SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Computer Associates International, Inc.
------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Belden Frease, Secretary
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
_________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________
(2) Form, schedule or registration statement no.:
________________________________________________________________________
(3) Filing party:
________________________________________________________________________
(4) Dated filed:
________________________________________________________________________
<PAGE>
COMPUTER ASSOCIATES INTERNATIONAL, INC.
One Computer Associates Plaza
Islandia, NY 11788-7000
(516) 342-5224
July 8, 1994
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Computer Associates International, Inc. (the "Company") to be held at 10:00
a.m. Eastern Daylight Time, on Wednesday August 10, 1994 at the Company's
world headquarters, One Computer Associates Plaza, Islandia, New York.
Your Board of Directors urges you to read the accompanying Notice of
Annual Meeting and Proxy Statement and recommends that you vote for the
election of the eight directors nominated, for approval of the Annual
Incentive Compensation Plan, and for ratification of the Board's appointment
of Ernst & Young as the Company's independent auditors for the 1995 fiscal
year.
The vote of every stockholder is important. Whether or not you plan to
attend the meeting, it is important that your shares be represented.
Accordingly, we urge you to sign, date, and mail the enclosed proxy in the
envelope provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/Charles B. Wang
Charles B. Wang
Chairman of the Board and
Chief Executive Officer
<PAGE>
COMPUTER ASSOCIATES INTERNATIONAL, INC.
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
__________________
To the Stockholders of
Computer Associates International, Inc.:
The Annual Meeting of Stockholders of Computer Associates International,
Inc. (the "Company") will be held on Wednesday, August 10, 1994, at 10:00
a.m. local time at the Company's world headquarters, One Computer Associates
Plaza, Islandia, New York, for the following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected;
2. To approve the Company's Annual Incentive Compensation Plan;
3. To ratify the appointment of Ernst & Young as the Company's
independent auditors for the fiscal year ending March 31,
1995; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 1, 1994 as
the record date for determination of those stockholders who will be entitled
to notice of and to vote at the meeting and any adjournment thereof.
If you plan to attend the meeting, please bring the admission ticket
attached to your proxy card.
Whether or not you expect to attend, STOCKHOLDERS ARE REQUESTED TO SIGN,
DATE AND RETURN THE ENCLOSED FORM OF PROXY IN THE ENVELOPE PROVIDED. No
postage is required if mailed in the United States.
By Order of the Board of Directors
Belden A. Frease
Secretary
Islandia, New York
July 8, 1994
<PAGE>
COMPUTER ASSOCIATES INTERNATIONAL, INC.
ONE COMPUTER ASSOCIATES PLAZA
ISLANDIA, NY 11788-7000
_____________________
PROXY STATEMENT
_____________________
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of the Common Stock, $.10
par value per share ("Common Stock"), of Computer Associates International,
Inc. (the "Company") in connection with the solicitation of proxies on behalf
of the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held on Wednesday, August 10, 1994 at 10:00 a.m. (Eastern
Daylight Time), at the Company's world headquarters, One Computer Associates
Plaza, Islandia, New York, and at any adjournment thereof. The purposes of
the meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Stockholders. At present, the Board
of Directors knows of no other business which will come before the meeting.
The Notice of Annual Meeting, Proxy Statement and form of proxy will be
mailed to stockholders on or about July 8, 1994. The Company will bear the
cost of its solicitation of proxies. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone, telegram and
telefax by the directors, officers and employees of the Company. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial
owners of stock held by such persons, and the Company may reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the meeting and a return envelope for the proxy
are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing
with the Secretary of the Company a written revocation or duly executed proxy
bearing a later date or by voting in person at the meeting. Shares of Common
Stock represented by executed and unrevoked proxies will be voted in
accordance with the instructions specified thereon. If no instructions are
given, the proxies will be voted FOR the election of management's eight
nominees for election as directors, FOR approval of the Annual Incentive
Compensation Plan, and FOR ratification of the appointment of Ernst & Young
as the Company's independent auditors for the fiscal year ending March 31,
1995.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on July 1, 1994 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
On July 1, 1994, the Company had outstanding 161,737,464 shares of Common
Stock, each of which (other than shares held in the Company's treasury) is
entitled to one vote upon matters presented at the meeting.
Votes cast at the meeting will be tabulated by persons appointed as
inspectors of election for the meeting. The inspectors of election will treat
shares of Common Stock represented by a properly signed and returned proxy
as present at the meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or abstaining.
Likewise, the inspectors of election will treat shares of Common Stock
represented by "broker non-votes" as present for purposes of determining a
quorum.
<PAGE>
The nominees for election to the Board of Directors receiving the greatest
number of affirmative votes cast by holders of Common Stock, up to the number
of directors to be elected, will be elected as directors. Accordingly,
abstentions or broker non-votes as to the election of directors will have no
effect on the election of directors.
The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the meeting in person or by proxy and entitled to vote
thereat will be required to approve the Annual Incentive Compensation Plan,
and to ratify the selection of independent public accountants. In determining
whether such proposals have received the requisite number of affirmative
votes, abstentions and broker non-votes will have the same effect as votes
against the proposal.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended March 31, 1994
is being mailed with this proxy statement.
Stockholders are referred to that report for financial and other
information about the activities of the Company. The Annual Report is not
incorporated by reference into this Proxy Statement and is not deemed to be
a part hereof.
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock as of July 1, 1994, by the persons
known to the Company to own, or deemed to own, beneficially 5% or more of the
Company's Common Stock:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned Class (rounded)
- - ------------------------------------- ------------------ ---------------
<S> <C> <C>
Walter Haefner/ 37,500,000(1) 23%
Careal Holding AG
Utoquai 49
8022 Zurich, Switzerland
<FN>
(1) According to a Schedule 13D, as amended, filed by Walter Haefner and
Careal Holding AG, Mr. Haefner has the sole voting and dispositive power
with respect to 37,500,000 shares of the Company's Common Stock held of
record by Careal Holding AG.
</TABLE>
BOARD AND MANAGEMENT OWNERSHIP
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock as of June 15, 1994 for (i) each
director and nominee for election as a director, including Charles B. Wang,
the Chairman and Chief Executive Officer, Sanjay Kumar, President and Chief
Operating Officer and Russell M. Artzt, Executive Vice President-Research and
Development, (ii) the two most highly compensated executive officers other
than Messrs. Wang, Kumar, and Artzt, and (iii) all directors, nominees for
director and executive officers as a group (13 persons). Information with
respect to beneficial ownership is based upon information furnished to the
Company by each security holder.
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned(1)(2) of Class
- - --------------------------- ------------------------ ----------
Director or Nominee:
<S> <C> <C>
Russell M. Artzt 365,041 .2%
Willem F.P. de Vogel 5,720 *
Irving Goldstein 5,000 *
Richard A. Grasso 1,000 *
Shirley Strum Kenny 2,500 *
Sanjay Kumar 87,942 *
Edward C. Lord 2,400 *
Gary E. Martinelli 24,400 *
Charles B. Wang 7,919,900(3) 4.9%
</TABLE>
<PAGE>
BOARD AND MANAGEMENT OWNERSHIP (continued)
<TABLE>
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned (1)(2) of Class
- - --------------------------- ------------------------- ----------
Non-Directors:
<S> <C> <C>
Arnold S. Mazur 189,437 .1%
Peter Schwartz 141,713 .1%
All Directors, Nominees and
Executive Officers as a
Group (13 persons) 8,803,666 5.4%
__________________
<FN>
* Represents less than .1% of the outstanding Common Stock
<FN>
(1) Includes shares that may be acquired within 60 days after June 15,
1994 through exercise of employee and non-employee directors stock
options as follows: Mr. Artzt, 334,572; Mr. Kumar, 72,707; Mr. Mazur,
176,668; Mr. Schwartz, 137,344; Mr. Wang, 1,292,626; Mr. de Vogel,
2,000; Mr. Goldstein, 2,000; Mr. Lord, 2,000; Mr. Martinelli, 2,000;
and all directors and executive officers as a group, 2,138,946.
<FN>
(2) Includes shares credited to the executives' accounts in the Company's
tax-qualified profit-sharing plan as follows: Mr. Artzt, 369; Mr. Kumar,
7,315; Mr. Mazur, 369; Mr. Schwartz, 369; and all executive officers as
a group, 9,020.
<FN>
(3) Includes 15,602 shares owned directly by Mr. Wang's wife, an employee
of the Company; 98,672 shares subject to employee stock options held by
Mr. Wang's wife, which are exercisable within 60 days after June 15,
1994; and 144 shares credited to the account of Mr. Wang's wife in the
Company's tax-qualified profit-sharing plan. Mr. Wang disclaims
beneficial ownership of such shares.
</TABLE>
ITEM 1--ELECTION OF DIRECTORS
NOMINEES
It is proposed that the eight persons named below will be elected at the
meeting. Unless otherwise specified it is the intention of the persons named
in the accompanying form of Proxy to vote, the enclosed proxy will be voted
for the election of Russell M. Artzt, Willem F.P. de Vogel, Irving Goldstein,
Richard A. Grasso, Shirley Strum Kenny, Sanjay Kumar, Edward C. Lord and
Charles B. Wang to serve as directors until the next Annual Meeting of
Stockholders and until their successors shall have been duly elected and
qualified. Each of the nominees now serves as a director of the Company. At
the time of the annual meeting, if any of the nominees named below is not
available to serve as director (an event which the Board of Directors does
not now anticipate), the proxies will be voted for the election as directors
of such other person or persons, if any, as the Board of Directors may
designate.
Set forth below are the names and ages of the nominees, the principal
occupation of each, the year in which first elected a director of the
Company, the business experience of each for at least the past five years and
certain other information concerning each of the nominees.
<TABLE>
<CAPTION>
Director
Age Since
----------- ------------
<S> <C> <C>
Russell M. Artzt (1) 47 1980
Executive Vice President-Research and
Development since April 1987 and the
Senior Development Officer of the
Company since 1976.
Willem F.P. de Vogel (2) (3) 43 1991
President of Three Cities Research, Inc.,
a private investment management firm in
New York City, since 1981. From August
1981 to August 1990, Mr. de Vogel served
as a director of the Company.
<PAGE>
<CAPTION>
Director
Age Since
----------- -----------
<S> <C> <C>
Irving Goldstein (2) (3) 56 1990
Director General and Chief Executive
Officer of INTELSAT, an international
satellite telecommunications company,
since February 1992. He was Chairman
and Chief Executive Officer of
Communications Satellite Corporation
from October 1985 to February 1992 and
President from May 1983 to October 1985,
and was a director from May 1983 to
February 1992. He also is a director of
Security Trust Co., N.A.
Richard A. Grasso (3) 47 1994
Executive Vice Chairman of the New York
Stock Exchange since January 1991 and
President and Chief Operating Officer
since 1989. He has been with the Exchange
since 1968.
Shirley Strum Kenny (4) 59 1994
President of Queens College of The City
University of New York since 1989. She
is also a director of Toys "R" Us, Inc.
Sanjay Kumar 32 1994
President and Chief Operating Officer
since January 1994. He was Executive
Vice President-Operations from January
1993 to December 1993, Senior Vice
President-Planning from April 1989 to
December 1992, Vice President-Planning
from November 1988 to March 1989. He
joined the Company with the acquisition
of UCCEL in August 1987.
Edward C. Lord (2) 44 1988
Senior Vice President of IBJ Schroder
Bank & Trust Company, a commercial
banking institution in New York City,
since 1987 and Vice President since 1978.
He has managed corporate banking and
personal lending activities in excess of
twelve years.
Charles B. Wang (1) 49 1976
Chief Executive Officer of the Company
since 1976 and Chairman of the Board
since April 1980.
<FN>
(1) Member Executive Committee.
<FN>
(2) Member Audit Committee.
<FN>
(3) Member Compensation Committee.
<FN>
(4) It is anticipated Ms. Kenny will be appointed to the Board of
Directors during July 1994.
<FN>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES
LISTED ABOVE.
</TABLE>
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the Company's fiscal year ended March 31, 1994, the Board of
Directors of the Company held six meetings. In addition to these meetings,
the Board of Directors acted by unanimous written consent on four occasions.
Each Director attended more than seventy-five percent (75%) of the Board
meetings and meetings of the Board committees on which he served. The Company
has a standing Executive Committee, Audit Committee and Compensation
Committee, but does not have a standing nominating committee, the functions
of which are performed by the entire Board.
The Compensation Committee of the Board consists of three non-employee
directors, Messrs. Irving Goldstein, Willem F.P. de Vogel and Richard A.
Grasso. During fiscal year 1994, the Compensation Committee met four times
and acted once upon unanimous written consent. A subcommittee consisting of
Messrs. de Vogel and Goldstein met once during fiscal 1994 to determine
performance-based incentive compensation under the Company's Annual Incentive
Compensation Plan. The Compensation Committee has the power to prescribe,
amend and rescind rules relating to the 1991 Stock Incentive Plan, 1981
Incentive Stock Option Plan, 1987 Non-Statutory Stock Option Plan and 1993
Stock Option Plan for Non-Employee Directors, to grant options and other
awards under the Plans and to interpret the Plans. The other duties of the
Compensation Committee are described below under "Compensation Committee
Report on Executive Compensation."
The Audit Committee of the Board consists of four non-employee directors,
Messrs. de Vogel, Goldstein, Grasso and Lord. The Committee has the
responsibility of recommending the firm to be chosen as independent auditors,
overseeing and reviewing audit results, and monitoring the effectiveness of
internal audit functions. The Audit Committee met three times during fiscal
year 1994. The Audit Committee has recommended the selection of Ernst &
Young as independent auditors for the fiscal year ending March 31, 1995.
Compensation for non-employee directors is set at $30,000 per year. In
addition, each non-employee director receives $500 for each meeting of the
Board of Directors or any of its committees he attends in person, provided,
however, that if a Board meeting and a committee meeting take place on the
same day only one attendance fee is paid for that day. Directors who are also
employees of the Company or its subsidiaries receive no compensation for
serving as directors or as members of board committees.
Under the Company's 1993 Stock Option Plan for Non-Employee Directors,
non-employee directors are automatically awarded options to acquire up to
2,000 shares of the Company's Common Stock per year depending on the
Company's attainment of specific return on equity objectives. Pursuant
to such Plan, the exercise price of such options is an amount equal to the
fair market value of the shares covered by such options on the date of grant.
REPORT OF COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended that might affect future filings,
including this Proxy Statement, the report of the Compensation Committee of
the Company's Board of Directors and the Stock Performance Graph set forth
below in accordance with Securities Exchange Commission requirements, shall
not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
Decisions as to certain compensation of the Company's executive officers
are made by the Compensation Committee (the "Committee") of the Company's
Board of Directors, none of whom are employees of the Company. At the
Company's fiscal year end, the members of the Committee were Messrs. de
Vogel, Goldstein and Grasso. During the fiscal year ended March 31, 1994, the
Committee met four times and acted once upon unanimous written consent. A
subcommittee consisting of Messrs. de Vogel and Goldstein, who are defined
as "outside directors" for Section 162(m) of the Internal Revenue Code, as
amended (the "Code") was formed to act upon performance-based executive
compensation and met once during the year.
<PAGE>
COMPENSATION POLICIES
The Committee's executive compensation policies are designed to attract
and retain executives capable of leading the Company in a rapidly evolving
computer software marketplace and to motivate such executives to maximize
profitability and stockholder value. The Committee has designed the Company's
Comprehensive Executive Compensation Plan with four components to achieve
this objective--base salary; annual incentives; long-term equity
participation; and benefits. The majority of each executive's total
compensation is dependent on the attainment of predefined performance
objectives which are consistent with the maximization of stockholder value.
The philosophy and operation of each component is discussed herein:
Base Salary. Base salaries for its executive officers are designed to
attract and retain superior, high performing individuals. As such, the
Company believes its base salaries for comparable positions are, and should
be, equal to or greater than those of comparable companies.
Annual Incentives. The executive officers earn a significant portion of
their total compensation based on achievement of predetermined individual and
Company performance targets. The Company's Annual Incentive Compensation
Plan, which is administered by a Subcommittee of the Compensation Committee
establishes a specific percentage of net income after taxes that is in excess
of a threshold based on the Company's return on average stockholders' equity.
Different target percentages of any such excess are determined for each
executive officer prior to the commencement of each fiscal year. The
Subcommittee has certain established caps on the Annual Incentive
compensation that can be earned by the executive officers if the Company's
growth in earnings per share from the prior fiscal year is less than
projected.
Long-term Equity Participation. The Committee believes strongly that stock
ownership by management and stock-based performance compensation arrangements
are beneficial in aligning management's and stockholders' interests in the
enhancement of stockholder's value. To this end, the Committee grants to key
executives stock options which vest (i.e., become exercisable) over a
five-year period as follows: 10% on the first anniversary; 15% on the second
anniversary; 20% on the third anniversary; 25% on the fourth anniversary and
30% on the fifth anniversary. Options granted at the current market price to
executives under the Company's 1991 Stock Option Plan have a term of 10 years
from the date of grant, and subject to the above vesting restrictions, may
be exercised at any time during such term.
In order to further strengthen and reinforce this linkage between
increased stockholder value and executive compensation, the Committee has
established target levels of stock ownership for each executive officer such
that the net value of each officer's holdings of Common Stock and Common
Stock equivalents shall be equal to or greater than a specified multiple of
that officer's average annual cash compensation for the past three fiscal
years. The table below shows the target relationships for the CEO and the
four most highly compensated executive officers at March 31, 1994:
<TABLE>
<CAPTION>
Average Target Target Actual
Compensation Multiple Holdings Holdings
------------ -------- ------------ ------------
<S> <C> <C> <C> <C>
C.B. Wang $4,393,000 3 $13,179,000 $238,505,240
S. Kumar 1,179,167 2 2,358,334 6,531,257
R.M. Artzt 1,025,833 2 2,051,666 13,749,555
A.S. Mazur 900,833 1 900,833 11,076,959
P. Schwartz 629,167 1 629,167 5,073,522
</TABLE>
Senior executive officers, including those shown above, have voluntarily
agreed to allocate at least 50% of the total value of their CASH plan (as
described below) to the Company stock fund component of the CASH Plan. In the
event that the Securities and Exchange Commission removes its current
exemption of 401(k) defined contribution plans from the restrictions of
Section 16b-3 of the Securities Exchange Act of 1934, this provision of the
long-term equity participation plan shall be void.
Benefits. The benefits available to executive officers are the same as
those offered to all full-time employees. In general, they are the standard
protection against financial catastrophe that can result from illness,
disability or death. Executive officers are also eligible to participate in
the voluntary personal contribution as well as the Company matching and
discretionary provisions of the Company"s CASH Plan, to the extent permitted
under the CASH Plan and applicable Employment Retirement Income Security Act
of 1974, as amended ("ERISA") and the Code. They provide all employees with
the protection and peace of mind enabling them to devote their full attention
to achievement of the Company's objectives.
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
After consulting with the Company's independent compensation advisors, the
Committee determined each component of Mr. Wang's fiscal year 1994
compensation as follows.
Base Salary. Mr. Wang's base salary of $1,000,000 was not increased from
the previous fiscal year.
Annual Incentives: The Company's fiscal year 1994 performance produced a
return on average stockholders' equity of 35.7%, an increase of nearly eleven
percentage points over the return achieved in fiscal year 1993. Mr. Wang's
performance-based at risk compensation calculated under the Annual Incentive
Compensation Plan was $5,729,000, or 85% of his total cash compensation.
Pursuant to the Annual Incentive Compensation Plan for fiscal year 1994, Mr.
Wang's award was calculated as a predetermined percentage of the Company's
net income for the fiscal year less a cost of equity. The cost of equity was
computed based on a "five point" quarterly average of the Company's reported
stockholder's equity. Mr. Wang's target incentive compensation award under
this formula was further limited to the extent the Company's earnings per
share for fiscal year 1994 did not exceed fiscal year 1993 earnings per share
by 15%. Since the Company's earnings per share grew 63% in fiscal year 1994,
this restriction or reduction did not apply.
Long-term Equity Participation. The committee granted Mr. Wang 303,900
incentive and non-statutory options under the Company's 1991 Stock Option
Plan. As noted in the discussion of targeted levels of Company stock
holdings, Mr. Wang's holdings at March 31, 1994 exceeded the objective by
approximately eighteen times, or $225,326,240.
Benefits. Mr. Wang received matching and discretionary contributions to
the Company's CASH Plan of $23,742 in fiscal year 1994. He was also eligible
for benefits under the Company's medical, dental, and life insurance plans
consistent with those available to other full-time employees.
OTHER EXECUTIVE OFFICERS
The compensation plans of the Company's other executive officers,
including the four persons shown in the Summary Compensation Table below,
provide for a base salary, annual incentive cash compensation based on a
fixed percentage of the Company's aggregate net income over and above a
predetermined return on average stockholders' equity for the fiscal year,
long-term equity grants under the Company's 1991 Stock Option Plan and access
to the Company's standard employee benefit plans. For fiscal 1994, the
Subcommittee allocated an aggregate of 1.5% of the Company's aggregate net
income in excess of a specified equity cost to the four below named executive
officers, other than the Chief Executive Officer. In addition, approximately
sixty percent of the Company's 6,900 employees, including the Chief Executive
Officer and the four executive officers referred to in the tables below and
four non-employee directors, were granted options to purchase an aggregate
of 2,267,820 shares of the Company's Common Stock. This grant represents
approximately 1.4% of the Company's total shares outstanding at March 31,
1994. The Committee believes that a significant vested interest demonstrated
by their ownership of stock and stock options is a strong incentive to align
the interests of all directors, employees, and particularly the executive
officers, with the interests of the stockholders.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS:
Willem F.P. de Vogel
Irving Goldstein
Richard A. Grasso
<PAGE>
COMPENSATION AND OTHER INFORMATION CONCERNING EXECUTIVE OFFICERS
The following table sets forth the cash and non-cash compensation for the
Chief Executive Officer and each of the four next most highly compensated
executive officers of the Company for each of the fiscal years ended March
31, 1992, 1993 and 1994, respectively.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Name and Fiscal Annual Compensation Compensation All Other
Principal Position Year Salary Incentive Option Awards (#)(1) Compensation(2)
- - ------------------- ------ ------ --------- -------------------- ---------------
<S> <C> <C> <C> <C> <C>
Charles B. Wang 1994 $1,000,000 $5,729,000 303,900 $30,942
Chairman of the Board 1993 $1,000,000 $2,700,000 306,950 $19,271
and Chief Executive 1992 $ 750,000 $2,000,000 263,000 $14,430
Officer
Sanjay Kumar 1994 $ 400,000 $1,690,000 203,900 $31,686
President and Chief 1993 $ 300,000 $ 632,500 156,950 $17,443
Operating Officer 1992 $ 150,000 $ 365,000 63,000 $10,500
Russell M. Artzt 1994 $ 400,000 $1,195,000 153,900 $32,177
Executive Vice 1993 $ 300,000 $ 582,500 106,950 $17,297
President-Research 1992 $ 200,000 $ 400,000 113,000 $13,000
and Development
Arnold S. Mazur 1994 $ 400,000 $ 880,000 153,900 $31,686
Executive Vice 1993 $ 300,000 $ 582,500 106,950 $17,463
President-Sales 1992 $ 175,000 $ 365,000 63,000 $12,113
Peter Schwartz 1994 $ 400,000 $ 530,000 103,900 $30,565
Senior Vice 1993 $ 300,000 $ 307,500 56,590 $16,567
President-Finance and 1992 $ 125,000 $ 225,000 35,080 $ 8,750
Chief Financial Officer
_______________________
<FN>
(1) All options granted to such executive officers of the Company vest
over a five year period, 10% on the first anniversary; 15% on the
second anniversary; 20% on the third anniversary; 25% on the fourth
anniversary and 30% on the fifth anniversary.
<FN>
(2) Consists of Company contributions to the Company's tax-qualified
profit-sharing plan, and for fiscal year 1994 a non-reimbursed travel
allowance of $7,200 for each executive officer.
</TABLE>
<PAGE>
The following tables summarize option grants and exercises during the
fiscal year ended March 31, 1994 to or by the executive officers named in
the Summary Compensation Table above, and the value of the options held by
such person on March 31, 1994.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Granted Percent of Exercise Expiration Potential Appreciation
Name Options Total Grants Price Date 0% 5%(1) 10%(2)
- - -------------- ------- ------------ ----- -------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
C.B. Wang 303,900 13.4% $25.625 May 12, 2003 -0- $ 4,897,478 $ 12,411,170
S. Kumar 203,900 9.0% $25.625 May 12, 2003 -0- $ 3,285,935 $ 8,327,205
R.M. Artzt 153,900 6.8% $25.625 May 12, 2003 -0- $ 2,480,164 $ 6,285,222
A.S. Mazur 153,900 6.8% $25.625 May 12, 2003 -0- $ 2,480,164 $ 6,285,222
P. Schwartz 103,900 4.6% $25.625 May 12, 2003 -0- $ 1,674,393 $ 4,243,240
All Optionees 2,267,820 100% $25.625 May 12, 2003 -0- $ 36,546,883 $ 92,616,976
All Stockholders(3) N/A N/A N/A N/A -0- $2,627,600,321 $6,658,855,108
<FN>
(1) Realizable net value if Company stock were to increase in value five
percent (5%) per year for the ten year term of the options.
<FN>
(2) Realizable net value if Company stock were to increase in value ten
percent (10%) per year for the ten year term of the options.
<FN>
(3) Realizable increase in value to all stockholders if all outstanding
shares of Company stock (163,048,776 at March 31, 1994) were to
increase in value five percent (5%) or ten percent (10%) per year
from its March 31, 1994 value for ten consecutive years.
</TABLE>
<TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Net Value of Unexercised
Unexercised Options In-The-Money Options
Shares Acquired/ Value at March 31, 1994 at March 31, 1994(3)
Name Exercised Realized(1) Exercisable(2) Unexercisable Exercisable(2) Unexercisable
- - ----- ---------- ----------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
C.B. Wang 1,216,193 984,487 $22,130,366 $15,290,445
S. Kumar 44,420 $881,484 28,775 433,655 $ 636,318 $ 5,424,559
R.M. Artzt 32,000 $802,000 303,140 442,710 $ 6,141,818 $ 6,667,007
A.S. Mazur 8,000 $298,500 145,235 361,205 $ 3,061,150 $ 4,842,816
P. Schwartz 2,200 $ 83,463 118,465 203,075 $ 2,444,250 $ 2,494,379
<FN>
(1) Market value of shares purchased at exercise date less aggregate
option exercise price.
<FN>
(2) All option grants vest over a five year period: 10% on the first
anniversary; 15% the second anniversary; 20% the third anniversary;
25% the fourth anniversary; and 30% the fifth
anniversary.
<FN>
(3) Pro forma net valuation based on March 31, 1994 closing price
($30.875) less fair market price at the grant date.
</TABLE>
<PAGE>
COMMON SHARE PRICE PERFORMANCE GRAPH
The following graph compares cumulative total return of the Company's
Common Stock with the Standard and Poor's 500 Index and the Standard and
Poor's Computer Software and Services Index during the fiscal years 1989
through 1994* assuming the investment of $100 on April 1, 1989 and the
reinvestment of dividends.
(Line graph of data table shown below)
<TABLE>
TOTAL RETURN DATA
<CAPTION>
3/31/89 3/31/90 3/31/91 3/31/92 3/31/93 3/31/94
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Computer Associates 100 80 51 91 140 182
S&P 500 Index 100 119 136 152 175 177
S&P Computer Software
and Services Index** 100 121 110 143 189 212
_____________________
<FN>
* The Company's fiscal years ended March 31 of each year.
<FN>
** The Standard and Poor's Computer Software and Services Index is composed
of the following companies:
Oracle Systems Corporation Lotus Development Corporation
Computer Associates International, Inc. Autodesk Inc.
Novell Inc. Automatic Data Processing, Inc.
Computer Sciences Corporation Ceridian Corporation
Shared Medical Systems Corporation
</TABLE>
<PAGE>
EMPLOYEES' PROFIT SHARING PLAN
The Company maintains a profit sharing plan, the Computer Associates
Savings Harvest Plan ("CASH Plan"), for the benefit of employees of the
Company. The CASH Plan is intended to be a qualified plan under Section
401(a) of the Code, and certain contributions made thereunder qualify for tax
deferral under Section 401(k) of the Code. The CASH Plan is funded through
the Company's and participating employees' contributions and generally
provides that employees may contribute, through payroll deductions, a
percentage of their regular salary. The Company makes matching and
discretionary contributions for participants in the CASH Plan, including the
Company's executive officers ("Employee Contributions"). Participants in the
CASH Plan receive a 50% match of their contributions, up to a maximum of 5%
of annual compensation (subject to certain Code limitations), and a portion
of the Company's discretionary contribution for each year generally in
proportion to their annual compensation. The Company's contributions under
the CASH Plan vest in incremental amounts over a period of seven years from
date of hire, and are 100% vested after seven years. The CASH Plan is
administered by a committee of officers and employees of the Company
appointed by the Board of Directors. All employees who have been in
the employ of the Company for at least one year are eligible to participate.
Effective April 1, 1994, the Company established an unfunded "Restoration
Plan" primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. This
Restoration Plan is solely for the purpose of benefiting participants in the
CASH Plan who are precluded from receiving a full allocation of Employer
Contributions under the CASH Plan because of the limitation on the
compensation taken into account under such CASH Plan imposed by Section
401(a)(17) of the Code as amended by the Omnibus Budget Reconciliation Act
of 1993.
The Company also established effective January 1, 1993, an unfunded
"Excess Benefit Plan" as said term is defined in Sections 3(36) and 4(b)(5)
of ERISA, solely for the purpose of benefiting participants in the CASH Plan
who are unable to receive a full allocation of Employer Contributions under
the CASH Plan limitations imposed by Section 415 of the Code.
During fiscal year 1994, the Company contributed $23,742, $24,486,
$24,977, $24,486 and $24,565 under the CASH and Excess Benefit Plans for the
accounts of Messrs. Wang, Kumar, Artzt, Mazur and Schwartz, respectively,
and $27,691,000 for all participating employees. Such contributions are
included in the amount of other cash compensation set forth opposite the five
executive officers' names on the Summary Compensation Table on page 8.
STOCK OPTIONS
During fiscal year 1994, the Company maintained the 1981 Incentive Stock
Option Plan (the "1981 Plan") which provides for the issuance to key
employees of incentive stock options to purchase up to a maximum of 8,000,000
shares of Common Stock of the Company. The 1981 Plan terminated in accordance
with its terms, on October 23, 1991, which was the tenth anniversary of the
date on which it was first adopted. No additional options may be granted
under the 1981 Plan. The 1981 Plan has been administered by the Compensation
Committee which determined the persons to whom incentive stock options were
granted, the number of shares subject to such options and the terms of the
stock options. Incentive stock options are stock options which are intended
to satisfy the criteria established in Section 422 of the Code and are
subject to different tax treatment than non-statutory stock options.
Incentive stock options may be granted for terms of up to ten years. The
option price of an incentive stock option may not be less than
the market price of the shares of Common Stock on the date the option is
granted.
The Company's 1991 Stock Incentive Plan (the "1991 Plan") provides that
up to an aggregate of 10,000,000 shares of the Company's Common Stock may be
granted to employees (including officers of the Company) pursuant to stock
options or stock appreciation rights ("SARs"). The options may be either
options intended to qualify as "incentive stock options," as that term is
defined in the Code, or non-statutory options. The per share exercise price
of options and SARs granted under the 1991 Plan may not be less than 100% of
the Fair Market Value (as defined below) of a share of the Company's Common
Stock on the date of grant. Shares of Common Stock acquired under the 1991
Plan may be treasury shares, including shares purchased in the open market,
newly issued shares or a combination thereof. Fair Market Value, as of any
date, means the closing sales price of a share of Common Stock as reflected
in the consolidated trading of New York Stock Exchange issues (as long as the
Company's Common Stock is listed on the New York Stock Exchange).
<PAGE>
The 1991 Plan is administered by the Compensation Committee of the Board
of Directors, which determines the individuals to whom options and SARs are
granted, the date or dates of grant, and the number of shares covered by
the options and SARs granted. The Compensation Committee also has the power
to interpret the 1991 Plan and to determine the terms, exercise price and
form of exercise payment for each option granted under the 1981 and 1991
Plans, including whether such option is intended to qualify as an incentive
stock option under the Code.
The Company also maintains the 1987 Non-Statutory Stock Option Plan (the
"1987 Plan") pursuant to which non-statutory options to purchase up to
5,000,000 shares of Common Stock of the Company may be granted to selected
officers and key employees of the Company. Pursuant to the 1987 Plan, the
option price of stock options granted thereunder may not be less than the
market price of the shares of Common Stock on the date of grant. The option
period may not exceed twelve years. The Compensation Committee of the Board
of Directors also administers the 1987 Plan.
The 1993 Stock Option Plan for Non-Employee Directors (the "1993 Plan")
provides for non-statutory options to purchase up to 100,000 shares of Common
Stock of the Company to be available for grant to each member of the Board
of Directors who is not otherwise an employee of the Company. Pursuant to the
1993 Plan, the exercise price shall be the fair market value of the shares
covered by the option at the date of grant. The 1993 Plan is administered
by the Compensation Committee of the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") and the New York Stock
Exchange ("NYSE") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of such copies of Section 16(a) forms received
by it, or written representation from certain reporting persons, during the
fiscal year ended March 31, 1994, the Company believes that each of its
officers, directors and greater than ten percent beneficial stockholders
complied with all applicable filing requirements, except that Mr. Lord's
Annual Report on Form 5 reporting the grant of certain options was filed two
days late.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary E. Martinelli, a director of the Company and a member of the
Compensation Committee until January 1994, is the principal officer and
director and sole shareholder of Gary E. Martinelli & Associates, P.C., a law
firm. The Company has retained, and intends to retain in the future, Gary E.
Martinelli & Associates, P.C. in connection with such legal matters as it
deems appropriate. In fiscal year 1994, legal fees of approximately $99,000
were paid to Gary E. Martinelli & Associates, P.C. In the opinion of
management, the terms and conditions of this transaction and the
aforementioned legal services were fair and reasonable, and as favorable to
the Company as those which could have been obtained from unrelated third
parties.
Richard A. Grasso, a director of the Company and a member of the
Compensation Committee is the Executive Vice Chairman, President and Chief
Operating Officer of the New York Stock Exchange (the "NYSE"). The Company's
Common Stock has been listed and traded on the NYSE since September 1986, and
in fiscal year 1994, the Company paid listing fees totaling $156,801 to the
NYSE. Although Mr. Grasso is a "disinterested director" under Rule 16b-3 of
the 1934 Securities Exchange Act (the "Act"), some interpretations of Section
162(m) of the Code would not consider Mr. Grasso to be an "outside director"
for purposes of determining or recommending executive compensation levels.
The Company does not consider this to be a valid distinction but has
established a two member subcommittee (not including Mr. Grasso) of the
Compensation Committee which has and will decide and recommend any
compensation plans likely to exceed the $1,000,000 Section 162(m) threshold.
CERTAIN TRANSACTIONS
Mr. Anthony W. Wang, a former President and Chief Operating Officer of the
Company, and a brother of Charles B. Wang, Chairman and CEO, has an agreement
to remain with the Company in a non-executive capacity until March 31, 1997.
During this term, Mr. Wang will assist the Company in the prosecution and
<PAGE>
defense of certain litigation and will perform such other advisory and
consulting duties as may be reasonably requested from time to time by the
Company's Chief Executive Officer. For these services and in consideration
of a five-year non-competition covenant, the Company agreed to pay Mr. Wang
$500,000 per year. Under his agreement Mr. Wang will not be entitled to
receive additional stock option grants, but stock options granted to Mr. Wang
during his tenure as an officer of the Company will continue to vest and be
exercisable.
ITEM 2--APPROVAL OF THE ANNUAL INCENTIVE COMPENSATION PLAN
On May 25, 1994, the Board of Directors of the Company ratified and
approved the Computer Associates International, Inc. Annual Incentive
Compensation Plan (the "Incentive Plan") which had been previously adopted
by the Compensation Subcommittee on performance-based executive compensation
on March 31, 1994. The Incentive Plan was established as part of an
initiative to document and codify the Company's existing management
compensation structure (described above under "Compensation Committee Report
on Executive Compensation") and to provide guidelines under which the
Compensation Subcommittee will determine and award future incentive
compensation to eligible management employees of the Company. Prior to the
start of each fiscal year, the Compensation Subcommittee identifies those key
executives whose responsibilities and performance most directly affect
attainment of the Company's larger objectives ("Participants"). The
individuals covered and the amounts paid under this Plan in the most recent
fiscal year ended March 31, 1994 are depicted in the Summary Compensation
table shown on page 8.
The Incentive Plan was developed as a result of a detailed review by the
Company's senior management and Compensation Committee of all aspects of the
Company's compensation structure. Such review was aided by a comprehensive
study by an independent management consultant of the compensation practices
of other companies in related businesses. Senior management and the
Compensation Committee also considered the impact of the recent enactment of
Section 162(m) of the Code, which limits in certain circumstances the
deductibility of compensation in excess of $1 million paid to certain
executive officers (see "Reasons for the Proposal" below). Based upon the
results of such review, the Compensation Subcommittee recommended the
Incentive Plan to the Board of Directors.
DESCRIPTION OF THE INCENTIVE PLAN
The material terms of the Incentive Plan are summarized below. Such
summary is qualified in its entirety by reference to the complete text of the
Incentive Plan attached as Exhibit A to this Proxy Statement.
Under the Incentive Plan, the Participants will be eligible to receive an
Annual Incentive award based upon the attainment and certification of
performance goals established by the Compensation Subcommittee.
The Subcommittee shall adopt these performance goals in advance of each
fiscal year (or in advance of such other date as may be permitted under
Section 162(m) of the Code). Each Participant will be assigned a target
Annual Incentive award ("Target") for such fiscal year equal to a specific
percentage of the net income of the Company less a fixed percentage of the
average equity for the Company on a consolidated basis. To the extent that
the Company's actual performance is better or worse than the levels
established by the Subcommittee, each participant's actual Annual Incentive
award will be greater or less than the Target for that fiscal year.
The Subcommittee will also adopt a mathematical formula or matrix for the
fiscal year which indicates the extent to which the Annual Incentive will be
reduced if the Company's net income per share does not exceed the prior
fiscal year's net income per share. With respect to the Company's current
fiscal year 1995, such determinations were made by the Compensation
Subcommittee at a meeting held on March 31, 1994, in accordance with
transitional rules issued by the Internal Revenue Service.
Except as the Subcommittee may otherwise in its sole discretion provide,
all Target awards under the Incentive Plan are contingent upon the
Participant remaining in the employ of the Company or its subsidiaries.
The Incentive Plan may be amended or terminated by the Board of Directors
of the Company at any time, provided that bonuses earned but unpaid are paid
promptly after such termination. Payment of any awards under the Incentive
Plan will be calculated and approved by the Compensation Subcommittee prior
to payment.
<PAGE>
REASON FOR THE PROPOSAL
The Incentive Plan was adopted in order to document the variable cash
incentive portion of the Company's ongoing pay for performance approach to
compensation. The Incentive Plan, in conjunction with the Base Salary,
Long-term Equity Participation, and Benefits Programs is intended to bring
the Company's compensation standards in line with those of comparable
companies in related businesses. In its discretion the Compensation
Subcommittee intends to establish Targets under the Incentive Plan which, if
achieved, will result in total cash compensation for the Company's executives
that will attract and retain high achieving performers. In addition, the
Board of Directors believes that the Incentive Plan will continue to motivate
such executives to achieve maximum profitability and stockholder returns.
The Incentive Plan is proposed to stockholders in response to the recent
enactment of Section 162(m) of the Code, which imposes limits on the ability
of public companies to deduct compensation in excess of $1 million paid to
Covered Employees in certain circumstances. If stockholder approval of the
Incentive Plan is obtained, all incentive compensation awarded under the
Incentive Plan will continue to qualify for an exception to Section 162(m)
of the Code relating to performance-based compensation and, therefore, will
be deductible by the Company for federal income tax purposes.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
ANNUAL INCENTIVE COMPENSATION PLAN.
ITEM 3--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Although the By-Laws of the Company do not require the submission of the
selection of independent auditors to the stockholders for approval, the Board
of Directors considers it desirable that its appointment of independent
auditors be ratified by the stockholders. Ernst & Young (and its predecessor
firm Ernst & Whinney) has been the independent auditor for the Company since
1980 and has been appointed to serve in that capacity for the 1995 fiscal
year. The Board of Directors will ask the stockholders to ratify the
appointment of this firm as independent auditors for the Company at the
Annual Meeting.
A representative of Ernst & Young will be present at the meeting and will
be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT OF
ERNST & YOUNG AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
The Company's By-Laws require advance notice for any stockholder
nomination or proposal at an annual or special meeting. In general, all
nominations or proposals must be delivered to the Secretary of the Company
at the address set forth below, not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting. Any
stockholder desiring a copy of the Company's By-Laws will be furnished a copy
without charge upon written request to the Secretary of the Company. The
submission deadline for stockholder proposals for consideration for inclusion
in proxy materials for the 1995 Annual Meeting is March 8, 1995.
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting,
it is the intention of the persons named in the enclosed proxy to vote the
shares represented thereby on such matters in accordance with their best
judgment.
The prompt return of your proxy will be appreciated. Therefore, whether
or not you expect to attend the meeting, please sign and date your proxy and
return it in the enclosed envelope.
By Order of the Board of Directors
Belden A. Frease
Secretary
Dated: July 8, 1994
Islandia, New York
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING. SUCH REQUESTS SHOULD BE
ADDRESSED TO: COMPUTER ASSOCIATES INTERNATIONAL, INC., ATTN.: MR. BELDEN A.
FREASE, SECRETARY, ONE COMPUTER ASSOCIATES PLAZA, ISLANDIA, NEW YORK
11788-7000.
<PAGE>
EXHIBIT A
COMPUTER ASSOCIATES INTERNATIONAL, INC.
ANNUAL INCENTIVE COMPENSATION PLAN
I. ESTABLISHMENT AND PURPOSE.
1.1 Purpose. Computer Associates International, Inc. (the "Company")
hereby establishes the Annual Incentive Compensation Plan (the
"Plan"), effective as of April 1, 1994. The Plan is intended to
attract and retain the services of executives who are in a position
to influence the success of the Company by providing an award based
on the Company's financial performance. Further, this Plan is
designed to motivate key executives to increase shareholder value
by improving operating results and efficiently employing the
Company's capital.
1.2 Effective Date. The Plan is effective as of April 1, 1994, subject
to the approval by an affirmative vote, at the 1994 Annual Meeting
of Stockholders, or any adjournment thereof, of the holders of a
majority of the outstanding shares of the common stock of the
Company, present in person or by proxy and entitled to vote at such
meeting.
II. DEFINITIONS.
2.1 Defined Terms. When used in the Plan, the following terms shall
have the meanings specified below:
2.1.1 "Net Income" means the Company's net income, in accordance
with Generally Accepted Accounting Principles, as reported
for the Plan Year, adjusted for cumulative effects of
changes in accounting standards.
2.1.2 "Equity" means the Company's reported shareholders' equity
for the Plan Year.
2.1.3 "Average Equity" means the "five-point" quarterly average
of the Equity for the Plan Year, the first point being the
preceding year end.
2.1.4 "Board" means the Company"s Board of Directors.
2.1.5 "Committee" means the Compensation Subcommittee of the Board
of Directors of the Company formed to act on
performance-based compensation for key executives.
2.1.6 "Cost of Equity" means the Company's imputed equity cost
based on a formula approved by the Committee prior to the
start of the Plan Year.
2.1.7 "Normal Retirement" or "Early Retirement" means any
termination of employment (other than by death or
disability) after a Participant's normal or early retirement
date (as defined in the Company's CASH Plan).
2.1.8 "Participant" means as to any Plan Year a key executive of
the Company who is likely to have a significant impact on
the value added performance of the Company. An employee
must be approved as a Participant by the Committee before
the beginning of each Plan Year.
2.1.9 "Plan Year" means the fiscal year commencing April 1, 1994
and ending March 31, 1995 and each succeeding fiscal year.
2.1.10 "Target Annual Incentive" means the target incentive
opportunity for an individual, expressed as a percentage of
the projected Value Added for a specific Plan Year. The
schedule of individual Target Annual Incentives shall be
determined by the Committee in accordance with Section 3.2.
2.1.11 "Value Added" means Net Income minus the Cost of Equity. The
Cost of Equity is determined by multiplying the Company's
Average Equity by a percentage fixed by the Committee.
<PAGE>
III. AWARDS AND COMMITTEE DETERMINATIONS
3.1 Opportunity. The Committee shall approve participation in the Plan
and establish a Target Annual Incentive for each Participant, based
on his or her role and responsibilities, prior to the beginning of
each Plan Year.
3.2 Awards. Payment under this Plan will be based on a payout table
adopted by the Committee in writing prior to the start of the Plan
Year. Such table will generally remain unchanged for a period of
years; however, the Committee reserves the right (in its sole
discretion) to modify the table, provided that such modification
is done prior to the start of the applicable Plan Year. The payout
table will provide 100% of a Participant's Target Annual Incentive
if a certain level of Value Added is achieved and greater or lesser
awards for Value Added that exceeds or is less than, respectively,
the level at which 100% of Target Annual Incentives are paid. The
payout table will be further limited by any pre-established limits
or caps based on Company or individual performance which the
Committee has previously determined.
3.3 Determination. Prior to the start of any Plan Year, the Committee
shall determine for such Plan Year whether any significant
nonrecurring item (e.g., an acquisition, or the gain or loss on a
divestiture, of a business) will be excluded from the calculation
of Value Added for the Plan Year, as well as any limitations based
on Company or individual performance. Such determination or
limitation shall apply only to events or performance that have
occurred since the adoption of this Plan or that may occur in the
Plan Year.
3.4 Adjustments Prior to Payment. The Committee, in its sole
discretion, may reduce the award for any Participant below the
award that would otherwise be payable in accordance with the Plan.
3.5 Certification. The Committee shall certify in writing the level of
Value Added achieved and the respective Annual Incentive amounts
earned for the Plan Year prior to payment of awards.
IV. PAYMENT OF AWARDS
4.1 Right to Receive Payment. Any Annual Incentive amounts that may
become due under this Plan shall be made solely from the general
assets of the Company, normally on or before the May 31st next
following the end of the Plan Year during which the award was
earned. Nothing in this Plan shall be construed to create a trust
or to establish or evidence any Participant's claim of any right
other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled.
4.1.1 Employment for Plan Year. If a Participant's employment with
the Company continues for the entire Plan Year, the
Participant shall be entitled to receive full payment of the
award amount determined under Article III for the Plan Year
in accordance with the terms of the Plan.
4.1.2 Retirement, Disability or Death. In the event of death,
Disability or Normal or Early Retirement of a Participant
during a Plan Year, the Committee (in its sole discretion)
will determine on a pro rata basis the amount of the partial
award (if any) to be paid to such Participant (or to his
or her personal representative) for such Plan Year. Payments
will be made in cash at the same time as other awards to
Participants are made for the same Plan Year.
4.1.3 Resignation or Discharge. If during a Plan Year, a
Participant's employment with the Company terminates by
reason of resignation or discharge, the Committee (in
its sole discretion) will determine on a pro rata basis the
amount of partial award (if any) to be paid to such
participant for such Plan Year. Payments will be made in
cash at the same time as other awards to participants are
made for the same plan year.
4.2 Beneficiaries. Each Participant may designate, in writing and on
such form as the Company may prescribe, one or more beneficiaries
to receive any amount that is payable after the individual's death.
In the event of a Participant's death, any award that is payable
to such Participant shall be paid to his or her beneficiary or, in
the event that no beneficiary has been designated, to his or her
estate.
<PAGE>
V. ADMINISTRATION
5.1 Committee. The Plan shall be administered by the Committee or a
subcommittee composed of not less than two independent outside
Directors. No employee or former employee of the Company may serve
on the Committee.
5.2 Rules and lnterpretation. The Committee shall be vested with all
discretion and authority as it deems necessary or appropriate to
administer the Plan and to interpret the provisions of the Plan.
Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration
or application of the Plan shall be final, conclusive and binding
upon all persons.
5.3 Records. The records of the Committee with respect to the Plan
shall be conclusive on all Participants and their beneficiaries and
on all other persons.
5.4 Tax Withholding. The Company shall withhold all applicable taxes
required by law from any payment, including any federal, FICA,
state and local taxes.
VI. GENERAL PROVISIONS
6.1 Nonassignability. Prior to the time of any payment under the Plan,
a Participant shall have no right by way of anticipation or
otherwise to assign or transfer any interest under this Plan.
6.2 Employment Rights/Participation. The establishment and subsequent
operation of the Plan, including eligibility as a Participant,
shall not be construed as conferring any legal or other rights upon
any Participant or any other individual for the continuation of his
or her employment for any Plan Year or any other period. The
Company expressly reserves the right, which may be exercised at any
time and without regard to when during a Plan Year or other
accounting period such exercise occurs, to discharge any individual
and/or treat him or her without regard to the effect which such
treatment might have upon him or her as a Participant in this Plan.
Being a Participant in any one Plan Year does not confer any right
to be named as a Participant for any succeeding Plan Year.
6.3 No Individual Liability. No member of the Committee or the Board,
or any officer of the Company, shall be liable for any
determination, decision or action made in good faith with respect
to the Plan or any award made under the Plan.
6.4 Severability; Governing Law. If any particular provision of this
Plan is found to be invalid or unenforceable, such provision shall
not affect the other provisions of the Plan, but the Plan shall be
construed in all respects as if such invalid provision had been
omitted. The provisions of the Plan shall be governed by and
construed in accordance with the laws of the State of New York.
VII. AMENDMENT AND TERMINATION
7.1 Amendment and Termination. The Committee may prospectively amend
or terminate the Plan at any time and for any reason; provided,
however, that such amendment shall not relieve the Company of its
obligations under Section 7.2.
7.2 Change in Control of the Company. In the event of a change in
control of the Company (defined as acquisition by any person or
persons of 50% or more of the Company's Common Stock, or a
transaction requiring stockholder approval involving the sale of
all or substantially all of the Company's assets, or the merger of
the Company with or into a previously unaffiliated corporation),
not later than the 20th business day following the date of such
event, the Company shall pay each Participant an award that is
the greater of (i) an award calculated in accordance with Article
III above, but using the period ending on the day immediately prior
to the day a change in control occurred as the last day of the
fiscal year for purposes of determining Value Added, or (ii) a pro
rata amount of each Participant's Target Annual Incentive for the
Plan Year, based upon the portion of the fiscal year that has
elapsed as of the date of the change in control.
