A Computer Associates' (CA) shareholder is proposing that the software supplier cap the compensation of Charles Wang, its chief executive, and base his wage on an agreed multiple of the lowest paid worker in the organisation.
Roger Rath of Fallston, Maryland, who owns 200 shares of CA common stock, has requested that the firm put forward his proposal at its next general meeting, which is due to be held on 25 August. But CA requested that shareholders vote against the proposal in a proxy statement filed with the US Securities and Exchange Commission (SEC) earlier this week.
Rath stated in the proxy: "In asking Computer Associates to establish a cap on executive compensation, we have not sought to impose our own arbitrary cap on executive pay. Instead, we have asked our Company to wrestle with the issue of the rising pay gap between corporate executives and those they seek to lead. By imposing the financial discipline of a pay cap, we hope our Company can help reverse a long standing trend that is neither good for business nor society."
He said he objected to the fact that in May, 1998, CA's top three executives received more than 20 million shares, worth more than $1.1 billion, for meeting performance goals over the previous three years. He cited Professor Graef Crystal, a compensation expert as saying that one third of all large companies had performed better than CA over that period.
He was also unhappy about the fact that Wang received a total of $430 million in compensation, including three years' worth of paper profits on unexercised stock options, over three years, "making him one of the highest paid corporate executives in the history of America". These figures do not include Wang's $670 million stock grant in May, 1998.
And Rath was even more unhappy that this translated into a $675 million after tax cost, or 43 per cent of CA's total pre charge, after tax net income over the three year period that ended on 30 June, 1998.
But CA retorted in the proxy statement: "Setting the compensation and incentives for the chief executive officer is a key responsibility of the Stock Option and Compensation Committee of the Board of Directors…your directors believe that Mr Wang's overall compensation level is appropriate in the light of the value that his superior leadership, vision, and dedication has provided."
It added: "To compete in an increasingly complex technology based global marketplace, the Company must attract and retain the best leadership talent. The Board believes that a cap, whether internally or externally imposed, would limit its ability to search for and retain the skills and talent necessary to continue the Company's preeminent success."
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago