NEW YORK -- A judge ordered the three top executives of software maker Computer Associates International to return stock valued at $1.1 billion last year, in a stinging rebuke of the software giant's controversial bonus plan.
The Delaware Chancery Court judge ruled Tuesday that 9.5 million shares of stock, now worth about $550 million, had been improperly awarded to Computer Associates chairman and chief executive Charles B. Wang; president and chief operating officer Sanjay Kumar, and executive vice president Russell M. Artzt.
The controversy erupted last year when Computer Associates awarded the bonuses just months before warning of a spending slowdown by its corporate software customers. The company's stock plunged 30 percent at the time as its bonus plan, enacted in 1995, became a symbol of excessive executive compensation.
Wang, who received a $670 million stock grant in May 1998 under the plan, was ranked 145th last month on the Forbes list of the richest people in America.
The court order supersedes a vote in August by Computer Associates shareholders to let the executives keep their compensation, which reduced CA's earnings by $1 billion last year. The court also ordered Wang, Kumar and Artzt to account for any profits tied to the 9.5 million shares they received.
"It now appears that the company will recapture more than half that amount," said Martin Unger, an attorney who brought the suit on behalf of shareholder Lisa Sanders. "The lesson here is that company directors are obligated to shareholders to follow the plans as written."
Islandia, N.Y.-based Computer Associates, a leading maker of business software products, said in a statement that it had not yet decided whether to appeal the decision, but that it "runs counter to the reasonable expectations that all the parties had when the (bonus) plan was approved by CA's shareholders."
A Computer Associates spokeswoman said company officials were not available for comment.
Also cited in the suit was the company's three-man compensation team, which includes New York Stock Exchange chairman Richard A. Grasso.
As a result of the decision, Computer Associates will have to remove 9.5 million shares of stock from its total outstanding.
Computer Associates stock was were up 6 1/4 cents at $58.68 3/4 in trading on the New York Stock Exchange.