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FROM SHAREHOLDER ADVOCATE

Letter blasts CA's exec search

BY MARK HARRINGTON
STAFF WRITER

July 29, 2004

Recent reports indicating that Computer Associates' interim chief executive Ken Cron was being considered for the permanent slot prompted a shareholder advocate to write to CA's chairman saying the CEO search may have been compromised.

In the letter to Lewis Ranieri from investment banker Gary Lutin, who conducts an online CA shareholder forum, Lutin said Ranieri's favorable comments about Cron in a Newsday story Monday could dissuade outsiders from applying.

"Monday's news report of your support for CA's interim manager as a potential permanent CEO may be interpreted by some observers, including alternative candidates for the position, as an abandonment of your efforts to recruit a qualified outside executive," Lutin wrote.

Lutin urged Ranieri to address shareholder concerns about executive compensation in periods of improper accounting, and CA's financial reporting process, which he said "top professionals have trouble understanding."

A CA spokeswoman said the company received the letter but had no comment.

In a Newsday story Monday, Ranieri, when asked if Cron were a candidate for the slot, said, "Yes. Ken is doing a good job, and we will look at all alternatives, including him and the job he's doing."

Greg Taxin, chief executive of Glass, Lewis & Co., a San Francisco governance consulting firm, said there are "valid reasons" for a board member to give public backing to an interim CEO, including solidifying his interim authority. But he added, "It's fairly rare a board member comes out in the middle of a search process and levies substantial praise on one potential candidate," which he said could discourage qualified outside candidates from putting their names in the ring.

Copyright 2004, Newsday, Inc.

 

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