Embattled CA Faces Hungry Shareholders - InformationWeek

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8/25/2005
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Embattled CA Faces Hungry Shareholders

Company leaders were already apologetic about employees' morale, management turnover and a securities fraud scandal. Then, they had to defend changes in their annual meeting.

Executives were fired. An accounting scandal unfolded. But, it really upset Computer Associates' shareholders when the management software company failed to feed them at their annual meeting Wednesday.

Several shareholders complained that CA showed a lack of sensitivity by moving the meeting to Manhattan from Long Island, where the company is based, and not providing food. The first shareholder who mentioned it drew laughter. As more people joined in, and some contrasted it with executive amenities, the tone grew angry.

Company leaders were already apologetic about employees' morale, management turnover and a securities fraud scandal. Then, they had to defend their annual meeting.

CA leaders said they decided to move the shareholders' event because only a small percentage of the international company's employees, investors and clients are from Long Island. They said Manhattan is more accessible in general. They said they did not believe people would expect breakfast during a 10 a.m. meeting, and they promised to provide food in the future.

One man, identifying himself only as a 90-year-old shareholder, drew applause when complaining that he received little, while executives have been treated generously.

"It took me over an hour to get here," he said. "In the past century, I've seen a lot, but the executive salaries and bonuses I've seen, with those people coming and leaving Computer Associates, it's absolutely mind-boggling. I get dividends of six cents a quarter. I can't even buy a third of a postage stamp with that. All you people sitting up there got dinner before this and get dinner after. I'm hungry, and I didn't get anything, and I demand food."

Gary J. Fernades, on the board of directors, said that the company has to pay salaries and bonuses that are competitive compared to what other companies pay.

Some shareholders weren't swayed.

Arlene Woods said she bought stock in CA because she wanted to support a local business. She said Long Island meetings have standing-room only, but the gathering in Manhattan was small.

"I think you did a wonderful job of crowd control by moving the meeting here," said Woods said. "I paid in excess of $30 to get here. I don't think that's fair to your shareholders."

Shareholders also complained about executives' personal use of corporate aircraft. The company said in a Securities and Exchange Commission filing that the practice reduced the amount of time executives spent traveling on personal business and increased the amount of time they were available for professional obligations.

"Most are working if not 24 hours a day, certainly a lot of ours in the day, a lot of days in the week," Fernandes told shareholders.

One person asked where she could find the "signup list" for aircraft use.

Shareholders questioned bonuses given last year to Executive Vice President of Partner Advocacy Gary Quinn and Executive Vice President of Worldwide Sales Greg Corgan. Quinn's salary was reported at $450,000 in CA's Schedule 14-A filing with the SEC. His bonus was over $1 million. Corgan's salary was reported at nearly $396,000 while his bonus was more than $860,000.

Company leaders told shareholders the bonuses are performance based, and shareholders voted in favor of incentives and severance packages. They also voted to renew the one-year terms of all 11 members of the board.

CA said in a release Thursday that nearly 89 percent of outstanding shares were represented in person or by proxy. A spokesperson said CA had no comment on the conflict at the meeting.

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