Wang: No Deals Before Vote
Says shareholders will decide fate of
By Mark Harrington
August 23, 2001
A week before a shareholders vote to decide whether he keeps his job,
Computer Associates International Inc. chairman Charles Wang said
yesterday there will be no compromise agreement to avoid a battle that
could give board seats to a dissident investor group.
"We live and die by what the shareholders decide, he said.
In an interview, Wang, in pinstripe suit and sporting a bandaged right
hand that he declined to explain, said any deviation from the direction he
and the current board have set would be "disruptive.
"This isn't the time to go screwing around with the formula, said Wang,
who founded the company 25 years ago. "It's disruptive. We're heading in
the right direction.
His comments follow a turbulent week for CA in which two firms that advise
institutional investors on how to vote their shares in proxy fights
switched their backing from CA management to the insurgents, Ranger
Institutional Shareholder Services of Rockville, Md. blamed Wang for
issues it considered most troubling at CA, and it suggested his departure
would appease them. "CA is much in need of a clean break from its past,
and in particular from the influence of Mr. Wang, whose continued presence
on the board depresses investor confidence in the progress being made,
ISS said in a revised report Monday.
Responding to Wang's comments, a Ranger spokesman said: "If the Ranger
nominees are elected, what would be disruptive is if the remaining CA
board members were to ignore the wishes of shareholders by refusing to
work cooperatively with us to get the company growing and increase
accountability to the company's owners.
The notion of a compromise agreement was broached yesterday by investment
banker Gary Lutin, who is conducting a shareholder forum on the proxy
fight. In a letter he faxed to CA board members and Ranger candidates last
night, Lutin proposed a plan that would, among other things, add three
Ranger candidates to the board and switch Wang's title to vice chairman.
Wang said he wouldn't agree to any pre-vote compromise.
The Ranger spokesman also balked. "The only thing we agree with chairman
Wang on is we don't want a settlement.
Settlement or not, Wang accepted the blame for recent criticisms of CA. He
also voiced frustration with continued criticism of his 1998 stock award,
which has been the basis of the proxy firms' criticism. Wang, his chief
executive Sanjay Kumar and co-founder Russell Artzt were awarded $1.1
billion in stock, but they ultimately were forced to return 4.5 million
shares worth around $250 million.
"If you look at the criticism, a lot of it was leveled at me, not the
company or its products or its people, he said. "If it's bad, I take the
blame. Some of the criticisms are valid. A lot of the things they're
talking about we're well on our way to changing.
Criticism of the stock award is "very frustrating, he said, explaining
that many believe it was granted for one year's work when in fact it was a
"five-year plan. He said 76 percent of shareholders approved the plan in
Asked how he feels when the prospect of his stepping down from his company
is broached by firms such as ISS, Wang said, "It's not my company. It's
the shareholders' company. We recognized that the day we went public. It's
up to the shareholders ultimately. They will tell us what they want us to
Wang confirmed that CA had retained an outside search firm to recruit "one
or two new board directors, bringing the number to "12 or even 14. He
said the effort was in place long before Sam Wyly and Ranger came along
with a plan to unseat CA board members.
Wang said CA's board isn't open to discussing a change in the so-called
"poison pill provisions it has adopted to thwart a hostile takeover. "We
think it's important to have a shareholder-rights plan, Wang said. "It's
been there since 1991. We'll always look at this in terms of good
governance, but we also have to look at long term what is the right thing
to do. We're not just here to win an election.
Wang said, though, that there are certain things that won't change.
CA, for example, has no intention of going back on its new
subscription-based business model and new accounting method that
recognizes revenue over the life of a contract rather than at the time it
Nor has Wang's confidence in Kumar been swayed. "It took me 14 years to
groom Sanjay. He's the future of this company. This kid is good.
His advice to Wyly, should Ranger lose: "You tried, you played hard, let's
move on now.
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