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The Wall Street Journal  

April 12, 2002

CA's Independent Directors
Voice Support for Top Executives


 U.S. Probes CA Over Stock Awards to Three Executives1
 Amid Criticism, CA Names Outside Directors to Its Board2

The eight independent directors of Computer Associates International Inc. voiced their support for the company's management after a letter from an investment group last month requested that the directors fire the software maker's top three executives.

Although the directors share the same concerns as Ranger Governance Ltd. about Computer Associates' recent stock performance, they wrote in a letter dated April 11 that they disagree with the conclusions made in Ranger's March 25 letter. Also, they wrote that the claims Ranger has made are harmful to Computer Associates.

In the March letter, Ranger Governance Managing Partner Stephen Perkins requested that Computer Associates Chairman Charles Wang, Chief Executive Sanjay Kumar and Chief Financial Officer Ira Zar be fired. Mr. Perkins, who stated that Ranger has three million options for $30 million of Computer Associates Stock, cited a lack of integrity and failure of performance at Computer Associates in making the request.

Ranger Governance is an investment arm of Ranger Capital Group, a hedge fund run by Texas investor Sam Wyly. Both companies are located in Dallas. Mr. Wyly failed in his efforts to get his own group of four directors on Computer Associates' 10-member board in August.

Computer Associates, Islandia, N.Y., had no comment on the letter from the directors, an outside spokesman for the company said. Mr. Perkins couldn't be reached for comment.

See continuing coverage of accounting issues in Questioning the Books3

In their letter, which was posted on Computer Associates' home page, the directors wrote that Computer Associates is adding new customers, increasing sales to existing ones and pursuing a new business model that will give the company a competitive advantage. Computer Associates doesn't tolerate unethical behavior from any of its employees, and the company treats employees fairly, they wrote.

Also, the eight directors wrote that they have reviewed the company's accounting practices, and that they and the company's independent auditor find those practices "appropriate and transparent."

The directors declined to meet with Mr. Perkins to talk about removing Messrs. Wang, Kumar and Zar, a request Mr. Perkins made in his letter.

Seperately, a joint Justice Department/Securities and Exchange Commission probe of the big software maker is focused on whether it improperly boosted its financial results to help produce $1 billion in stock awards for the company's top three executives in 1998, say people familiar with the matter.

Write to Desiree J. Hanford at desiree.hanford@dowjones.com4

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Updated April 12, 2002 5:45 p.m. EDT

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