Shareholder Demand for Minutes to Review
Performance of Director Candidates
(June 27, 2005)
Copied below are the texts of a June 27, 2005 letter and
supporting power of attorney presenting a shareholder "Delegate" demand for the
minutes of meetings and actions of the board of Computer Associates since 1998,
for the purpose of obtaining information needed by shareholders in their voting
decisions relating to directors who present themselves for re-election.
The demand was made pursuant to
Section 220 of the Delaware General Corporation Law, providing shareholders
a court-enforceable right to inspect books and records for information that may
be relevant to investor interests. CA management had previously declined
to provide the required information co-operatively, in
May 13 and May 20, 2005 letters responding
to the Forum's May 11, 2005 request.
Addressing possible confidentiality requirements, the
Delegate's letter states that he is willing to arrange for independent legal
counsel or other experts to review designated material subject to conventional
restrictions, and then prepare reports that exclude the confidential details as
approved by CA or by a court. The approved non-confidential reports could
then be made available publicly to provide all shareholders with information
they can use, without "insider" constraints, to consider each director
candidate's past performance in making voting or other investment decisions.
The Delegate, Peter F. Brennan, has served as Chairman of the New York Society
of Security Analysts Committee for Corporate Governance,* and the authorizing
shareholder, Leonard Rosenthal, is Professor of Finance at Bentley College.
Both individuals are frequently quoted experts on shareholder rights, and
volunteered to support a Forum demonstration of the process for obtaining
information needed by investors.
Subsequently, on July 5, 2005, counsel to the company
responded to the demand stating an intent to comply "amicably" subject to the
resolution of certain procedural issues and "clearance" of the US Attorney's
Office responsible for the CA Deferred Prosecution
Agreement. The US Attorney's Office was asked in a
July 21, 2005 letter to clarify issues raised
by CA, and the shareholder Delegate responded to CA's proposed conditions in a
July 22, 2005 letter.
Considering the delays which ultimately prevented
shareholders from obtaining the information needed for voting decisions at the
annual meeting scheduled for August 24, 2005, the board was asked in an
August 4, 2005 letter to state its policy for
improved responses to investor inquiries, and the Forum adjusted its program to
seek information about director performance relevant to shareholder decisions in
the following year. Management responded with indications that they would
not comply with the information demand, resulting ultimately in an
August 23, 2005 Forum request that the
court-appointed Examiner consider these investor interests in his reports to
the U.S. Attorney regarding management's compliance with the relevant provisions
Deferred Prosecution Agreement. It was
reported on September 6, 2005 that the
Delegate intended to suspend efforts to review records pending the Examiner's
Subsequently, one of the demanded records, minutes of a
July 2003 board meeting contradicting company statements about director
responsibility for the initiation of an independent audit committee
investigation, was made available in a public court filing by the
U.S. Attorney in its criminal prosecution of former CA executives.
* Mr. Brennan had chaired the NYSSA Committee for Corporate
Governance during the period of its pioneering
Forum programs, and resumed the Committee's chair
effective July 2005.
June 27, 2005
By telecopier: 631-342-3300
Mr. Kenneth V. Handal
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11749
Re: Demand for records
Dear Mr. Handal:
Acting as a shareholder Delegate according to the accompanying
powers of attorney and evidence of stock ownership, having no notice or
knowledge that those powers have been revoked, I demand that you produce the
following books and records of Computer Associates International, Inc. (the
“Company”) for inspection and copying pursuant to Section 220 of the
Delaware General Corporation Law:
All minutes of meetings and actions of the Company’s board of directors and
its committees from the beginning of 1998 until now, including attached or
The purposes of this demand are (a) to evaluate the performance
of the Company's directors, (b) to determine specifically how each director
conducted his or her oversight responsibilities during the period of
acknowledged management misconduct from 1998 to 2004, (c) to consider
shareholder voting decisions, particularly in relation to current directors
who are presented as candidates for re-election to the board at the
Company’s annual meeting in August, and (d) to consider other possible
actions to protect the rights and interests of shareholders.
To the extent that any of the records to be produced may include
trade secrets or other information that should be treated as confidential,
you should so identify the particular material. If required, I will
authorize an attorney to establish conventional agreements and procedures
for “attorney’s eyes only” review of confidential material as a foundation
for counsel’s preparation of reports that provide the substantive
information needed for investment decisions in a form suitable for public
use, without confidential details as approved by the Company or a court. It
should be understood that the information which is ultimately provided to me
should not be restricted by any confidentiality agreements or other duties
that might restrict its use, since the very purpose of seeking the
information is to use it for investment decisions.
It should also be understood that neither your communications
with me nor any of my communications with others will relieve the Company's
management of its responsibility for providing information to public
investors in compliance with applicable SEC regulations.
Please let me know within five business days what arrangements
you propose for producing the demanded records.
Very truly yours,
Peter F. Brennan,
STATE OF NEW YORK )
COUNTY OF NEW YORK )
Sworn to before me on this 24 day of June, 2005.
[signature of notary public]
DURABLE POWER OF ATTORNEY
The undersigned, Leonard Rosenthal, having an address
106 Walnut Hill Road, Newton, MA 02461 (“Shareholder”), and being the owner
of the common stock of COMPUTER ASSOCIATES INTERNATIONAL, INC. (“Company”)
evidenced in the accompanying purchase confirmation, hereby appoints PETER
F. BRENNAN, having an address c/o Palmer Brennan LLC, 237 Park Avenue, New
York, New York 10017 (“Delegate”), as the undersigned’s agent
(attorney-in-fact) to take any and all actions which Shareholder, as a
shareholder of the Company, could take in accordance with any applicable
statutory or common law, including, without limitation, as provided for in
Section 220 of the Delaware General Corporation Law, to request, demand,
obtain, inspect, copy and otherwise deal with, on Shareholder’s behalf, any
and all information of the Company deemed by the Delegate to be relevant to
Shareholder’s interests as a shareholder, but specifically withholding from
Delegate the authority to enter into any agreement that would impose upon
Shareholder any confidentiality obligations or other conditions that would
restrict Shareholder’s use or disclosure of any such information for any
purpose related to Shareholder’s interests as a shareholder, and otherwise
granting unto said Delegate full power and authority to do and perform each
and every lawful act and thing which Shareholder might or could do in person
in connection with the aforesaid matters that Delegate believes necessary,
proper or convenient. Shareholder ratifies and confirms all that Delegate
in fact does or causes to be done under the authority granted in this Power.
Delegate shall not be liable to Shareholder or any of
Shareholder’s successors in interest for any action taken or not taken in
good faith, but shall be liable for any willful misconduct or gross
This power of attorney shall not be affected by
subsequent incapacity of the Shareholder, and shall remain in full force and
effect until revoked by the Shareholder.
Persons dealing with Delegate may rely fully on a
photostatic copy of this Power.
Signed this 23 day of June
State of Massachusetts
County of Middlesex
On June 23, 2005 before me,
Donna DeIulio , a notary public in the
state of Massachusetts , personally appeared
Leonard Rosenthal , personally known
to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to
me that he or she executed the same in his or her authorized capacity, and
that by his or her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.