Investors Seek 'Restatement' of Bonuses

Meanwhile, the bonuses can amount to sizable portions of companies' net income. The profit bonus at Nortel, for instance, actually helped turned the company's operating profit into a loss in the first quarter last year.

At Computer Associates, the $10.8 million in cash bonuses paid in 2000 to Kumar, Wang and four other top executives amounted to about 2 cents a share, before taxes. The company earned about $696 million, or $1.25 a share, that year.

Follow the Money

Demanding that executives repay part or all of their past bonuses is not a new issue. Two years ago, in his proposal for post-Enron reforms, President Bush called for executives to return bonuses given for reported financial results that were "grossly inaccurate," or the result of "serious misconduct." Under the Sarbanes-Oxley reform act, the federal government can force CEOs and CFOs to disgorge bonuses, equity compensation and the gains from stock sales made after a restated period, if "misconduct" was behind the misstated numbers.

There is some precedence for the idea of repaying compensation. In 2002, after Dollar General(DG Quote) announced that it would restate three years worth of results, Chairman Cal Turner repaid the company $6.8 million for bonuses and stock options he received during the affected years.

Gary Winnick promised to replenish the Global Crossing(GLBC Quote) workers' 401(k) fund with $25 million of his own money. He put the $25 million in an escrow account and last month agreed to pay investors and former employees $50 million to settle a securities fraud lawsuit.