Computer Associates 2006 Annual Report Download - page 100

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restricted shares under the new LTIP program described above, one-third of which was fully vested at grant. The
award was based upon a payment at 75% of his targeted performance for the 2006 fiscal year.
Other Long-Term Incentives: Under the new LTIP program, Mr. Swainson was granted 170,700 options having a
grant date value of $1,650,000 and is eligible to receive unrestricted shares in an amount not to exceed 200% of the
target amount of 64,200 performance shares, as set forth in the “Long-Term Incentive Plan — Awards in Last Fiscal
Year” table.
Other Compensation: Pursuant to his employment agreement, as amended, Mr. Swainson is entitled to
reimbursement for any expenses incurred with his relocation and the Company agreed to provide him with
temporary corporate housing until no later than November 22, 2006.
Deferred Compensation Plan: As previously disclosed, on April 29, 2005, the Company entered into a deferred
compensation plan and related trust agreement for the benefit of Mr. Swainson. The plan and trust fulfill the
Company’s obligation under Mr. Swainson’s employment agreement to provide him with the present value of
$2.8 million in respect of certain benefits he would have received had he remained employed with IBM plus interest.
Mr. Swainson has an initial deferred compensation account balance of $2,835,000 and is entitled to notionally
allocate his account balance among various investment options (generally similar to the investment options
available under the Company’s 401(k) Plan) for the purpose of determining the value of his account that is
subsequently paid to him. The plan provides for Mr. Swainson to receive in a cash lump sum the value of his
deferred compensation balance upon the earliest of (i) his death, (ii) six months after his separation from service (as
defined in the plan) or (iii) a Change in Control (as defined in the plan). The trust is in the form of a “rabbi trust”
whose assets are subject to the claims of the Company’s creditors.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of compensation in excess of $1 million paid
to the Company’s CEO and to each of the other four highest-paid executive officers unless this compensation
qualifies as “performance-based”. For purposes of Section 162(m), compensation derived from the exercise of stock
options generally qualifies as “performance-based”. In addition, the Company generally intends that incentive
compensation for fiscal year 2006 paid in cash or in the form of restricted stock or restricted stock units or
performance shares, qualify as performance-based. However, we are not precluded from approving annual, long-
term or other compensation arrangements that do not qualify for tax deductibility under Section 162(m).
SUBMITTED BY THE COMPENSATION
AND HUMAN RESOURCE COMMITTEE
Lewis S. Ranieri, Chair
Gary J. Fernandes
Jay W. Lorsch
William E. McCracken
80