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 A. Frease
- ----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii),14a-6(i)(1),or 14a-(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
1-516-342-5224
July 8, 1996
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
14, 1996 at our world headquarters, One Computer Associates Plaza,
Islandia, New York.
The Board of Directors urges you to read the accompanying Notice
of Annual Meeting and Proxy Statement and recommends that you vote (1)
for the election of the directors nominated, (2) for approval of an
amendment to the Company's Restated Certificate of Incorporation, as
amended, to increase from 500,000,000 to 1,100,000,000 the number of
authorized shares of its Common Stock, par value $.10 per share, (3)
for approval of the 1996 Deferred Stock Plan for Non-Employee Directors,
and (4) for ratification of the Board's appointment of Ernst & Young LLP
as the company's independent auditors for the 1997 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. Share amounts
throughout this document and on your proxy card do not reflect the
Company's three-for-two stock split effective June 19, 1996 and payable
July 15, 1996.
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
14, 1996, at 10:00 a.m. Eastern Daylight 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 an amendment to the Company's Restated
Certificate of Incorporation, as amended, to increase
the number of shares of its authorized Common Stock, par
value $.10 per share, from 500,000,000 to 1,100,000,000;
3. To approve the 1996 Deferred Stock Plan for Non-Employee
Directors;
4. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year
ending March 31, 1997; and
5. 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 June 19,
1996 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. Shares eligible for vote will not reflect the
Company's three-for-two stock split effective June 19, 1996 and payable
July 15, 1996.
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
/s/Belden A. Frease
Belden A. Frease
Secretary
Islandia, New York
July 8, 1996
<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, par value $.10 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 14, 1996, 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, 1996. 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.
Revocability and Voting of Proxy
A form of proxy for use at the meeting and a postpaid 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
shown on the proxy. If no instructions are given, the proxies will be
voted (1) FOR the election of management's nominees for election as
directors, (2) FOR approval of an amendment to the Company's Restated
Certificate of Incorporation, as amended, (3) FOR approval of the 1996
Deferred Stock Plan for Non-Employee Directors, and (4) FOR ratification
of the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending March 31, 1997.
Record Date and Voting Rights
Only stockholders of record at the close of business on June 19,
1996 are entitled to notice of and to vote at the meeting or any
adjournment thereof. On June 19, 1996, the Company had outstanding
242,932,012 shares of Common Stock. This total, as well as the share
amounts shown on individual proxies, do not reflect the Company's
three-for-two stock split payable July 15, 1996, 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.
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.
<PAGE> 2
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 (1) approve an amendment to
the Company's Restated Certificate of Incorporation, as amended, (2)
approve the 1996 Deferred Stock Plan for Non-Employee Directors, and (3)
ratify the selection of the independent auditors. 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, 1996 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 of it.
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 June 19, 1996
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(1) Class (rounded)
- ------------------------------------- --------------------- ---------------
<S> <C> <C>
Walter Haefner/ 56,250,000(2) 23.2%
Careal Holding AG
Utoquai 498022 Zurich, Switzerland
- -------------------
<FN>
(1) Share amounts do not reflect the three-for-two stock split payable July 15, 1996.
<FN>
(2) 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 56,250,000 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 19,
1996 for (i)each 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, and
executive officers as a group (12 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)(3) of Class
- -------------------------- ----------------------------- -----------
<S> <C> <C>
Directors:
Russell M. Artzt 621,742(5) .3%
Willem F.P. de Vogel 14,579 *
Irving Goldstein 14,500 *
Richard A. Grasso 10,500 *
Shirley Strum Kenny 3,750 *
Sanjay Kumar 325,218(5) .1%
Edward C. Lord 3,600 *
Charles B. Wang 12,754,912(4)(5) 5.3%
<PAGE> 3
<CAPTION>
BOARD AND MANAGEMENT OWNERSHIP (continued)
Number of Shares Percent
Name of Beneficial Owner Beneficially Owned (1)(2)(3) of Class
- ------------------------ ---------------------------- ----------
<S> <C> <C>
Non-Directors:
Charles P. McWade 30,577 *
Peter Schwartz 438,424 .2%
All Directors and Executive
Officers as a Group
(12 persons) 14,285,312 5.9%
<FN>
- ----------------------------------
* Represents less than .1% of the outstanding Common Stock.
<FN>
(1) Share amounts do not reflect the three-for-two stock split payable
July 15, 1996.
<FN>
(2) Includes shares that may be acquired within 60 days after June 19,
1996 through exercise of employee and non-employee directors stock
options as follows: Mr. Artzt, 494,153; Mr. Kumar, 222,232; Mr.
McWade, 29,543; Mr. Schwartz, 413,258; Mr. Wang, 2,982,767; Mr. de
Vogel, 9,000; Mr. Goldstein, 9,000; Mr.Grasso, 6,000; Mr. Lord,
3,000; and all directors and executive officers as a group,
4,612,291.
<FN>
(3) Includes shares credited to the executives' accounts in the
Company's tax-qualified profit-sharing plan as follows: Mr. Artzt,
8,104; Mr. Kumar, 13,815; Mr. McWade, 556; Mr. Schwartz, 1,075;
Mr. Wang, 348; and all executive officers as a group, 25,848.
<FN>
(4) Includes 43,503 shares owned directly by Mr. Wang's spouse, an
employee of the Company; 400,922 shares subject to employee
stock options held by Mr. Wang's spouse, which are exercisable
within 60 days after June 19, 1996; and 306 shares credited to
the account of Mr. Wang's spouse in the Company's tax-qualified
profit-sharing plan. Mr. Wang disclaims beneficial ownership of
such shares.
<FN>
(5) Does not reflect the Initial Grant or Additional Grants of
shares to Mr. Artzt, Mr. Kumar, and Mr. Wang under the 1995 Key
Employee Stock Ownership Plan since they are subject to
substantial risk of forfeiture.
</TABLE>
ITEM 1--ELECTION OF DIRECTORS
Nominees
It is proposed that the seven 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 all
shares of Common Stock represented by such proxy for the election of
Russell M. Artzt, Willem F.P. de Vogel, Irving Goldstein, Richard A.
Grasso, Shirley Strum Kenny, Sanjay Kumar, 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) 49 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) 45 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. He is
also a director of MLX Corp.
<PAGE> 4
<CAPTION>
Director
Age Since
-------- ----------
<S> <C> <C>
Irving Goldstein (2) (3) 58 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 COMSAT
(formerly known as Communications
Satellite Corporation) from October
1985 to February 1992 and President
from May 1983 to October 1985, and
was a director of that Company from
May 1983 to February 1992.
Richard A. Grasso (3) (4) 49 1994
Chairman and Chief Executive
Officer of the New York Stock
Exchange since June 1995. He was
Executive Vice Chairman of the New
York Stock Exchange from January
1991 to May 1995 and President and
Chief Operating Officer from June
1988 to May 1995. He has been with
the Exchange since 1968.
Shirley Strum Kenny (2) (4) 61 1994
President of the State University
of New York at Stony Brook since
September 1994. She was President
of Queens College of The City
University of New York from 1989 to
August 1994. She is also a director
of Toys "R" Us, Inc.
Sanjay Kumar (1) 34 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.
Charles B. Wang (1) (4) 51 1976
Chief Executive Officer of the
Company since 1976 and Chairman of
the Board since April 1980. He is
also a director of Symbol
Technologies, Inc.
- -------------------------------
<FN>
(1) Member Executive Committee.
<FN>
(2) Member Audit Committee.
<FN>
(3) Member Stock Option and Compensation Committee.
<FN>
(4) Member Nominating Committee.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES LISTED ABOVE.
Meetings of the Board of Directors and Committees
During the Company's fiscal year ended March 31, 1996, the Board of
Directors of the Company held eight meetings. In addition to these
meetings, the Board of Directors acted by unanimous written consent on
one occasion. Each Director attended more than seventy-five percent of
the Board meetings and meetings of the Board committees on which he
or she served. The Company has standing Executive, Audit, Stock Option
and Compensation, and Nominating Committees.
The Executive Committee consists of Russell Artzt, Sanjay Kumar,
and Charles B. Wang. During fiscal year 1996 the Executive Committee
acted by unanimous written consent on four occasions.
<PAGE> 5
The Stock Option and Compensation Committee of the Board (the
"Compensation Committee") consists of three non-employee directors,
Willem F.P. de Vogel, Irving Goldstein, and Richard A. Grasso.
During fiscal year 1996 the Compensation Committee met once. The
Compensation Committee also has the power to prescribe, amend, and
rescind rules relating to the Company's 1995 Key Employee Stock
Ownership Plan, 1991 Stock Incentive Plan, 1981 Incentive Stock Option
Plan, 1987 Non-Statutory Stock Option Plan, and 1993 Stock Option Plan
for Non-Employee Directors (the "plans"), 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 "Stock Option and
Compensation Committee Report on Executive Compensation."
The Audit Committee of the Board consisted of four non-employee
directors, Willem F.P. de Vogel, Irving Goldstein, Shirley Strum Kenny,
and Edward C. 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 1996.
The Audit Committee has recommended the selection of Ernst & Young LLP
as independent auditors for the fiscal year ending March 31, 1997.
The Nominating Committee of the Board was established in May 1996
and consists of three directors, Richard A. Grasso, Shirley Strum Kenny,
and Charles B. Wang. The committee has responsibility for suggesting
nominees for election as directors.
Director's Compensation
For the Company's fiscal year ended March 31, 1996, non-employee
directors received an annual retainer fee of $30,000 payable in cash.
In addition, each such director received a fee of $500 for each
Board or Committee meeting attended. Directors who are also employees
of the Company receive no Board or Committee fees. On May 21, 1996,
the Board of Directors adopted the 1996 Deferred Stock Plan for
Non-Employee Directors. Under this Plan, which is subject to
stockholder approval at the Annual Meeting, directors will receive
their entire annual retainer in Common Stock, receipt of which will be
deferred until retirement from the Board, death or disability. See Item
3-1996 Deferred Stock Plan for Non-Employee Directors.
Under the Company's 1993 Stock Option Plan for Non-Employee
Directors (the "1993 Plan"), non-employee directors are automatically
awarded options to acquire up to 3,000 shares (does not reflect the
three-for-two stock split payable July 15, 1996) of the Company's
Common Stock per year depending on the Company's attainment of specific
return on equity objectives. Pursuant to the 1993 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. On August
10, 1995, each non-employee director, except Ms. Kenny, was granted
3,000 shares of Common Stock at $49.50 per share. On the advice of the
New York State Commission on Ethical Practices, Ms. Kenny has declined
to accept any options under this Plan.
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 Stock
Option and Compensation Committee of the Company's Board of Directors
set forth below and the Stock Performance Graph set forth on page 8 in
accordance with Securities Exchange Commission requirements, shall not
be incorporated by reference into any such filings.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General
Decisions as to certain compensation of the Company's executive
officers are made by the Stock Option and Compensation Committee
(the "Compensation 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 Compensation Committee were Willem F.P. de
Vogel, Irving Goldstein, and Richard A. Grasso. During the fiscal year
ended March 31, 1996, the Compensation Committee met three times. On
May 16, 1996, the Committee approved fiscal year 1996 awards under the
1994 Annual Incentive Plan and the 1995 key Employee Stock Ownership
Plan.
<PAGE> 6
Compensation Policies
The Compensation 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 Compensation 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 executive 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 1994 Annual
Incentive Compensation Plan, which is administered by the Compensation
Committee, establishes a specific percentage of net income after taxes
that is in excess of a threshold based on the Company's target return
on average stockholders' equity. Different percentages of any such
excess are determined for each executive officer at the commencement of
each fiscal year. The Compensation Committee has also established
certain 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. The Compensation
Committee may, at its discretion, decrease (but never increase) the
calculated annual incentive compensation payable to an executive,
and/or direct that a portion of this incentive be payable in Company's
Common Stock, subject to certain holding restrictions.
Long-term Equity Participation. The Compensation 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 return. To this end, the Compensation 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
Incentive Plan have a term of ten years from the date of grant, and
subject to the above vesting restrictions, may be exercised at any time
during such term. The Compensation Committee has authorized the grant to
certain key employees of shares of Common Stock under the 1995 Key
Employee Stock Ownership Plan. These grants are non-transferrable
after vesting, subject to substantial risk of forfeiture if certain
performance objectives are not attained, and further subject to
significant limitations on transfer for seven years after vesting.
Benefits. The benefits available to executive officers are the same
as those afforded to all full-time employees. In general, they
are the standard protection against financial catastrophe that can
result from personal or family 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 Computer Associates Savings Harvest Plan (the "Cash
Plan"), to the extent permitted under the CASH Plan, the applicable
Employment Retirement Income Security Act of 1974 regulations, as
amended ("ERISA") and the Code. The Company's medical, dental and
disability plans as well as the CASH Plan provide all employees with the
protection and peace of mind necessary to devote their full attention
to achievement of the Company's objectives.
Chief Executive Officer Compensation
After consulting with the Company's independent compensation
advisors, the Compensation Committee determined the components of Mr.
Wang's fiscal year 1996 compensation as follows:
Base Salary. Mr. Wang's base salary of $1,000,000 was not increased
from that of the two previous fiscal years.
Annual Incentives. The Company's fiscal year 1996 performance
produced a return on average stockholders' equity of 39.4%,
excluding a write-off of purchased research and development associated
with the acquisition of Legent Corporation. Stockholder value in terms
of stock price increased by 81%, or more than two times either the
Standard and Poor's 500 or Computer Software and Services Indices.
Pursuant to the 1994 Annual Incentive Compensation Plan for fiscal year
1996, Mr. Wang's award was calculated at a predetermined percentage of
the Company's net income for the fiscal year less a cost of equity.
<PAGE> 7
The cost of equity was computed based on a "five point" quarterly
average of the Company's reported stockholder's equity. Mr. Wang's
total performance-based at risk compensation calculated under the 1994
Annual Incentive Compensation Plan was approximately $11,600,000. This
amount was reduced by the Compensation Committee to $10,000,000. In
addition, fifty percent of Mr. Wang's annual incentive under this
formula, as reduced, was granted in Company Common Stock which is
restricted from transfer for two years from the date of award.
Long-term Equity Participation. The Compensation Committee granted
Mr. Wang 564,750 incentive and non-statutory stock options under the
Company's 1991 Stock Incentive Plan. On January 11, 1996, 360,000
shares awarded to Mr. Wang under the 1995 Key Employee Stock Ownership
Plan, were vested and no longer subject to forfeiture, but remain
contingent on his employment by the Company until March 31, 2000. These
grants are non-transferable and subject to substantial risk of
forfeiture if certain performance objectives are not attained, and
further subject to significant limitations on transfer for seven years
after vesting. Mr. Wang has agreed to restrict the transfer of
3,600,000 shares of Common Stock which he currently owns. Such
restrictions will lapse concomitant with those of shares granted under
the 1995 Key Employee Stock Ownership Plan. All stock option and share
amounts referred to above reflect the three-for-two stock split paid
September 5, 1995, but do not reflect the three-for-two stock split
payable July 15, 1996.
Benefits. Mr. Wang received matching and discretionary
contributions to the Company's benefit plans of $26,376 in fiscal year
1996. He was also eligible for benefits under the Company's medical,
dental, and disability plans consistent with those available to other
full-time employees.
Other Executive Officers
The compensation plans of most of the Company's other executive
officers, including the four persons shown in the Summary Compensation
Table on page 9, provide for a base salary, annual incentive cash
compensation based on either individual fixed percentages of the
Company's aggregate net income over and above a predetermined return on
average stockholders' equity for the fiscal year or an absolute level of
Company revenue/net margin achievement, long-term equity grants under
the Company's 1991 Stock Incentive Plan and access to the Company's
standard employee benefit plans. For fiscal 1996, the Compensation
Committee allocated an aggregate of approximately 1% of the Company's
net income, excluding the $1.3 billion pre-tax, non-cash charge
associated with the August 1995 acquisition of Legent Corporation, to
the four executive officers, other than the Chief Executive Officer.
Except for Mr. McWade, fifty percent of this amount was awarded in the
form of Company Common Stock which is restricted from transfer for two
years from date of award. The Compensation Committee has authorized the
grant to two of the executive officers of certain shares of Common
Stock under the proposed 1995 Key Employee Stock Ownership Plan. These
shares are non-transferrable and subject to substantial risk of
forfeiture, if certain performance objectives are not attained, and
further subject to significant limitations on transfer for seven years
after vesting.
In addition, approximately sixty percent of the Company's
approximately 9,000 employees, including the Chief Executive Officer and
the four executive officers referred to in the table on page 10 and four
non-employee directors, were granted options to purchase an aggregate of
4,140,000 (does not reflect the three-for-two stock split payable July
15, 1996) shares of the Company's Common Stock. This total represents
approximately 1.7% of the Company's total shares outstanding at March
31, 1996. The Compensation 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 STOCK OPTION AND COMPENSATION
COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Willem F.P. de Vogel
Irving Goldstein
Richard A. Grasso
<PAGE> 8
Common Share Price Performance Graph
The following graph compares cumulative total return of the
Company's Common Stock with the Standard and Poor's Computer Software
and Services Index* and the Standard and Poor's 500 Index during the
fiscal years 1992 through 1996** assuming the investment of $100 on
April 1, 1991 and the reinvestment of dividends.
(Line graph of data table shown below)
<TABLE>
TOTAL RETURN DATA
<CAPTION>
3/31/91 3/31/92 3/31/93 3/31/94 3/31/95 3/31/96
--------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Computer Associates
International, Inc. 100 176 273 355 685 1244
S&P Computer Software
and Services Index 100 129 171 192 259 366
S&P 500 Index 100 111 128 130 150 198
- --------------------------------------------------
<FN>
Source: Standard and Poor's Compustat Custom Business Unit
<FN>
* The Standard and Poor's Computer Software and Services Index is
composed of the following companies:
Autodesk Inc. First Data Corporation
Automatic Data Processing, Inc. Microsoft Corporation
Ceridian Corporation Novell, Inc.
Computer Associates International, Inc. Oracle Systems Corporation
Computer Sciences Corporation Shared Medical Systems
Corporation
<FN>
** The Company's fiscal years ended March 31 of each year.
</TABLE>
<PAGE> 9
COMPENSATION AND OTHER INFORMATION CONCERNING
EXECUTIVE OFFICERS
The following table sets forth the cash and non-cash compensation
for the Chief Executive Officer and each of the four next most
highly compensated executive officers of the Company for each of the
fiscal years ended March 31, 1996, 1995, and 1994, respectively.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation Awards
Name and Fiscal Annual Compensation Restricted Stock Option All Other
Principal Position Year Salary Incentive(1) Awards($)(1)(4) Awards(#)(2) Compensation(3)
- -------------------- ------ ------------ ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Wang 1996 $ 1,000,000 $ 5,000,000 $5,000,000 564,750 $ 38,376
Chairman of the Board 1995 $ 1,000,000 $ 4,585,000 $3,056,625 529,875 $ 38,425
and Chief Executive 1994 $ 1,000,000 $ 5,729,000 _ 455,850 $ 30,942
Officer
Sanjay Kumar 1996 $ 650,000 $ 3,250,000 $3,250,000 452,250 $ 38,376
President and Chief 1995 $ 650,000 $ 2,667,000 $1,777,747 379,875 $ 38,425
Operating Officer 1994 $ 400,000 $ 1,690,000 _ 305,850 $ 31,686
Russell M. Artzt 1996 $ 550,000 $ 975,000 $ 975,000 302,250 $ 37,923
Executive Vice 1995 $ 550,000 $ 954,000 $ 635,787 274,875 $ 38,425
President-Research 1994 $ 400,000 $ 1,195,000 _ 230,850 $ 32,177
and Development
Peter Schwartz 1996 $ 450,000 $ 525,000 $ 525,000 242,250 $ 38,376
Senior Vice 1995 $ 450,000 $ 488,000 $ 325,197 192,375 $ 38,425
President-Finance and 1994 $ 400,000 $ 530,000 _ 155,850 $ 30,565
Chief Financial Officer
Charles P. McWade 1996 $ 175,000 $ 265,000 _ 39,750 $ 31,915
Senior Vice 1995 $ 175,000 $ 210,000 _ 25,050 $ 32,125
President-Finance 1994 $ 150,000 $ 200,000 _ 24,750 $ 22,905
<FN>
(1) Incentive compensation and restricted stock awards shown for Messrs.
Wang, Kumar, Artzt, and Schwartz for fiscal years 1995 and 1996
were made under the 1994 Annual Incentive Compensation Plan.
<FN>
(2) Option awards reflect the three-for-two stock split paid September
5, 1995, but do not reflect the three-for-two stock split payable
July 15, 1996. 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>
(3) Consists of Company contributions to the Company's benefit plans
and a non-reimbursed travel allowance for each executive officer of
$12,000 for each fiscal year 1995 and 1996, and $7,200 for fiscal
year 1994.
<FN>
(4) Does not reflect the vesting on January 11, 1996 of 20% of the
Initial Grant under the 1995 Key Employee Stock Ownership Plan (the
"1995 Plan") which was previously described in the 1995 Proxy and
approved by the stockholders at the 1995 Annual Meeting (Mr. Wang-
-360,000 shares, Mr. Kumar--180,000 shares, Mr. Artzt--60,000
shares). These shares are subject to risk of forfeiture if the
employee terminates his employment with the Company prior to March
31, 2000 for any reason other than death or disability. Sale or
transfer of these shares is restricted for seven years thereafter
under the terms of the 1995 Plan.
</TABLE>
<PAGE> 10
The following tables summarize option grants and exercises during
the fiscal year ended March 31, 1996 to or by the executive officers
named in the Summary Compensation Table on page 9, and the value of the
options held by such person on March 31, 1996.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Granted Percent of Exercise Expiration Potential Appreciation
Name Options(1) Total Grants Price Date 5%(2) 10%(3)
- ------------ ----------- ------------ ---------- ------------- ---------------- ----------------
- --
<S> <C> <C> <C> <C> <C> <C>
C.B. Wang 564,750 13.6% $43.50 May 21, 2005 $ 15,444,470 $ 39,136,237
S. Kumar 452,250 10.9% $43.50 May 21, 2005 $ 12,367,882 $ 31,340,174
R.M. Artzt 302,250 7.3% $43.50 May 21, 2005 $ 8,265,765 $ 20,945,423
P. Schwartz 242,250 5.9% $43.50 May 21, 2005 $ 6,624,919 $ 16,787,523
C.P. McWade 39,750 1.0% $43.50 May 21, 2005 $ 1,087,061 $ 2,754,609
All Optionees 4,125,000 99.6% $43.50 May 21, 2005 $ 112,808,211 $ 285,855,648
15,000 .4% $49.50 August 9, 2005 $ 466,954 $ 1,183,354
All Stockholders(4) N/A N/A N/A N/A $10,910,146,747 $27,648,453,930
<FN>
(1) Share amounts reflect the three-for-two stock split paid September
5,
1995, but do not reflect the three-for-two stock split payable July
15,
1996.
<FN>
(2) 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>
(3) 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>
(4) Realizable increase in value to all stockholders if all outstanding
shares (242,207,771 at March 31, 1996) of Company stock were to
increase in value five percent (5%) or ten percent (10%) per year
from its March 31, 1996 value for ten consecutive years.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Net Value of Unexercised
Unexercised Options In-The-Money Options
Shares Acquired/ Value at March 31, 1996(1) at March 31, 1996(4)
Name Exercised(1) Realized(2) Exercisable(3) Unexercisable Exercisable(3) Unexercisable
- ----------- -------------- ----------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
C.B. Wang _ _ 2,640,535 1,755,110 $166,391,318 $82,536,729
S. Kumar 212,701 $ 9,350,550 _ 1,181,360 _ $52,657,629
R.M. Artzt 293,019 $14,375,397 336,421 861,860 $ 20,715,946 $39,469,863
P. Schwartz 6,000 $ 422,748 307,786 594,749 $ 19,221,404 $26,001,459
C.P. McWade 24,750 $ 1,043,157 6,706 105,481 $ 427,736 $ 4,865,807
<FN>
(1) Share amounts reflect the three-for-two stock split paid September 5,
1995, but do not reflect the three-for-two stock split payable July 15,
1996.
<FN>
(2) Market value of shares purchased at exercise date less aggregate
option exercise price.
<FN>
(3) All option grants 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>
(4) Pro forma net valuation based on the March 29, 1996 closing price of
$71.625 (which does not reflect the three-for-two stock split payable
July 15, 1996), less fair market price at the grant date.
</TABLE>
<PAGE> 11
Employee's Profit Sharing Plans
The Company maintains a profit sharing plan, the 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 eligible participants in the CASH Plan
who have one year of service, including the Company's executive officers
("Employer 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 as allowed by the Code. 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 of the Company appointed by the Board of Directors. All
employees are eligible to participate in the CASH Plan in the month
following hire.
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 the 1996 fiscal year, the Company contributed $26,376 for
each of the accounts of Messrs. Wang, Kumar, and Schwartz, $25,923 for
the account of Mr. Artzt, $19,915 for the account of Mr. McWade
and $22,394,565 for all participating employees under the CASH, the
Excess Benefit and the Restoration Plans. 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 9.
Stock Option Plans
During fiscal year 1996, the Company maintained the 1981
Incentive Stock Option Plan (the "1981 Plan") which provides for
the issuance to certain selected employees of incentive stock options
to purchase up to a maximum of 12,000,000 shares (reflects the three-
for-two stock split paid September 5, 1995, but does not reflect the
three-for-two stock split payable July 15, 1996) of Common Stock.
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. Under the 1981
Plan, stock options may be granted for terms of up to ten years. 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 Company also maintains the 1987 Non-Statutory Stock Option Plan
(the "1987 Plan") pursuant to which non-statutory options to purchase
up to 7,500,000 shares (reflects the three-for-two stock split paid
September 5, 1995, but does not reflect the three-for-two stock split
payable July 15, 1996) of Common Stock 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 Company's 1991 Stock Incentive Plan (the "1991 Plan") provides
that up to an aggregate of 30,000,000 shares (reflects the three-for-two
stock split paid September 5, 1995, but does not reflect the three-for-
two stock split payable July 15, 1996) 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 Compensation Committee has the power to determine whether such
options are intended to qualify as an incentive stock option under the
Code.
The 1993 Stock Option Plan for Non-Employee Directors (the
"1993 Plan") provides for non-statutory options to purchase up to
150,000 shares (reflects the three-for-two stock split paid September 5,
1995, but does not reflect the three-for-two stock split payable July
15, 1996) of Common Stock to be available for grant to each member of
the Board of Directors who is not otherwise an employee of the
Company.
<PAGE> 12
The 1981 Plan, the 1987 Plan, the 1991 Plan, and the 1993
Plan are 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 per share exercise price
of options and SARs granted may not be less than 100% of the Fair
Market Value of a share of the Company's Common Stock on the date of
grant. Shares of Common Stock acquired 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 on such date 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).
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), 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 (the
"NYSE") initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company
("Section 16(a) Forms"). 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 representations from certain reporting
persons, during the fiscal year ended March 31, 1996, 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 5 days late, and that a
Statement of Changes in Beneficial Ownership on Form 4 for Mr.
Goldstein was filed 13 days late.
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
Chief Executive Officer, 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 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--AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION, AS
AMENDED, TO INCREASE AUTHORIZED COMMON STOCK
Introduction
The Company's Restated Certificate of Incorporation, as amended,
currently authorizes the issuance of 500,000,000 shares of Common
Stock, par value $.10 per share and 10,000,000 shares of Preferred
Stock, Class A, without par value. No shares of Preferred Stock are
presently issued.
Approximately 325,000,000 of the 500,000,000 authorized shares of
Common Stock inclusive of Treasury shares have been issued or are
reserved for exercise of stock options or stock awards under the
Company's various stock and option plans. Although the three-for-two
stock split of the Company effective June 19, 1996 and payable July 15,
1996 has not been reflected in any share amounts shown in this Proxy
Statement, it would have the effect of increasing the shares
outstanding and reserved under various Plans to approximately
488,000,000 shares. In May 1996, the Board of Directors of the Company
unanimously approved an amendment to Article FOURTH of the Restated
Certificate of Incorporation, as amended, to increase the total
authorized capital stock of the Company by increasing the Company's
authorized Common Stock, par value $.10 per share, from 500,000,000
shares to 1,100,000,000 shares. The Board of Directors believes that it
is desirable to increase the number of authorized shares of Common
Stock. This action will provide the Company with flexibility of action
in the future by assuring that there will be sufficient authorized but
unissued Common Stock for possible acquisitions, financing
requirements, stock splits, and other corporate purposes.
The Company has no present plans, proposals, agreements or
understandings to issue any of the additional 600,000,000 shares of
Common Stock sought to be authorized in this proposal, or any of the
currently authorized Preferred Stock, Class A, if the proposed amendment
is adopted. The Board of Directors does not presently intend to secure
<PAGE> 13
any further approval from the stockholders prior to issuing such Common
Stock or Preferred Stock, Class A, except where such approval is
required by law or by the NYSE or the Company's Restated Certificate of
Incorporation.
Increase in Authorized Common Stock
Upon the favorable vote of the holders of a majority of the
outstanding shares of the Company's Common Stock, the authorized Common
Stock of the Company will be increased from 500,000,000 shares to
1,100,000,000 shares. All such shares not heretofore issued and
outstanding would be issuable at any time or from time to time by action
of the Board of Directors without further authorization from the
stockholders unless required pursuant to the rules of the NYSE or
applicable law or the Company's Restated Certificate of Incorporation.
Each holder of a share of Common Stock will continue to be entitled to
one vote in respect of such share. As in the past, no holder of Common
Stock will have any pre-emptive rights.
Adoption of the proposed amendment requires the affirmative
vote of the holders of a majority of the outstanding shares of Common
Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
AMNEDMENT TO ARTICLE FOURTH OF THE RESTATED CERTIFICATE OF INCORPORA-
TION, AS AMENDED.
ITEM 3--1996 DEFERRED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Introduction
On May 21, 1996, the Company's Board of Directors adopted the 1996
Deferred Stock Plan for Non-Employee Directors (the "1996 Plan")
covering 50,000 shares of the Company's Common Stock. Approval of the
1996 Plan, a copy of which is annexed to this Proxy Statement as Exhibit
A, by the holders of a majority of the Common Stock present or
represented and entitled to vote at the Company's Annual Meeting of
Stockholders held in accordance with the laws of the State of Delaware,
is a condition precedent to the effectiveness of the 1996 Plan.
The purpose of the 1996 Plan is to provide Directors of the
Company with a deferred payment plan for fees payable for services as a
member of the Board of Directors and to increase the identification of
interests between the Directors and stockholders by payment of directors
fees only in shares of Common Stock.
Description of the Deferred Stock Plan
The following is a summary of certain provisions of the 1996 Plan.
The summary is not, however, intended to be complete, and is qualified
by reference to the complete text of the 1996 Plan attached as Exhibit
A to this Proxy Statement. Capitalized terms used in this description
without definition are used as defined in the 1996 Plan.
The annual Director Fees for the succeeding twelve months shall be
established by majority vote of the Board of Directors at its annual
meeting. Any Director eligible to participate in the 1996 Plan shall
receive all Director Fees exclusively under the Plan. Any Director of
the Company who is not an employee of the Company and is separately
compensated for services on the Board or on any committee of the
Board shall (unless prohibited by applicable law or regulations)
be eligible to participate in the 1996 Plan, subject to the
following limitations:
(i) The establishment of any separately compensated consulting
relationship between a Director and the Company will
render that individual ineligible for participation in the
1996 Plan in any Director Service Year.
(ii) Any Director who (1) fails to attend (or otherwise
participate in) 80% of the meetings of the Board or any
committee thereof during any Director Service Year, or (2)
maintains a directorship or advisory position for
compensation with any organization in which another
Director of the Company is an executive officer during any
Director Service Year, shall not be eligible to participate
in the 1996 Plan for such Director Service Year and will
forfeit all deferred Common Stock payments allocated or
allocable to such Director's Deferred Stock Compensation
Account.
Each Director will be paid Director Fees (on the date on which the
Director Fees are payable) in shares of Common Stock and will defer
payment of Director Fees by crediting such Director's Deferred Stock
Compensation Account as provided in the 1996 Plan. Each Director's
Deferred Stock Compensation Account will be credited annually with the
number of shares which is determined by dividing the annual Directors
Fees for the year ended by the Fair Market Value of one share of Common
Stock at the end of a Director Service Year. These deferred shares
as well as any dividends thereon will accumulate in the Director's
Deferred Stock Compensation Account, subject to adjustment and
substitution for splits, dividends or consolidations of the Common
Stock, until termination of the
<PAGE> 14
Director's term of office, resignation or death. The Company will issue
certificates for each whole share and cash in lieu of any fractional
shares on January 2 of the calendar year in which the Director ceases
to be a member of the Board for any reason.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
COMPANY'S 1996 DEFERRED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS.
ITEM 4--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
A representative of Ernst & Young LLP will be present at the meeting
and will be available to respond to appropriate questions from
stockholders.
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 LLP (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 1997 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT
OF ERNST & YOUNG LLP 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 of
stockholders.
In general, all nominations or proposals must be delivered to the
Secretary of the Company at the Company's world headquarters. The
submission deadline for stockholder proposals for consideration for
inclusion in proxy materials for the 1997 Annual Meeting is March 7,
1997.
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 postpaid envelope.
By Order of the Board of Directors
/s/Belden A.Frease
Belden A.Frease
Secretary
Dated: July 8, 1996
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> A-1
EXHIBIT A
COMPUTER ASSOCIATES INTERNATIONAL, INC.
1996 DEFERRED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose; Reservation of Shares
The purpose of the 1996 Deferred Stock Plan for Non-Employee
Directors (the "Plan") is to provide Directors of Computer Associates
International, Inc. (the "Company") with a deferred payment plan for
fees payable for future services as a member of the Board of Directors
of the Company (the "Board") or as a member of any committee thereof
("Director Fees") and to increase the identification of interests
between such Directors and the stockholders of the Company by payment of
Director Fees only in shares of Common Stock, par value $.10 per share,
of the Company ("Common Stock"). The aggregate number of shares of
Common Stock which may be credited to Deferred Stock Compensation
Accounts (as defined under Section 4 below) for subsequent issuance
under the Plan is limited to 50,000 shares, subject to adjustment and
substitution as set forth in Section 4(b).
2. Eligibility and Fees
(a) The annual Director Fees for the succeeding twelve months
shall be established by majority vote of the Board of
Directors at its annual meeting. Any Director eligible to
participate in the Plan shall receive all Director Fees
exclusively under the Plan.
(b) Any Director of the Company who is not an employee of the
Company and is separately compensated for services on the
Board or on any committee of the Board shall (unless
prohibited by applicable law or regulations) be eligible to
participate in the Plan, subject to the following
limitations:
(i) The establishment of any separately compensated
consulting relationship between a Director and the
Company will render that individual ineligible for
participation in the Plan in any Director Service Year.
A "Director Service Year" is any approximate one-year
period between annual meetings of stockholders.
(ii) Any Director who (1) fails to attend (or otherwise
participate in) 80% of the meetings of the Board or any
committee thereof during any Director Service Year, or
(2) maintains a directorship or advisory position for
compensation with any organization in which another
Director of the Company is an executive officer during
any Director Service Year, shall not be eligible to
participate in the Plan for such Director Service Year
and will forfeit all deferred Common Stock payments
allocated or allocable to such Director's Deferred Stock
Compensation Account (as defined in Section 4(a)) in
respect of such Director Service Year.
3. Administration
Each Director will be paid Director Fees (on the date on which
the Director Fees are payable) in shares of Common Stock and
will defer payment of Director Fees by crediting such
Director's Deferred Stock Compensation Account as provided in
this Plan ("Stock Deferral").
4. Deferred Stock Compensation Account
(a) General. Issuance of Common Stock in payment of Director
Fees shall be deferred in accordance with this Section 4 and
the Fair Market Value of the shares, as defined in Section
10, shall be credited to a deferred stock compensation
account maintained by the Company in the name of each
Director (a "Deferred Stock Compensation Account"). A
separate Deferred Stock Compensation Account shall be
maintained for each Director. The Company shall not
issue share certificates to the Director for the shares of
Common Stock. The Fair Market Value of the shares shall
instead be added to the Director's account under the Plan.
On each date on which Director Fees are payable, each
Director's Deferred Stock Compensation Account shall be
credited with a number of shares of Common Stock (including
fractional shares) equal to (x) 100% of the amount of the
Director Fees payable divided by (y) the Fair Market Value
of one share of the Common Stock on the date on which such
Director Fees are payable. If a dividend or distribution is
<PAGE> A-2
paid on the Common Stock in cash or property other than
Common Stock on the date of payment of the dividend or
distribution to holders of the Common Stock, each Deferred
Stock Compensation Account shall be credited with a
number of shares of Common Stock (including fractional
shares) equal to the number of shares of Common Stock
credited to such Account on the date fixed for determining
the stockholders entitled to receive such dividend or
distribution times the amount of the dividend distribution
paid per share of Common Stock divided by the Fair Market
Value of one share of the Common Stock on the date on which
the dividend or distribution is paid. If the dividend or
distribution is paid in property, the amount of the
dividend or distribution shall be equal to Fair Market Value
of the property on the date on which the dividend or
distribution is paid. The Deferred Stock Compensation
Account of a Director shall be charged on the date of
distribution with any distribution of shares of Common
Stock made to the Director from such Account pursuant to
Section 4(c) hereof.
(b) Adjustment and Substitution. The number of shares of Common
Stock credited to each Deferred Stock Compensation Account,
and the number of shares of Common Stock available for
issuance or crediting under the Plan in each calendar year
in accordance with Section 1 hereof, shall be
proportionately adjusted to reflect any dividend or other
distribution on the outstanding Common Stock payable in
shares of Common Stock or any split or consolidation of the
outstanding shares of Common Stock. If the outstanding
Common Stock shall, in whole or in part, be changed into or
exchangeable for a different class or classes of securities
of the Company or securities of another corporation or cash
or property other than Common Stock, whether through
reorganization, reclassification, recapitalization, merger,
consolidation or otherwise, the Board shall adopt such
amendments to the Plan as it deems necessary to carry out
the purposes of the Plan, including the continuing
deferral of any amount of any Deferred Stock Compensation
Account.
(c) Manner of Payment. The balance of a Director's Deferred
Stock
Compensation Account will be paid in shares of Common
Stock
to the Director upon his termination or resignation as a
Director or, in the event of the Director's death, the
Director's designated beneficiary, in accordance with the
Director's beneficiary designation and the provisions of
Section 5. A Director may elect to receive payment of the
shares of Common Stock credited to the Director's Deferred
Stock Compensation Account in annual installments rather
than a lump sum, provided that the payment period of
installment payments shall not exceed ten years following
the Payment Commencement Date as described
in Section 5 hereof. The number of shares of Common Stock
distributed in each installment shall be determined by
multiplying (i) the number of shares of Common Stock in the
Deferred Stock Compensation Account on the date of payment
of such installment by (ii) a fraction, the numerator of
which is one and the denominator of which is the number of
remaining unpaid installments, and by rounding such result
down to the nearest whole number of shares. The balance of
the number of shares of Common Stock in the Deferred Stock
Compensation Account shall be appropriately reduced to
reflect the installment payments made hereunder. Shares of
Common Stock remaining in a Deferred Stock Compensation
Account pending distribution pursuant to this Section 4(c)
shall continue to be credited with respect to dividends or
distributions paid on the Common Stock pursuant to Section
4(a) hereof and shall be subject to adjustment pursuant to
Section 4(b) hereof. If a lump sum payment or the final
installment payment hereunder would result in the issuance
of a fractional share of Common Stock, such fractional share
shall not be issued and cash in lieu of such fractional
share shall be paid to the Director based on the Fair Market
Value of a share of Common Stock on the day immediately
preceding the date of such payment. The Company shall issue
share certificates to the Director, or the Director's
designated beneficiary, for the shares of Common Stock
distributed hereunder. As of the date on which the Director
is entitled to receive payment by actual issuance of shares
of Common Stock, a Director shall become a stockholder of
the Company with respect to such shares.
5. Payment Commencement Date
Issuance of shares of Common Stock in respect of a Deferred Stock
Compensation Account shall commence on January 2 (or if January 2
is not a business day, on the first succeeding business day) of
the calendar year following the Director Service Year in which
the Director ceases to be a member of the Board for any reason,
including death or disability (the "Payment Commencement Date").
<PAGE> A-3
6. Beneficiary Designation
A Director may designate, in the Beneficiary Designation Form
prescribed by the Company, any person to whom payments of shares
of Common Stock are to be made if the Director dies before
receiving payment of all amounts due hereunder. A beneficiary
designation will be effective only after the signed Beneficiary
Designation Form is filed with the Secretary of the Company while
the Director is alive and will cancel all beneficiary
designations signed and filed earlier. If the Director fails to
designate a beneficiary, or if all designated beneficiaries of
the Director die before the Director or before complete payment
of all amounts due hereunder, any remaining unpaid amounts shall
be paid in one lump sum to the estate of the last to die of the
Director or the Director's designated beneficiaries, if any.
7. Non-Alienability of Benefits
Neither the Director nor any beneficiary designated by the
Director shall have the right to, directly or indirectly,
alienate, assign, transfer, pledge, anticipate or encumber
(except by reason of death) any amount that is or may be payable
hereunder, nor shall any such amount be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Director or the
Director's designated beneficiary or the debts, contracts,
liabilities, engagements, or torts of any Director or designated
beneficiary, or transfer by operation of law in the event of
bankruptcy or insolvency of the Director or any beneficiary, or
any legal process.
8. Nature of Deferred Stock Compensation Accounts
Any Deferred Stock Compensation Account and any cash fractional
amount accumulated under Section 4(c) shall be established and
maintained only on the books and records of the Company, and no
assets of funds of the Company or the Plan or shares of Common
Stock of the Company shall be removed from the claims of the
Company's general or judgment creditors or otherwise made
available until such amounts are actually payable to Directors
or their designated beneficiaries as provided herein. The Plan
constitutes a mere promise by the Company to make payments in
the future. The Directors and their designated beneficiaries
shall have the status of, and their rights to receive a payment
in shares of Common Stock under the Plan shall be no greater than
the rights of, general unsecured creditors of the Company. No
person shall be entitled to any voting rights with respect to
shares credited to a Deferred Stock Compensation Account, and
not yet payable to a Director or the Director's, designated
beneficiary. The Company shall not be obligated under any
circumstance to fund its financial obligations under the Plan,
and the Plan is intended to constitute an unfunded plan for tax
purposes. However, the Company may, in its discretion, set aside
funds in a trust or other vehicle, subject to the claims of its
creditors, in order to assist it in meeting its obligations under
the Plan, if such arrangement will not cause the Plan to be
considered a funded deferred compensation plan under the
Internal Revenue Code of 1986, as amended.
9. Administration of Plan; Hardship Withdrawal
Full power and authority to construe, interpret, and administer
the Plan shall be vested in the Board. Decisions of the Board
shall be final, conclusive, and binding upon all parties. The
Board may, in its sole discretion, permit the withdrawal of
shares credited to a Deferred Stock Compensation Account with
respect to Director Fees previously payable, upon the request of
a Director or the Director's representative or, following the
death of a Director, upon the request of a Director's
beneficiary or such beneficiary's representative, if the Board
determines that the Director or the Director's beneficiary, as
the case may be, is confronted with an unforeseeable emergency.
For this purpose, an unforeseeable emergency is an unanticipated
emergency caused by an event that is beyond the control of the
Director or the Director's beneficiary, and that would result in
severe financial hardship to the Director or the Director's
beneficiary if an early hardship withdrawal were not permitted.
The Director or the Director's beneficiary shall provide to the
Board such evidence as the Board, in its discretion, may require
to demonstrate that such emergency exists and financial hardship
would occur if the withdrawal were not permitted. The withdrawal
shall be limited to the number of shares necessary to meet
unforeseen financial hardship if the Director has an unexpected
need for cash to pay for expenses incurred by him or a member of
his immediate family (spouse/and or natural or adopted children)
such as those arising from illness, casualty loss, or death.
Cash needs arising from foreseeable events, such as the purchase
or building of a house or education expenses, will not be
considered to be the result of an unforeseeable financial
<PAGE> A-4
emergency. Payment shall be made as soon as practicable after
the Board approves the payment and determines the number of
shares which shall be withdrawn in a single lump sum from
the portion of the Deferred Stock Compensation Account. No
Director shall participate in any decision of the Board regarding
such Director's request for a withdrawal under this Section 9.
10. Fair Market Value
Fair Market Value of the Common Stock shall be the mean between
the following prices, as applicable, for the date as of which
Fair Market Value is to be determined as quoted in The Wall
Street Journal (or in such other reliable publication as the
Board or its delegate, in its discretion, may determine to rely
upon): (a) if the Common Stock is listed on the New York Stock
Exchange, the highest and lowest sales prices per share of the
Common Stock as quoted in the NYSE-Composite Transactions
listing for such date, (b) if the Common Stock is not listed on
such exchange, the highest and lowest sales prices per share of
Common Stock for such date on (or on any composite index
including) the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which
the Common Stock is listed, or (c) if the Common Stock is not
listed on any such exchange, the highest and lowest sales prices
per share of the Common Stock for such date on the National
Association of Securities Dealers Automated Quotations System
("NASDAQ") or any successor system then in use. If there are no
such sale price quotations for the date as of which Fair
Market Value is to be determined, but there are such sale price
quotations within a reasonable period both before and after such
date, then Fair Market Value shall be determined by taking a
weighted average of the means between the highest and lowest
sales prices per share of the Common Stock as so quoted on the
nearest date before and the nearest date after the date as of
which Fair Market Value is to be determined. The average should
be weighted inversely by the respective numbers of trading days
between the selling dates and the date as of which Fair Market
Value is to be determined. If there are no such sale price
quotations on or within a reasonable period both before and
after the date as of which Fair Market Value is to be
determined, then Fair Market Value of the Common Stock shall be
the mean between the bona fide bid and asked prices per share of
Common Stock as so quoted for such date on NASDAQ, or if none,
the weighted average of the means between such bona fide bid
and asked prices on the nearest trading date before and the
nearest trading date after the date as of which Fair Market
Value is to be determined, if both such dates are within a
reasonable period. The average is to be determined in the manner
described above in this Section 10. If the Fair Market Value
of the Common Stock cannot be determined on the basis previously
set forth in this Section 10 on the date as of which Fair Market
Value is to be determined, the Board or its delegate shall in
good faith determine the Fair Market Value of the Common Stock
on such date. Fair Market Value shall be determined without
regard to any restriction other than a restriction which, by
its terms, will never lapse.
11. Securities Laws; Issuance of Shares
The obligation of the Company to issue shares of Common Stock
under the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as
amended, with respect to such shares, if deemed necessary or
appropriate by counsel for the corporation, (ii) the condition
that the shares shall have been listed (or authorized for
listing upon official notice of issuance) upon each stock
exchange, if any, on which shares of the Common Stock may then
be listed, and (iii) all other applicable laws, regulations,
rules and orders which may then be in effect. The Board shall
adopt appropriate rules and regulations or Plan amendments
to carry out the intent of the immediately preceding sentence if
the need for such rules and regulations or amendments arises.
12. Governing Law
The provisions of this Plan shall be interpreted and
construed in accordance with the laws of the State of New York.
13. Effective Date; Amendment and Termination
The Plan was adopted by the Board on May 21, 1996, subject to
approval by the stockholders of the Company at its 1996 Annual
Meeting or any adjournment thereof, and if so approved by the
stockholders, the Plan shall become effective on the date of
such approval. The Board may amend or terminate the Plan at
any time, provided that no such amendment or termination
shall adversely affect rights with respect to amounts or shares
then credited to any Deferred Stock Compensation Account.
