to have been met, CA awarded bonuses to top executives on its sales and management teams.

At the meeting, 76% of votes cast sided with CA, which opposed the proposal. A small number of investors hold a significant percentage of CA's shares and traditionally vote with the company's management.

Private Capital Management, which owns 10% of the company said earlier this month that while it agreed in spirit with Amalgamated Bank, it did not want to see a mandatory policy enacted because it could devastate employee morale. Private Capital Management said it would vote against the proposal.

CA has now expelled every executive implicated in the fraud and those in a top management role at the time it was perpetrated. Four former CA executives, including its ex-chief financial officer, have pleaded guilty to criminal charges including securities fraud.

Earlier this year CA offered $10m to settle the charges against it. CA is also reviewing the issue of compensation paid to "certain officers" in prior years.

Stacy Cowley writes for IDG News Service

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