CA, INC.
CHANGE IN CONTROL SEVERANCE POLICY
(AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 2008)
1.
Purpose . The purpose of the CA, Inc. Change in
Control Severance Policy (the “ Policy ”)
is to secure the continued services of certain senior executives of
the Company and to ensure their continued dedication to their
duties in the event of any threat or occurrence of a Change in
Control (as defined in Section 2).
2.
Definitions . As used in this Policy, the following
terms shall have the respective meanings set forth
below:
(a)
“ Annual Performance Bonus ” means the annual
cash bonus awarded under the Company’s incentive plan, as in
effect from time to time (as of the date of adoption of this Policy
the “annual performance bonus” within the meaning of
Section 4.4 of the Company’s 2007 Incentive Plan,
effective as of June 12, 2007 (the “ Company
Incentive Plan ”)).
(b)
“ Base Salary ” means the higher of
(i) the Participant’s highest annual rate of base salary
during the twelve-month period immediately prior to the
Participant’s Date of Termination or (ii) the average of
the Participant’s annual base salary earned during the past
three (3) completed fiscal years of the Company immediately
preceding the Participant’s Date of Termination (annualized
in the event the Participant was not employed by the Company (or
its affiliates) for the whole of any such fiscal year).
(c)
“ Board ” means the Board of Directors of
the Company and, after a Change in Control, the “board of
directors” of the Parent Corporation or Surviving
Corporation, as the case may be, as defined for purposes of
Section 2(f).
(d)
“ Bonus Amount ” means the higher of
(i) the Participant’s target Annual Performance Bonus
for the fiscal year in which the Participant’s Date of
Termination occurs (or if the Participant’s Qualifying
Termination is on account of Good Reason pursuant to a reduction in
a Participant’s compensation or compensation opportunity
under Section 2(k)(ii), the Participant’s target Annual
Performance Bonus for the prior fiscal year if higher) or
(ii) the average of the Annual Performance Bonuses earned by
the Participant from the Company (or its affiliates) during the
last three (3) completed fiscal years of the Company (or such
shorter period of time during which the Participant was employed by
the Company) immediately preceding the Participant’s Date of
Termination (annualized in the event the Participant was not
employed by the Company (or its affiliates) for the whole of any
such fiscal year).
(e)
“ Cause ” means (i) the willful and
continued failure of the Participant to perform substantially his
duties with the Company (other than any such failure resulting from
the Participant’s incapacity due to physical or mental
illness or any such failure subsequent to the Participant being
delivered a notice of termination without Cause by the Company or
delivering a notice of termination for Good Reason to the Company)
after a written demand for substantial performance is delivered to
the Participant by or on behalf of the Board which specifically
identifies the manner in which the Board believes that the
Participant has not substantially performed his duties,
(ii) the willful engaging by the Participant in illegal
conduct or gross misconduct which is demonstrably and materially
injurious to the Company or its affiliates, (iii) the engaging by
the Participant in conduct or misconduct that materially harms the
reputation or financial position of the Company, (iv) the
Participant (x) obstructs or impedes, (y) endeavors to
influence, obstruct or impede or (z) fails to materially
cooperate with, an Investigation, (v) the Participant
withholds, removes, conceals, destroys, alters or by other means
falsifies any material which is requested in connection with an
Investigation, or attempts to do so or solicits another to do so,
(vi) the commission of a felony by the Participant or
(vii) the Participant is found liable in any SEC or other
civil or criminal securities law action or enters into any cease
and desist orders with respect to such action regardless of whether
the Participant admits or denies liability. For purposes of this
paragraph (d), no act or failure to act by the Participant shall be
considered “willful” unless done or omitted to be done
by the Participant in bad faith and without reasonable belief that
the Participant’s action or omission was in the best
interests of the Company or its affiliates. Any act, or failure to
act, in accordance with authority duly given by the Board, based
upon the advice of counsel for the Company (including counsel
employed by the Company) shall be conclusively presumed to be done,
or omitted to be done, by the Participant in good faith and in the
best interests of the Company. Cause shall not exist unless and
until the Company has delivered to the Participant a copy of a
resolution duly adopted by three-quarters (3/4) of the entire Board
(excluding the Participant from both the numerator and denominator
if the Participant is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to the
Participant and an opportunity for the Participant, together with
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board an event set forth in clauses (i), (ii),
(iii), (iv), (v), (vi) or (vii) has occurred and
specifying the particulars thereof in detail.
(f)
“ Change in Control ” means the
occurrence of any one of the following events:
(i)
individuals who, on the effective date of the Policy, constitute
the Board (the “ Incumbent Directors ”)
cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director
subsequent to the effective date of the Policy whose election or
nomination for election was approved by a vote of a majority of the
Incumbent Directors then on the Board (either by a specific vote or
by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent
Director;
provided , however , that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
(ii)
any “person” (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”) and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 35% or more of the combined
voting power of the Company’s then outstanding securities
eligible to vote generally in the election of directors (the
“ Company Voting Securities ”);
provided , however , that the event described in this
paragraph (ii) shall not be deemed to be a Change in Control
by virtue of any of the following acquisitions: (A) by the
Company or any Subsidiary, (B) by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)), (E) pursuant to any acquisition by the
Participant or any group of persons including the Participant (or
any entity controlled by the Participant or any group of persons
including the Participant); or (F) a transaction (other than
one described in (iii) below) in which Company Voting
Securities are acquired from the Company, if a majority of the
Incumbent Directors approve a resolution providing expressly that
the acquisition pursuant to this clause (F) does not
constitute a Change in Control under this paragraph
(ii);
(iii)
the consummation of a merger, consolidation, statutory share
exchange, reorganization, sale of all or substantially all the
Company’s assets or similar form of corporate transaction
involving the Company or any of its Subsidiaries that requires the
approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a
“ Business Combination ”), unless
immediately following such Business Combination: (A) at least
60% of the total voting power of (x) the corporation resulting
from such Business Combination (the “ Surviving
Corporation ”), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has
beneficial ownership of at least 95% of the voting securities
eligible to elect directors of the Surviving Corporation (the
“ Parent Corporation ”), is represented
by Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities
were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit
plan (or related trust) sponsored or maintained by the
Surviving
Corporation or
the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of 35% or more of the total voting power of
the outstanding voting securities eligible to elect directors of
the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of
the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be
deemed to be a “ Non-Qualifying Transaction
” and any Business Combination which does not satisfy all of
the criteria specified in (A) (B) and (C) shall be deemed
a “ Qualifying Transaction ”);
or
(iv)
the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more
than 35% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company or its
affiliates which reduces the number of Company Voting Securities
outstanding; provided , that if after the consummation of
such acquisition by the Company such person becomes the beneficial
owner of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then
occur. For purposes of this Change in Control definition,
“corporation” shall include any limited liability
company, partnership, association, business trust and similar
organization, “board of directors” shall refer to the
ultimate governing body of such organization and
“director” shall refer to any member of such governing
body.
(g)
“ Company ” means CA, Inc.
(h)
“ Date of Termination ” means
(i) the effective date on which the Participant’s
employment by the Company terminates as specified in a prior
written notice by the Company or the Participant, as the case may
be, to the other, delivered pursuant to Section 9 or
(ii) if the Participant’s employment by the Company
terminates by reason of death, the date of death of the
Participant.
(i)
“ Disability ” shall mean long-term
disability under the terms of Company’s long-term disability
plan, as then in effect.
(j)
“ Equity Incentive Compensation ” means
all equity-based compensation (including stock options and
restricted stock) awarded under the Company’s incentive plan,
as in effect from time to time (as of the date of adoption of this
Policy the “restricted stock,” “stock
options” and “other equity-based awards” within
the meaning of Sections 4.6, 4.7 and 4.8, respectively, of the
Company Incentive Plan).
(k)
“ Good Reason ” means the occurrence of
one or more of the following circumstances, without the
Participant’s express written consent, and which
circumstance(s) are not remedied by the Company within thirty
(30) days of receipt of a written notice from the Participant
describing in reasonable detail the Good Reason event that has
occurred (which notice must be provided within ninety
(90) days of the Participant’s obtaining knowledge of
the event), provided that the Participant must terminate employment
within the two (2) years following the Participant’s
obtaining knowledge of the event:
(i)
(A) any material change in the duties, responsibilities or
status (including reporting responsibilities) of the Participant
that is inconsistent in any material and adverse respect with the
Participant’s position(s), duties, responsibilities or
authority with the Company immediately prior to such Change in
Control (including any material and adverse diminution of such
duties or responsibilities); provided , however ,
that Good Reason shall not be deemed to occur upon a change in
duties, responsibilities (other than reporting responsibilities) or
status that is solely and directly a result of the Company no
longer being a publicly traded entity and does not involve any
other event set forth in this Section 2(k) or (B) a material
and adverse change in the Participant’s titles or offices
(including, if applicable, membership on the Board) with the
Company as in effect immediately prior to such Change in
Control;
(ii)
a more than 10% reduction by the Company in the Participant’s
rate of annual base salary or Annual Performance Bonus, Long-Term
Performance Bonus or Equity Incentive Compensation target
opportunities (including any material and adverse change in the
formula for such targets) as in effect immediately prior to such
Change in Control, provided that any such change constitutes a
reduction of 5% or more in the Participant’s total
compensation paid by the Company;
(iii)
the failure of the Company to continue in effect any employee
benefit plan, compensation plan, welfare benefit plan or fringe
benefit plan in which the Participant is participating immediately
prior to such Change in Control or the taking of any action by the
Company, in each case which would materially adversely affect the
Participant, unless the Participant is permitted to participate in
other plans providing the Participant with materially equivalent
benefits in the aggregate (at materially equivalent or lower cost
with respect to welfare benefit plans);
(iv)
the failure of the Company to obtain the assumption of the
Company’s obligations hereunder from any successor as
contemplated in Section 8(b); or
(v)
a material breach by the Company of the terms of the
Participant’s employment agreement.
The
Participant’s right to terminate employment for Good Reason
shall not be affected by the Participant’s incapacities due
to mental or physical illness and the Participant’s continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any event or condition constituting Good
Reason.
(l)
“ Home Country ” shall mean a
Participant’s country of residence immediately before the
Participant commenced employment with the Company.
(m)
“ Investigation ” means an investigation
authorized by the Board, a self-regulatory organization empowered
with self-regulatory responsibilities under federal or state laws
or a governmental department or agency.
(n)
“ Long-Term Performance Bonus ” means the
long-term bonus awarded under the Company’s incentive plan,
as in effect from time to time (as of the date of adoption of this
Policy the “long-term performance bonus” within the
meaning of Section 4.5 of the Company Incentive
Plan).
(o)
“ Participant ” means each of the senior
executives of the Company who are selected by the Board for
coverage by this Policy and identified on Schedules A, B and C from
time to time.
(p)
“ Potential Change in Control ” means the
execution or entering into of any agreement by the Company the
consummation of which can be expected to be a Qualifying
Transaction.
(q)
“ Qualifying Termination ” means a
termination of the Participant’s employment with the Company
(i) by the Company other than for Cause or (ii) by the
Participant for Good Reason. Termination of the Participant’s
employment on account of death, Disability or Retirement shall not
be treated as a Qualifying Termination. Notwithstanding the
preceding sentence, the death of the Participant after notice of
termination for Good Reason or without Cause has been validly
provided shall be deemed to be a Qualifying Termination.
(r)
“ Retirement ” means the
Participant’s mandatory retirement (not including any
mandatory early retirement) in accordance with the Company’s
retirement policy generally applicable to its salaried employees,
as in effect immediately prior to the Change in Control, or in
accordance with any retirement arrangement established with respect
to the Participant with the Participant’s written
consent.
(s)
“ Subsidiary ” means any corporation or
other entity in which the Company has a direct or indirect
ownership interest of 50% or more of the total combined voting
power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the
election of directors (or members of any similar governing body) or
in which the Company has the right to receive 50% or more of the
distribution of profits or 50% of the assets or liquidation or
dissolution.
(t)
“Section 409A” means
Section 409A of the Internal Revenue Code of 1986, as amended,
and the final Treasury Regulations issued thereunder.
(u)
“ Termination Period ” means the period
of time beginning with a Change in Control and ending two
(2) years following such Change in Control. Notwithstanding
anything in this Policy to the contrary, if (i) the
Participant’s employment is terminated prior to a Change in
Control (or, if applicable, a Potential Change of Control) for
reasons that would have constituted a Qualifying Termination if
they had occurred following a Change in Control; (ii) the
Participant reasonably demonstrates that such termination (or Good
Reason event) was at the request of a third party who had indicated
an intention or taken steps reasonably calculated to effect a
Change in Control; and (iii) a Change in Control (or a
Potential Change in Control) involving such third party (or a party
competing with such third party to effectuate a Change in Control)
does occur within six (6) months from the date of such
termination (or, in the case of a Potential Change in Control, such
Potential Change in Control occurs within three (3) months of
such termination), then for purposes of this Policy, the date
immediately prior to the date of such termination of employment or
event constituting Good Reason shall be treated as a Change in
Control. For purposes of determining the timing of payments
and benefits to the Participant under Section 4, the date of
the actual Change in Control (or, if applicable, the Potential
Change of Control) shall be treated as the Participant’s Date
of Termination under Section 2(h), and for purposes of
determining the amount of payments and benefits owed to the
Participant under Section 4, the date the Participant’s
employment is actually terminated shall be treated as the
Participant’s Date of Termination under
Section 2(h).
3.
Eligibility . The Board shall determine in its sole
discretion which senior executives of the Company shall be
Participants and whether a Participant shall be listed on
Schedule A, B or C, and the Board may remove the name of any
senior executive from Schedule A, B or C and participation in
this Policy at any time in its sole discretion; provided ,
however , that a Participant may not be removed from
Schedule A, B or C without his or her prior written consent
within the two-year period after a Change in Control or within the
period of time beginning on a date three (3) months prior to a
Potential Change in Control and ending on the termination of the
agreement that constituted the Potential Change in Control. The
Board may delegate its authority to identify the Participants on
Schedule A, B or C and to remove a Participant from
Schedule A, B or C to the Compensation and Human Resources
Committee (or any successor committee) of the Board.
4.
Payments Upon Termination of Employment . If during
the Termination Period the employment of the Participant is
terminated pursuant to a Qualifying Termination, then, subject to
the Participant’s execution of a Separation Agreement and
Release in the form attached to this Policy as Exhibit A (the
“ Separation Agreement and Release ”),
which shall be provided to the Participant no later than two
(2) days after the Date of Termination and must be executed by
the Participant, become
effective and
not be revoked by the Participant by the fifty-fifth (55
th ) day following the Date of Termination, the
Company shall provide to the Participant:
(a) a
lump sum cash payment equal to the result of multiplying
(i) the sum of (A) the Participant’s Base Salary,
plus (B) the Participant’s Bonus Amount by
(ii) either 2.99 for a Participant identified on
Schedule A, or 2.00 for a Participant identified on
Schedule B or 1.00 for a Participant identified on
Schedule C; and
(b) a
cash payment equal to the Participant’s target Annual
Performance Bonus for the fiscal year in which the
Participant’s Date of Termination occurs, multiplied by a
fraction the numerator of which shall be the number of days the
Participant was employed by the Company during the fiscal year in
which the Date of Termination occurred and the denominator of which
is 365; and
(c) a
cash payment equal to the Participant’s target Long-Term
Performance Bonus for any incomplete performance cycle(s) as of the
Participant’s Date of Termination, multiplied by a fraction
the numerator of which shall be the number of days the Participant
was employed by the Company during the applicable performance cycle
and the denominator of which shall be the total number of days in
the performance cycle; and
(d) a
cash payment equal to the Company’s monthly premium cost of
health care for Participant and/or the Participant’s family
at the Date of Termination, multiplied by eighteen (18);
and
(e) for
a period of one (1) year following the Participant’s
Date of Termination, the Company shall make outplacement services
available to the Participant in accordance with its outplacement
policy in effect immediately before the Change in Control (or if no
such policy is in effect, the Participant may choose a provider of
outplacement services, provided that the total cost of such
outplacement services for the Participant shall not exceed $10,000
USD); and
(f) if
on the Date of Termination the Participant is working in a country
other than the Participant’s Home Country and the Participant
wishes to relocate to such Participant’s Home Country within
one (1) year following the Date of Termination, the Company
shall provide relocation benefits to the Participant and his or her
dependants in accordance with the Company’s relocation
program as in effect immediately before the Change in Control (or
if no such program is in effect, the Company shall reimburse the
Participant for reasonable relocation benefits incurred by the
Participant and his or her dependants in returning to the
Participant’s Home Country to the extent that such costs do
not exceed $75,000 USD); and
(g) to
the extent provided in Appendix A, if the Participant is
subject to the excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the “ Excise
Tax ”), a gross-up payment in accordance with the
provisions of Appendix A.
The cash
payments specified in paragraphs (a), (b), (c) and (d) of
this Section 4 shall be paid no later than the sixtieth
(60 th
) day (or the next following
business day if the sixtieth day is not a business day) following
the Date of Termination.
Except as
otherwise expressly provided pursuant to this Policy, this Policy
shall be construed and administered in a manner which avoids
duplication of compensation and benefits which may be provided
under any other plan, program, policy, or other arrangement or
individual contract. In the event a Participant is covered by any
other plan, program, policy, individually negotiated agreement or
other arrangement, in effect as of his or her Date of Termination,
that may duplicate the payments and benefits provided for in this
Section 4, the Board is specifically empowered to reduce or
eliminate the duplicative benefits provided for under the
Policy.
5.
Withholding Taxes . The Company may withhold from all
payments due to the Participant (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or
other law, the Company is required to withhold
therefrom.
6.
Reimbursement of Expenses . Except as provided in
Section 16(a) of a Participant’s Employment and
Confidentiality Agreement, if any contest or dispute shall arise
under this Policy involving termination of a Participant’s
employment with the Company or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof,
the Company shall reimburse the Participant on a current basis for
all reasonable legal fees and related expenses, if any, incurred by
the Participant in connection with such contest or dispute
(regardless of the result thereof), together with interest in an
amount equal to the prime rate as reported in The Wall Street
Journal , but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue thirty
(30) days from the date the Company receives the
Participant’s statement for such fees and expenses through
the date of payment thereof, regardless of whether or not the
Participant’s claim is upheld by a court of competent
jurisdiction or an arbitration panel; provided ,
however , that the Participant shall be required to repay
immediately any such amounts to the Company to the extent that a
court or an arbitration panel issues a final and non-appealable
order setting forth the determination that the position taken by
the Participant was f
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