A COMPROMISE PROPOSAL
Banker Proposes Middle Course On CA
August 23, 2001
In this letter faxed to CA board members on Wednesday night,
investment banker Gary Lutin proposed a compromise plan to resolve the
differences between current CA management and Texas billionaire Sam Wyly,
who is vying to take a greater role in the company.
Copied below is the text of a letter sent late this afternoon to both
groups of candidates, encouraging them to establish a cooperative
agreement for an orderly transition and suggesting the type of terms
which may serve the interests of CA shareholders.
The proposition in my letter is intended to put the candidates to the
test. The proposed terms should provide a thoroughly reasonable basis
for anyone who is willing to cooperate to do so. If a candidate refuses
to shake hands now, to assure an orderly transition, you may want to
question relying on him to serve shareholders in the future.
Recent reports of threatened disruption -- such as Mr. Wang's statements
in this morning's Newsday interview -- could of course be nothing more
than posturing for votes. But it's best to find out now rather than
after the vote which of the candidates can be relied upon to act
responsibly in the interests of shareholders.
Approaching the August 29th meeting date, there appears to be a virtual
consensus that change is needed -- the only real issue is how to
implement it without disorder. Everyone, including candidates as well as
shareholders, needs to focus on the best way to do it and not on who can
do what to obstruct it.
GL - 8/22/01
Text of 8/22/01 letter from GL to members of and candidates for CA board
LUTIN & COMPANY 575 MADISON AVENUE, 10th FLOOR NEW YORK, NEW YORK 10022
Telephone (212) 605-0335 Facsimile (212) 605-0325
August 22, 2001
Mr. Russell M. Artzt, Mr. Linus W.L. Cheung, Mr. Alfonse M. D'Amato, Mr.
Richard A. Grasso, Ms. Shirley Strum Kenny, Mr. Sanjay Kumar, Mr. Roel
Pieper, Mr. Lewis S. Ranieri, Mr. Willem F.P. de Vogel, and Mr. Charles
B. Wang c/o Computer Associates International, Inc. One Computer
Associates Plaza Islandia, New York 11749
Mr. Richard J. Agnich, Mr. Stephen R. Perkins, Ms. Cece Smith, and Ms.
Elizabeth Ann VanStory c/o Ranger Governance, Ltd. 300 Crescent Court,
Suite 1000 Dallas, Texas 75201
To each member of and candidate for the board of Computer Associates:
It is my impression that both sides in the contest for CA board seats
have become focused during the past few days on legal challenges to
shareholder voting rights, public threats of disruption, and private
dealmaking for votes. This does not serve the interests of most CA
Under these circumstances I strongly encourage CA's existing board and
the dissident candidates to consider a practical compromise which
assures an orderly accommodation of clearly expressed shareholder
interests. This could involve agreeing to a single slate of directors
and dropping all proxy-related litigation based on some variation of the
1. Board candidates: The commonly adopted slate would consist of seven
incumbent directors, including Mr. Wang, and three Ranger nominees. The
Ranger nominees would be selected from the four current Ranger
candidates by a committee of current independent directors of CA who are
not members of the compensation committee.
2. Chairman: Mr. Kumar would become the board's Chairman, and Mr. Wang
would become its Vice Chairman.
3. Future board expansion: The board would continue its efforts to
recruit at least two new independent directors within six months,
increasing board size as required. The recruiting process and selection
of candidates would be the responsibility of the nominating committee,
which should consist entirely of independent directors of whom half are
selected from the Ranger candidates.
4. Poison pill: The board would take appropriate actions to terminate
the "Rights Agreement" in one year if the value of CA shares has not by
that time equaled or exceeded an average standard for its peer group,
such as a multiple of book value or revenue. The board would also adopt
a resolution confirming that Mr. Haefner will not be declared an
5. Shareholder litigation: The board would establish a special
committee, comprised entirely of disinterested directors, to monitor and
make recommendations concerning the disposition of shareholder
It is my impression, from public reports as well as communications with
CA Forum participants, that your efforts to negotiate this or a similar
form of cooperative plan would be widely supported by CA's shareholders.
There is an apparent consensus among shareholders regarding the need for
some change at CA. What they will be observing now, and voting on next
week, is each candidate's demonstration of responsibility in
representing the obvious interests of the company's owners.
Very truly yours,
Copyright © 2001,