Computer Associates 2006 Annual Report Download - page 157

Note 9 — Stock Plans (Continued)
outstanding under the 2002 Director Plan were exercisable. These options are exercisable at $11.04 – $23.37 per
share. As of March 31, 2006 approximately 25,000 deferred shares were outstanding in connection with annual
director fees.
The 2003 Compensation Plan for Non-Employee Directors (the 2003 Director Plan) was effective as of August 27,
2003 and amended on August 24, 2005. The 2003 Director Plan provides for each director to receive annual director
fees of $150,000, which was amended to $175,000 in August 2005 pursuant to the plan amendment, in the form of
deferred shares with an option to elect to receive up to 50% in cash. In addition, certain directors receive an
additional annual fee for their work as committee chair. As of March 31, 2006, approximately 91,000 deferred
shares are outstanding in connection with annual director fees under the 2003 Director Plan.
Beginning with awards granted in fiscal year 2006, the Company changed its equity-based compensation strategy to
provide the general population of employees with RSUs as opposed to stock options, which had been the
Company’s previous practice. Awards associated with the fiscal year 2005 performance cycle were granted in
the first quarter of fiscal year 2006, whereas awards associated with the fiscal year 2004 performance cycle were
granted in the fourth quarter of fiscal year 2004.
Equity based compensation granted to senior management employees is apportioned between RSAs, RSUs and
stock options. Additionally, under the Company’s long-term incentive plan for fiscal year 2006, which is more fully
described in the Company’s proxy statement dated July 26, 2005, senior executives were granted stock options and
issued PSUs, under which the senior executives are eligible to receive RSAs or RSUs and unrestricted shares in the
future if certain targets are achieved. Each quarter, the Company compares the actual performance the Company
expects to achieve with the performance targets. The Committee reduced the number of shares granted under the
1-year PSUs to 75% of the original target. As such, the Company accrued compensation cost based on 75% of the
1-year PSUs initially expected to be earned under the long-term incentive plan. The Company believes its actual
performance will not materially deviate from the previously established performance target for the 3-year PSUs. As
such, the Company has accrued compensation cost based on 100% of the 3-year PSUs initially expected to be
earned under the long-term incentive plan. Compensation cost will continue to be amortized over the requisite
service period of the awards. At the conclusion of the performance period for the 3-year PSUs, the number of shares
of unrestricted stock issued may vary based upon the level of achievement of the performance targets. The ultimate
number of shares issued and the related compensation cost recognized will be based on a comparison of the final
performance metrics to the specified targets.
As of March 31, 2006, 4.3 million of the 4.8 million options outstanding related to acquired companies’ stock plans
are exercisable at $1.37 – $72.69 per share. Options granted under these acquired companies’ plans become
exercisable over periods ranging from one to five years and expire seven to ten years from the date of grant.
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