August 30, 2001
Computer Associates Management
Wins Over Sam Wyly in Proxy Battle
By JERRY GUIDERA
Staff Reporter of THE
Computer Associates International Inc. beat back a bid to unseat
four incumbent directors after promising large shareholders it would make
the board more independent and would share more strategic information with
The big Islandia, N.Y., software maker said its 10 incumbent directors
won more than 75% of the votes cast in the proxy fight mounted by Texas
investor Sam Wyly, who had accused CA and its current managers of poor
performance, overcompensation, an overly cozy board and an accounting
system that obscured deteriorating results.
The preliminary count, subject to official certification, was made at
CA's annual shareholders' meeting in Islandia Wednesday. The company said
it had received votes from holders of more than 80% of its 577 million
In an interview after the vote, CA Chief Executive Officer Sanjay Kumar
confirmed that he had pledged to shareholders during the campaign that he
would address concerns raised by Mr. Wyly and the candidates backed by his
Ranger Governance Ltd. He said CA expects to add a new board member by the
end of the year and hopes two will sign on by year end. Both would be
independent directors who wouldn't be employed by CA. Just after the proxy
fight began, CA added two independent members to its board. Three of the
current members are CA employees.
The result was a victory for Mr. Kumar and CA Chairman Charles Wang.
Still, Mr. Wang, who helped found the fourth-largest software maker 25
years ago and became one of Mr. Wyly's main targets in the takeover
battle, said in an interview that the two-month-long contest was "a
While he pledged to be more open with investors about the company, Mr.
Wang noted that the victory was by "a significant margin" and said "it
feels good" because the results showed "shareholders understand the value
of experienced, knowledgeable directors in maintaining CA's competitive
advantage and success."
Mr. Kumar, who says he spent the past several weeks on the road
campaigning "just about every day" for votes from major shareholders, also
pledged to share company-funded customer-survey and product reviews with
analysts and the investment community; to outline specific growth targets
for niche software markets such as data-storage, security and
mainframe-systems management; and to be more regularly in touch with large
Shy From Board Ousters, Instead Opting for Dissident Members
Associates Management Is Likely to Win in Wyly Proxy Battle (Aug.
Associates' Kumar Defends Chairman Wang (Aug. 23)
People familiar with the matter said CA won the critical support of
Fidelity Investments, the money-management titan, whose 9.7% holding is
the largest of any institution; and of No. 3 holder State Street
Corp., which has 2.2%. Others who also sided with incumbents were Swiss
investor Walter Haefner, who acquired his 21% stake through the 1986 sale
of his firm to Computer Associates and other company insiders, who had 7%.
In an interview, Mr. Wyly credited the proxy fight for CA's board
reforms and moves toward more openness. He said shareholders extracted
these as concessions from CA during the campaign. "The largest
institutions knew from the beginning" that the slate would be hard-pressed
to win, he said, but they "used the power we gave them to get something
they could see would be a significant change."
Mr. Wyly, who last year sold a software firm he ran to CA for $3.9
billion, maintained that Mr. Kumar also made specific pledges to replace
certain board members, an accusation CA denies. "We made no specific
commitments," said Mr. Kumar, who said he knew of "no plans for anyone to
Gary Lutin, a shareholder activist who organized an electronic forum to
debate the corporate-governance issues raised by Mr. Wyly's proxy bid,
said he was surprised by the support that institutions gave to CA. He has
estimated Mr. Wyly had the backing of as many as three-quarters of
shareholding institutions after Ranger scaled back its proxy slate to four
members from the full 10 necessary to replace the entire board.
Write to Jerry Guidera at
URL for this Article:
Hyperlinks in this Article:
Copyright © 2001 Dow Jones & Company, Inc. All