Doing less than the minimal at CA Inc. …

May 20, 2011

Call us stodgy and old-fashioned, but we like it when a company — hell-bent as it may be on obfuscating the facts, or uninterested as it may be in telling shareholders what’s going on — at least pretends to take this whole disclosure thing seriously.

That means we’re not thrilled with the 8-K that CA (CA) filed on Wednesday. At first glance, it seems pretty straightforward: The press release accompanying the filing announces the appointment of Richard Beckert as Chief Financial Officer, effective immediately, replacing Nancy Cooper, who is retiring after five years.

All well and good. As is our habit, however, we turned to the 8-K itself, which typically skips the testimonials to the wondefulness of said executives (really, how often do you see the CEO badmouth a departing executive or new hire in the press release?) and gets into the nitty gritty details: the what, when and how much of the new appointee’s pay and duties.

Imagine our disappointment, then, when we found this sentence instead:

“In connection with his new role, Mr. Beckert will receive salary and incentive compensation increases, as well as an increase of his Change in Control and Severance Plan multiple.”

And that’s it. No detail. No explanation that the amounts aren’t yet set and will be disclosed once they are. Nada. We did the digital equivalent of flipping to the back of the document — figuring we might find the details in the employment agreement or amendment filed with the 8-K. Only, you guessed it, no attachment other than the press release.

We’re confident that we’ll see the new agreement eventually: Material agreements have to be disclosed in the next quarterly report or annual report, and by definition, pay arrangements for the CEO and the next four top officers (and for all directors) are material. That’s where the whole pretense thing comes in: Clearly someone at CA simply couldn’t be bothered to provide even the barest details, or (if those details haven’t been set yet) couldn’t be bothered to explain why they weren’t doing so.

Mind you, by our reading of the regulations, the details probably should be in the 8-K, at least in summary form. Here’s what the Securities and Exchange Commission has to say about it in explaining its final rule for new Form 8-K requirements, effective August 2004:

A company must disclose the following information upon entry into, or material amendment of, a material definitive agreement:

  • The date on which the agreement was entered into or amended, the identity of the parties to the agreement and a brief description of any material relationship between the company or its affiliates and any of the parties, other than in respect of the material definitive agreement or amendment; and
  • A brief description of the terms and conditions of the agreement or amendment that are material to the company.

Technically, we suppose, CA’s 29-word sentence could be read to constitute “a brief description of the terms and conditions of the agreement or amendment,” but probably only securities lawyers and their doting mothers would take the argument seriously. (Again, the SEC seems pretty definite that executive-pay arrangements are material, so we’re not too concerned about the “material to the company” bit.)

In any case, until the company’s next 10-Q comes out, we may have to be satisfied with unspecified “salary and incentive compensation increases” and that mysterious increase in severance multiple. That doesn’t mean we have to like it.

Image source: CA Labs

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