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Letter to Chairman Concerning Requirements for Recruitment of CEO or Sale of Company

(July 28, 2004)

Copied below is the text of a July 28, 2004 letter to Lewis S. Ranieri, Chairman of the Computer Associates board of directors.  Summarizing conditions that will affect the company's ability to attract either candidates for the CEO position or bidders for a sale of the company, the letter invites management's participation in the planning of a new shareholder "forum" program to monitor the board's progress and assure their understanding of investor views.

The letter refers to a July 26, 2004 Newsday article which had reported favorable views of Mr. Ranieri and others regarding the company's interim chief executive as a candidate for the permanent position.  The interim executive was reported to have stated that he would stay as long as the board wanted, and, when asked how he would respond if the board offered him the permanent position, said "We'll cross that bridge when we come to it."




575 Madison Avenue

New York, New York 10022

Telephone (212) 605-0335

Facsimile (212) 605-0325


                                                            July 28, 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:


            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.  Under these circumstances, it may also be assumed that the board will be considering the alternative of selling the company to a buyer that can effectively manage the enterprise before its strategic values deteriorate.


            Proceeding with a sale alternative, however, will not reduce the importance of shareholder concerns addressed in our recent correspondence.  The same conditions that would discourage a prospective CEO candidate will also dampen the bidding of a prospective buyer.  Whether you intend to attract buyers or CEO candidates to assume responsibility for CA’s management, you must first resolve these issues:


§         Corporate integrity:  The company has not yet taken actions to adjust miscalculated compensation or to recover damages from individuals whose misconduct has been established, and management’s recent offer of a $10 million payment from shareholder funds to end government investigations suggests a preference to avoid rather than correct the problems.  The board must show that violations of corporate integrity will not be tolerated, and that the company’s managers will not be rewarded for either misconduct or mistakes.


§         Financial reporting:  Three of the six analysts who asked questions during CA’s July 22nd earnings conference call raised issues about the company’s accounting.  If top professionals have trouble understanding the numbers, the reporting simply isn’t satisfactory.  Logically, management must have access to sufficient data to make informed business decisions.  This data must also be presented in a form that can be used by the public to make informed investment decisions.


            Many of CA’s shareholders will want to monitor the board’s progress with these and any other issues that may have a significant effect on the value of CA stock, and some of those shareholders will also be willing to offer their views for the board’s consideration.  As indicated in recent correspondence, planning has been initiated to accommodate these monitoring and communication functions in a shareholder “forum” program similar to the one conducted in 2001.  But the benefits will be much greater if, unlike CA’s 2001 management, the current CA management participates cooperatively.  This would assure the board’s understanding of investor interests, and, at the same time, assure the shareholders’ appreciation of the board’s efforts to address those interests.  And the board’s embrace of shareholder support would show investors – as well as a growing list of litigants and government agencies concerned with the protection of those investors’ interests – that current management can be relied upon to make CA viable.


            I invite you to work with me to develop a program that will allow CA’s board to make good use of the strong shareholder interest in your success.  Please let me know if you wish to participate in the planning process.



                                                            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.

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