Forum for Shareholders of CA, Inc.

Forum Home Page

Pending Status

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.

CA Forum Home Page

CA Research Reference


Letter to Chairman Inviting Cooperative Development of Shareholder Oversight Procedures

(December 8, 2004)

Copied below is the text of a December 8, 2004 letter to the chairman of Computer Associates' board inviting management cooperation in the development of procedures supporting shareholder oversight responsibilities described in the Forum Summary.

The letter proposes starting with programs to (1) improve the quality of analyst information and (2) monitor the board's decisions relating to potential claims against directors and officers.  It also addresses the need for confidentiality provisions that will avoid exposing Forum participants to "insider" constraints, and encourages the establishment of broadly applicable procedures that will also satisfy the requirements of Sarbanes-Oxley and the company's DOJ-SEC Deferred Prosecution Agreement.

Following several weeks of informal discussion, management proposed a February 9, 2005 meeting to define their cooperation.  Asked at that meeting to make specific commitments in relation to an example of plans for presenting shareholder views to the Administrator of the $225 million Restitution Fund, management responded with a February 11, 2005 decision not to fund the shareholder activities but to attend their meeting.  Upon management's February 25, 2005 confirmation of their decision, the Forum developed alternative plans to respond to the Administrator's request for addressing investor interests.

Subsequently, management repeatedly declined requests for advice regarding the development of procedures for the Forum's review and reporting of information needed by shareholders about the past performance of directors standing for re-election, requiring resort to a June 27, 2005 court-enforceable demand for records pursuant to Section 220 of the Delaware General Corporation Law.  Although the company's attorneys stated their intent to comply "amicably" with the demands, further delays ultimately prevented shareholders from obtaining the information needed for voting decisions at the 2005 annual meeting.  The company's board was asked in an August 4, 2005 letter to state its policy for improved responses to investor inquiries.




575 Madison Avenue

New York, New York 10022

Telephone (212) 605-0335

Facsimile (212) 605-0325


December 8, 2004



By telecopier: 631/342-3300


Mr. Lewis S. Ranieri

Computer Associates International, Inc.

One Computer Associates Plaza

Islandia, New York 11749



Dear Mr. Ranieri:


            I will appreciate your advice of appropriate CA representatives for discussions of communication procedures to accommodate the requirements of responsible shareholder oversight during the next year.


            As you know, the “Forum” program I’m managing will be supporting shareholder needs for the information and exchange of views that may be relevant to their investment decisions.  A preliminary indication of the issues to be addressed is presented in a “Forum Summary,” dated November 1, 2004, which can be found on the program’s web site:


            Procedures for responding to these shareholder requirements should be developed with CA management cooperation to minimize the costs and maximize the benefits, so that both investors and board members can be better informed about the decisions they must make.  I propose starting with the following:


  1. Analyst information:  Investors, including professional securities analysts, find it difficult to understand the information CA publishes about its business performance.  The quality and clarity of investment information must be improved to eliminate this confusion, and to establish management credibility.  (It should be noted that analyst questions during conference calls reflect problems arising from their inability to reconcile performance data, and do not appear to involve accounting issues.  Efforts to improve analyst information would therefore be independent of the oversight requirements for audit and regulatory compliance.)  A collaboration of analysts and CA management, following the example of the informal professional “workshops” developed as part of a past Forum to resolve similar “pro forma” reporting confusion, will be required to define specific information requirements and methods of publicly reporting the data in usable form.


  1. Claims against directors and officers:  The board’s performance of its responsibilities relating to potential claims against directors and officers is viewed by investors, and by other CA constituencies, as critical to corporate integrity.  To encourage reliance on the board rather than on independently controlled derivative litigation for the disposition of this type of claim, shareholders must be assured that they will be able to find out what is decided and why.  This can be done by creating some form of shareholder “advisory panel” to confer with the board – or with a “special litigation committee” of disinterested directors – on matters relating to the potential claims, including the priorities of DOJ and SEC actions.  With a limited number of delegates representing diverse investor perspectives and the support of independent legal counsel, the process for review and reporting of shareholder interests can be made efficient as well as effective.


            In relation to these initial programs as well as other issues the Forum may address, we will also need to deal with the need for confidentiality restrictions.  It should be understood that the Forum’s purpose is to make information available to investors for their use in investment decisions, and that most of the participating investors will not want to constrain themselves as “insiders” by receiving confidential material.  Instead, we will be following the conventional practice of arranging for attorneys or relevant experts to review any material that may be considered confidential, and then prepare reports which contain only information that can be provided publicly to investors.  To do this efficiently, avoiding the costs and delays observed in court-supervised procedures, we should establish simple steps for routine submissions of information requests, designations of confidential material, and reviews of proposed public reports to confirm the absence of material that is to remain confidential.


            I assume you will support the goal of developing communication protocols that permit efficient CA management responses to identified Forum requirements, as well as to a reasonably anticipated range of other investor inquiries.  It is in everyone’s interest to minimize the costs, particularly in avoiding any confusion or duplication of your efforts to respond to others who may be seeking some of the same information for different purposes.  (I will of course invite the Examiner’s participation in these discussions, as soon as the court appoints one.)  The protocols should also be designed as a foundation for satisfying the requirements of Sarbanes-Oxley and your Deferred Prosecution Agreement relating to investor response procedures.  And if we are successful at this, I would hope that CA may also gain marketplace recognition for setting the standard to be followed by well-governed companies.


            I look forward to learning who will be involved in these discussions, and to our progress with the initial programs.



Sincerely yours,





Gary Lutin



The Forum is open to all Computer Associates ("CA") shareholders, whether institutional or individual, and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, as described in the Forum Summary.

There is no charge for participation.  As stated in the Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

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