Computer Associates CEO Gets Pay Package
Wednesday November 24, 4:59 pm ET
By Ellen Simon, AP Business Writer
Computer Associates Gives New CEO John Swainson Pay Package That Totals More Than $8.6 Million
NEW YORK (AP) -- Computer Associates International Inc., a business software company embroiled in an accounting scandal, is giving its new chief executive, John Swainson, a pay package that totals more than $8.6 million in salary, signing bonuses and stock.
The package includes a $2.5 million cash signing bonus, a $1 million base salary and a stock grant of 100,000 shares for signing with the company. The shares are valued at more than $3 million at the stock's early afternoon price Wednesday.
Swainson's package also includes what is described as "a payment equal to the present value of $2.8 million" in the "form and manner....mutually agreed" by Swainson and Computer Associates. The payment is "in respect of certain benefits he would have received had he remained employed" with his former employer, International Business Machines Corp., according to the five-year agreement, which was filed with the Securities and Exchange Commission.
Swainson will get an annual bonus of at least $333,334 for the remainder of the company's 2005 fiscal year, no matter what his performance.
His bonuses could go as high as $3.5 million in cash and restricted stock.
Swainson, 50, began working as president of the company Monday and will take over from its acting chief executive, Kenneth Cron, within six months. He worked at IBM for 26 years, most recently as head of its worldwide software sales.
Computer Associates, which has been rocked by an accounting scandal that has resulted in four executive guilty pleas and the indictment of former chief executive Sanjay Kumar, engaged in a protracted CEO search before announcing Swainson's selection this week.
Other details of the agreement include an initial stock option grant of 350,000 shares. The strike price on the shares will be their value on the day they were granted; the shares will vest over 10 years.
The agreement also grants him 100,000 shares of "restricted stock units" within six months of him leaving the company for any reason.
If Swainson is terminated by the company without cause, or if he quits under circumstances outlined in the agreement as "good reason," he will receive a severance package equal to two-years' salary and bonus, a lump-sum payment for 18 months of health insurance and accelerated vesting of stock awards due him over the 12 months after he departs.
Under the company's takeover provisions, he will get a severance payment equal to 2.99 times his salary and bonus if he is terminated without cause or for his own "good reasons" if the company is sold.
The company also disclosed Wednesday that Jeff Clarke, its chief operating officer, is eligible for a long-term bonus of $3 million for the period from April 1, 2004 to March 31, 2005.
Computer Associates shares rose 46 cents to close at $30.62 Wednesday on the New York Stock Exchange -- a new 52-week high. The shares are up about a third since early August.
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