Several top executives of Computer Associates International Inc were ordered by a Delaware court Tuesday to return roughly $558m in stock paid to them as part of a compensation package. The judgement affects CEO Charles Wang, president and COO Sanjay Kumar and vice president Russell Artz. In what is being called the largest such compensation return ever ordered by a US court, the three must surrender a total of 9.5 million shares of stock. Individual amounts were not broken out, but Wang will have to return the majority of the shares.
The stock to be returned represents about half of the original $1.1bn in stock paid to the executives last year by the company’s board of directors. A group of shareholders had subsequently filed suit, asking the Chancery Court of Delaware – where the Islandia, New York-based company is incorporated – to rule the compensation excessive and return a substantial portion of it to CA.
In a statement issued after the ruling, CA said it may appeal, pointing out that a majority of shareholders approved the compensation plan in the first place. Shareholders never voted to adjust the number of shares in the compensation package in the event of a stock split, however, leading Chancery Court Vice Chancellor Myron Steele to order the return. An original grant of 6 million shares was approved in 1995 and, after three successive three-for-two stock splits, the adjusted equivalent of 20.25 million shares was granted to the executives in May 1998. á