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


PROXY Governance Report of Voting Recommendations

(September 6, 2006)

PROXY Governance, Inc., the proxy advisory subsidiary of FOLIOfn, Inc., issued the press release below on September 6, 2006 announcing their recommendation that clients vote shares of CA, Inc., against director candidate D'Amato but in favor of all other candidates.  The firm's analysis and rationale of this recommendation, referring to the Amalgamated LongView shareholder proposal for removal of directors, follows:


CA has been in full-blown crisis mode for several years and, to some extent, remains in that mode today. It is perhaps still premature to speculate on the likely success of the company's now multi-year turnaround effort in view of the ongoing turnover in its top executive ranks. Regarding governance, while most of the company's management team and board have been brought into the company in the last several years in an attempt to put the company's accounting scandals and turmoil behind it, we view one director as a prominent exception to this statement. Alfonse D'Amato's service on the CA board dates to 1999, a time period in the midst of the accounting, fraud and stock option scandals that the company is still attempting to recover from.

We further note that in a March 3, 2006, court filing federal prosecutors allege a direct correlation between the closing of a $51 million line of credit that former CEO Kumar secured (backed by the value of his restricted shares of CA common stock) on June 30, 2000, to buy the New York Islanders hockey team and the company’s July 3, 2000, announcement that it would miss financial projections. CA’s stock declined 43% following the announcement, erasing $13 billion of the company's market value. According to the government, Kumar was able to use the stock as collateral only because, several days earlier, the CA board had voted to ease a previous restriction on the sale or transferal of the stock. At this time, D’Amato, while serving on the CA board, was a consultant to Nassau Coliseum management and helped broker the deal for Kumar to buy the Islanders. The company did not disclose this relationship in any of its proxy statements from 1999 to 2002. D’Amato joined the board in 1999 and currently serves on the Audit and Compliance Committee and the Corporate Governance Committee. D’Amato has served on the Audit Committee since 2000. In view of the company's obvious need to put the past behind it, we recommend that shareholders withhold votes for D'Amato.

Ranieri, the other director singled out by LongView, is a tougher call. Ranieri joined the board in 2001 and currently serves on the Compensation and Human Resource Committee. He appears to have been extremely active, particularly since being named chairman in April 2004, in attempting to help CA sort out its problems. Ranieri was awarded an additional $160,000 in fees for his "extraordinary service" to the company during 2005. The additional fees were paid in the form of making the company’s aircraft available to him for business and personal use. He elected not to accept director’s fees in the amount of $37,500 in the fourth quarter of 2005.

While CA has clearly continued to endure tough times on Ranieri's watch as chairman, we are inclined to believe that he is part of the solution to the problems at CA rather than part of the problem. That judgment, however, is certainly subject to review as we watch the company's continuing efforts to put the current turmoil behind it.


PROXY Governance generally believes that the board is properly discharging its oversight role and adequately policing itself. However, we recommend withholding votes from D'Amato given his role in brokering a major business deal involving Kumar in 2000, which appears to be a clear conflict of interest, and the fact that he is the sole remaining director that served on the board during the period when the company's accounting scandals were occurring.

The firm's full report is available for downloading from the following link, with the publisher's permission:



PROXY Governance News Release

Media Contacts:


Bill McGuire
(703) 245-4877


PROXY GOVERNANCE, INC. Recommends CA Shareholders Withhold Votes for D'Amato as Director and Reject Poison Pill Proposal


VIENNA, VA, Sept. 6, 2006 — PROXY Governance, Inc., an independent provider of proxy analysis, global voting and U.S. compliance services, today recommended that its clients withhold votes from former Senator Alfonse M. D’Amato as a director at the upcoming annual meeting of CA Inc. (formerly Computer Associates) and reject the ill-considered proposal to require unanimous board approval to adopt or extend a poison pill not approved by shareholders.


Alfonse D’Amato, a distinguished and respected former U.S. Senator from New York, served on the CA board dating back to 1999 and included periods when the Long Island-based software company confronted accounting scandals, financial restatements and executive departures.


D’Amato was one of two CA directors targeted for defeat earlier this year by the labor-affiliated Amalgamated Bank LongView Funds.  LongView submitted a proposal in March 2006 requesting shareholders remove two CA directors –D’Amato and Chairman Lewis Ranieri – saying that their board service prior to 2002 made their continuing service detrimental to shareholders.  The company was allowed to omit the proposal from its proxy ballot by the Securities and Exchange Commission, however, after the Commission issued a no-action ruling in June saying that the proposal violated a proxy rule.


PROXY Governance recommended that shareholders not withhold votes from CA Chairman Ranieri, stating in its report that “while CA has clearly continued to endure tough times on Ranieri's watch as chairman, we are inclined to believe that he is part of the solution to the problems at CA rather than part of the problem.”  Ranieri joined the CA board in 2001 and has been chairman since April 2004.  PROXY Governance, however, believes it best that the company be able to start fresh with directors that weren’t on the board when the bulk of the troubles occurred. For that reason it believes it’s best that former Senator D’Amato not continue with the CA board.


Separately, PROXY Governance recommended rejection of a bylaw proposal by Harvard Law Professor Lucian Bebchuk to require “unanimous” board consent to adopt or extend a poison pill not approved by shareholders.  Any such pill would sunset after one year and any change to the bylaw would similarly require “unanimous” board approval.  CA’s pill is scheduled to expire in November.


PROXY Governance believes this proposal is really bad governance, pure and simple. The unanimity mandate would give veto power to a single director—including the CEO—over the adoption of a critical takeover defense.  As noted in an April article by lawyers Martin Lipton and Mark Gordon, the provision not only has questionable legality but also could lead to a “tyranny of one.”  PROXY Governance does not believe the pill has been harmful to the struggling CA, whose stock has lost two-thirds of its value since 2000.  Providing a lone director the opportunity to frustrate the will of the majority of the board is not best practices or even a reasonably thoughtful one.


As a separate matter, PROXY Governance also notes that the Bebchuk proposal is part of a mini revival this year of binding pill resolutions, which were attempted more in earnest in the 1990s, and which PROXY Governance believes have merit when thoughtfully presented.  In addition to CA, Bebchuk filed similar, though less rigid, proposals at Bristol-Myers Squibb Co. and Halliburton Co. (67% board approval and three-year pill sunset), while labor union UNITE HERE sponsored a bylaw amendment at Hilton Hotels Corp. requiring prior shareholder ratification of any pill.  Both Bristol-Myers (which adopted the bylaw) and Halliburton (where the proposal made a poor showing) had policies in place to put future pills to a shareholder vote within a year of adoption.


Whether the binding bylaw approach to pills gathers momentum next season may well depend on the outcome at CA and Hilton--both at the ballot box and in any legal challenges.  The two companies have argued that these types of shareholder-sponsored bylaws violate Delaware law, which gives boards specific authority to adopt and maintain defensive measures.  The Hilton proposal, which won majority support, is under consideration by the board.




About PROXY Governance

PROXY Governance, Inc., ( is an independent proxy advisory and voting firm that provides a full range of proxy analysis, voting and reporting services designed to meet the needs of pension funds, money managers, mutual funds, investment advisors and other fiduciaries. PROXY Governance’s mission is to provide proxy-voting recommendations that truly build long-term shareholder value. Its analysis uses a company-specific methodology. Rather than evaluating proxy issues in isolation, the firm considers each issue in the context of a company’s performance, relative to its peers. PROXY Governance’s policies and voting recommendations are transparent and free from conflict, and the company does not market any services that could generate conflicts of interest. PROXY Governance is a wholly-owned subsidiary of FOLIOfn, Inc., an innovative financial services company that also provides brokerage services and portfolio management technology for individual investors and investment advisors.




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.