CA gang of three to return $550m shares
Court rules stock giveaway was unlawful
Three head honchos at Computer Associates were yesterday ordered by a US court to return stock worth $550 million. The 9.5 million shares were part of a 20.25 million share grant given to the three execs as part of an executive compensation package authorised by shareholders in 1995.
The lawsuit, filed on behalf of shareholder Lisa Sanders last September, claimed the software company had granted more stock than was allowed. Delaware Chancery Court ruled the shares were received improperly and said the company had exceeded its authority in granting the extra 9.5 million shares.
Last year CA took a charge of $1.1 billion to give the stock to chairman and CEO Charles Wang, president and COO Sanjay Kumar, and executive VP Russell Artzt. Wang, who stood to gain the lion's share of the original $1.1 billion windfall, was held up as an example of executive greed by shareholder activists, according to Reuters.
The New York company said it had not yet reviewed the ruling, but claimed that it ran counter to "reasonable expectations that all the parties had when the plan was approved by CA's shareholders" in 1995. "The company will study the opinion before deciding on further steps, including the likelihood of an appeal," it added.
The court also told Wang, Kumar and Artzt to account for profits traceable to the 9.5 million shares. The payout stemmed from CA's booming share performance from 1995 to 1998. The company's value more than tripled to more than $30 billion in the period. CA recorded sales of $5.3 billion for the year ended June 1999. ®