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CA Shareholders OK Directors' Pay Hike

By Mark Harrington
Staff Writer

August 28, 2003

Shareholders approved a more generous pay package for outside directors of Computer Associates International Inc., but not before a healthy debate at the company's annual shareholders meeting Wednesday.

Also on the table at the comparatively sedate meeting: the board's lack of a woman director, the "razzle-dazzle" of financial presentations, a recent shareholder lawsuit settlement and even Newsday's coverage of the company.

At the same time, several veteran shareholders praised management and CA's direction, and, at the urging of chairman and chief executive Sanjay Kumar, applauded CA co-founder and chairman emeritus Charles Wang, who did not attend.

The pay package, which triples members' base pay to $150,000 but eliminates stock options for CA's eight independent directors, was alternately questioned as excessive and defended as fair given increased workloads.

"I'm very unhappy about the directors' salaries," said shareholder Steven Speter, who is also an executive vice president of DHR International, an executive search firm. "It should be relative to what shareholders are making" on the stock.

While CA stock is down from previous year highs, Kumar noted the stock is up 125 percent since the last annual meeting. He called the board member pay "a very fair amount."

Shareholders also approved the proposed slate of directors, a group that, while praised for credentials that include a former SEC chief accountant, a governance guru and a former U.S. senator, lacked one component.

"I would hope for more feminine faces," said one woman shareholder. "You've denied yourself 50 percent of the world population and an important viewpoint." Stony Brook University President Shirley Strum Kenny left the board last year.

Kumar said the board was already working to fill open slots and added, "I think it would be phenomenal to have a woman on the board."

That same shareholder, noting the company's $267 million loss last year, said, "You've razzle-dazzled us today" by painting a positive picture of finances, even as "expenses still exceed revenue. You've got to do more." CA reported its first net profit in nearly three years in the first quarter of fiscal 2004.

Some questioned this week's planned settlement of five years of accounting-related shareholder lawsuits. The company will issue up to 5.7 million new shares at a charge to earnings of $144 million. But Lorsch said settling was a "no-brainer," given the potential for distraction and legal fees. He added the company will "do whatever we have to do" to get beyond government probes of CA's accounting, ongoing since February 2002.

Criticism and plaudits during the meeting weren't reserved only for CA. One shareholder, clutching a fistful of Newsday stories, railed against what he called the "negative" tone of coverage of CA, tore them up and said he would instead subscribe to Playboy.

Copyright 2003, Newsday, Inc.


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