A major Computer Associates ( CA) shareholder wants the company to review bonuses given to executives who may have benefited from fraudulent accounting practices. The $4 billion Amalgamated Bank's LongView Investment Fund has submitted a shareholder resolution urging action by the board to be voted on at the annual meeting in late August. The fund holds 260,000 shares in CA. The giant software company has been shaken by admissions that it illegally backdated nearly $2 billion in software license revenue in fiscal 2000 and 2001 to meet financial projections for earlier quarters. Although the resolution does not target specific executives, an obvious target would be
deposed CEO Sanjay Kumar, who was awarded a bonus of $3.16 million in 2001 on top of his base salary of $900,000 and 750,00 million stock options. Also given a substantial bonus that year were then CFO Ira Zar, who recently pleaded guilty to charges of securities fraud , and former Chairman and CEO Charles Wang. Zar was awarded $950,000 in addition to his salary of $350,000 and 500,000 options; Wang, who has not been implicated in the scandal, received a $4.78 million bonus plus his base salary of $1 million and 1 million options. "Bonuses and incentives are supposed to be limited to superior performance," said Con Hitchcock, the fund's outside attorney, in an interview. "To the extent anyone got a bonus based on faulty accounting, they should give the money back to shareholders." The company had no immediate reaction to the resolution, but spokesman Robert Gordon pointed out that the subject of bonuses came up earlier this week when the company announced that it was restating financial results for the years in question. "Although bonuses and other compensation paid to officers of the company who are the subjects of the investigation are under review, this restatement will have no effect on compensation for any other CA employees during the years in question," Chairman Lewis Ranieri said during a conference call with analysts and investors. Gary Lutin, an investment banker and shareholder advocate, said Ranieri's position "missed the point," noting that the newly appointed chairman seemed only to question bonuses paid to those under investigation. "The issue is fairness and responsibility," he said. "It shouldn't make any difference whether compensation errors are based on honest mistakes or dishonest mistakes. If it was miscalculated, it should be adjusted. That's what's fair." CA shares closed down 20 cents, or 0.7%, to $28.97.