Computer Associates 2006 Annual Report Download - page 97

with respect to fiscal year 2006. Discretionary bonuses are currently not eligible for deferral under this deferred
compensation plan.
Other
In connection with the government investigation, the Board of Directors is continuing to review the matter of
compensation paid or due to individuals subject to the investigation, and possibly to other persons. Following the
completion of this review, subject to the delegation of authority to the Special Litigation Committee as discussed
above under “Litigation Involving Certain Directors and Executive Officers”, the Board will take such action as it
deems in the best interests of the Company and its stockholders.
COMPENSATION AND HUMAN RESOURCE COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Human Resource Committee (the “Committee”) is made up entirely of independent
directors. Our responsibilities include overseeing the Company’s compensation plans and policies, establishing the
performance measures under the Company’s annual and long-term incentive programs that cover executive officers,
approving their compensation and authorizing awards under the Company’s equity-based plans, in consultation
with the Chief Executive Officer, when appropriate. Our chairman reports on Committee actions and
recommendations at Board meetings. Our charter, which is available on our website at www.ca.com, reflects
these responsibilities and reporting relationships, and the Board and Committee periodically review and revise the
charter. We are also charged with oversight of management development and succession issues on behalf of the
Board.
In addition to working with the Company’s internal human resource, financial and legal personnel, we have retained
the services of an outside consultant to assist in our review of management compensation levels and programs.
Philosophy/Objectives
Our objective is to attract, retain and motivate executives to enhance profitability and maximize stockholder value
in the evolving software marketplace. Our fundamental philosophy is to link closely our executives’ compensation
with the achievement of annual and long-term performance goals. We intend to award compensation that is
consistent with competitor levels and tied to Company, business unit and individual performance. Performance
measures are designed to motivate our management to achieve strategic business objectives that we believe will
enhance long-term stockholder value. We seek to recognize executives’ efforts and performance during each fiscal
year and over multi-year cycles, and we include a significant equity component in total compensation because we
believe that equity-based compensation serves to align the interests of employees with those of stockholders.
Consistent with this philosophy and these objectives, we took several important initiatives in respect of fiscal year
2006:
1. We implemented a new long-term incentive program under which awards would be made in a
combination of (a) stock option grants made during the early part of the fiscal year, vesting over three years,
(b) restricted stock to be granted based on the achievement of preset performance goals and vesting one-third at
grant and one-third on each of the next two anniversaries of the grant date and (c) performance shares tied to a
three-year performance cycle ending with fiscal year 2008 paid in unrestricted shares of Common Stock at the
end of the performance cycle. This program was designed with the assistance of our outside consultant. For
fiscal year 2006, the aggregate compensation paid as base salary, bonus and long-term incentives was generally
targeted to be between the 50th and 75th percentile of competitive practice within the computer software and
services industry if predetermined performance objectives were attained at the target level.
2. We implemented stock ownership guidelines under which our CEO is expected to accumulate and
retain shares of Common Stock valued at four times his base salary and other executives would retain stock
valued from three to one times their annual salary, depending on rank and responsibilities. They will have a
period of three years to satisfy this requirement.
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