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Forum activities relating to CA, Inc. are temporarily suspended pending release of a court-appointed Examiner's report on management compliance with a Deferred Prosecution Agreement.

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Shareholder Proposal to Remove Directors

(March 28 - June 26, 2006)

Copied below is a shareholder proposal and supporting statement submitted to CA by Amalgamated Bank LongView Collective Investment Fund on March 28, 2006, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, for inclusion in the company's proxy statement for the next annual meeting of stockholders.

The proposal seeks the removal of two CA directors, Alfonse M. D'Amato and Lewis S. Ranieri, according to shareholder rights provided in section 141(k) of the Delaware General Corporation Law:

Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors....

(The provision is modified for boards that are classified or elected by cumulative voting.)

The supporting statement refers to conduct that led to the company's acceptance of a Deferred Prosecution Agreement ("DPA"), as described in that document and its "Information" exhibit. References are also made to Mr. Ranieri's statements at the 2004 annual meeting and to management's refusal to comply with acknowledged obligations in response to shareholder demands for information about director performance.

Responding to the proposal, CA management sought SEC staff approval to exclude it from the company's proxy statement so that the proposal would not be presented for shareholder voting.  Following an Amalgamated response and another letter from CA, the staff issued a brief statement dated June 20, 2006 accepting the CA argument that a shareholder proposal to remove directors could be considered "as relating to an election for membership on its board of directors" and therefore excluded under Rule 14a-8(i)(8), a provision intended to make director nominations subject to a separate set of requirements for candidate disclosures.  Amalgamated requested full Commission review of the staff decision, based on policy and legal issues which had not been resolved by the Commission, and on the importance of shareholder rights to remove directors according to the laws of Delaware and other states.  CA management responded with a letter to the SEC conceding that there was no need to treat removal proposals differently from other shareholder proposals, but arguing that allowing "any shareholder" to freely question the qualifications of directors "could have profound, far-reaching consequences for corporate governance of public companies."  Copies of the letters can be downloaded from the following links:

Subsequently, in February 2007, the issue of shareholder rights to remove directors was resolved by the CA board's agreement to adopt majority voting for future elections.



            RESOLVED: That pursuant to section 141(k) of the Delaware General Corporation Law, the shareholders of CA, Inc. hereby remove from the Board of Directors Alfonse M. D'Amato and Lewis S. Ranieri or whichever of them should be serving as directors at the time this resolution is adopted.




            Over two years have passed since Computer Associates (as CA was then known) announced the need to restate financial results because of significant accounting irregularities.  Since then, several top executives have been indicted and pled guilty, and the Company's former CEO is awaiting trial on criminal charges.  CA was forced to enter into a Deferred Prosecution Agreement (“DPA”) in order to avoid a criminal trial.  CA acknowledged making false and misleading statements to the SEC and to obstructing a government investigation into accounting and financial fraud.  CA paid $225 million in restitution to shareholders.


            Although CA has made some governance changes to satisfy the DPA, we believe that more change is needed.  In particular, we deem it important to replace those directors who served during the period of misconduct, who continued on the board during the board’s failure to effectively investigate accounting issues that were raised in 2001 newspaper reports and government investigations, and whose initial response was merely to demote the CEO and offer a $10 million payment to end the law enforcement inquiries.  


            Despite the DPA, we believe that the CA board has been unable to break with the past.  For example, Chairman Ranieri stated at the 2004 annual meeting that shareholders should "be patient" and that CA would not tolerate former executives retaining "ill gotten gains" that were paid as bonuses based on false numbers.  However, CA has not undertaken to recover money from any executives who received unjustified compensation.


Moreover, within the past year, CA reversed the position of its attorneys and refused to disclose the minutes of board meetings that had been requested by shareholders under a Delaware law providing access to such records.


            We believe that this failure to make a clean break may be delaying CA’s financial recovery.  As of March 23, 2006, CA stock has trailed the S&P 500 index for the preceding one-, two-, and five-year periods; a share of CA stock was worth 10% less than it was ten years ago, whereas the S&P 500 index has risen 100%.


            We believe that an effective turnaround and a restoration of investor confidence will require the service of directors who bear no responsibility for management before 2002.  We thus propose removing those directors who served during that period.  At present, that group includes Messrs. D’Amato and Ranieri.


            The law of Delaware, where CA is incorporated, expressly authorizes shareholders to remove directors.  This resolution is the only cost-effective way to raise this issue, since CA shareholders do not have the right to call a special meeting. 


            We urge you to vote FOR this proposal.




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The material presented on this web site is published by Gary Lutin, as chairman of the Shareholder Forum.