Forum for Shareholders of CA, Inc.

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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.

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Forum Summary:

Computer Associates International, Inc.


            A new “Forum” program for shareholders of Computer Associates International, Inc. (“CA”) is being initiated in 2004 to address essentially the same issue that concerned participants in the 2001 CA Forum: eliminating a substantial stock price discount associated with corporate governance conditions.  The current Forum’s objective is to support effective shareholder oversight of the actions required to achieve that value enhancement within a year.

Conditions Impairing Value

            The marketplace pricing of CA stock at the end of October 2004 was discounted more than 30% below the $40+ price range that would be realizable if CA were valued at the average ratios for its industry.[1]  Most or all of this discount may be attributable to the following risk factors:

Corporate integrity – After years of public controversies about compensation and accounting issues, the Department of Justice and SEC brought criminal fraud and obstruction charges against seven top executives, including the CEO, and imposed a Deferred Prosecution Agreement on the company requiring corporate reforms within 18 months.[2]

Financial reporting – Although the company’s auditors and regulatory agencies are satisfied that fraudulent financial statements have been corrected, professional securities analysts continue to find the current form of company reports difficult to understand.[3]

Executive leadership – Most of the top level of executives were dismissed or resigned in relation to the corruption investigations, and the company is currently operating without a permanent CEO or CFO.[4]

Shareholder Decisions

            Shareholders must of course rely upon the company’s board of directors to establish at least acceptable standards and average values, either (a) by developing a new management team that can make the required changes or (b) by selling the business to a company with existing management resources to assure viable operations.  Forum attention will therefore be focused on the information needed by shareholders to responsibly select and monitor the directors.  Subjects of review are expected to include

§         past performance of each incumbent director standing for re-election in 2005;

§         shareholder nominations of director candidates;

§         qualifications of all candidates for election to the board;

§         qualifications of the company’s auditor; and

§         liability claims against directors for unjustified compensation or the costs incurred by the company for shareholder claims and the September 2004 Deferred Prosecution Agreement.[5]

Forum Activities

            To address these and other issues that may be defined, the Forum will conduct a variety of activities to provide investors with the kind of access to information and free exchange of views that might be sought at a traditional shareholders meeting, but with independent control of the process and continuous operation until shareholder interests are resolved.  CA’s management will be invited to support the Forum, and it is hoped that the responses of the company’s directors and representatives will permit cooperative communication for the benefit of all decision-makers.  However, even in the absence of management participation beyond obligatory responses to shareholder requests, the Forum may conduct board inquiries, panel reviews, professional workshops, shareholder surveys, open meetings or other activities as required to produce the information investors need for their evaluations and decisions, and also to present management with information they need to consider in the performance of their duties to shareholders.[6]

            Participation in the Forum will be open to all CA shareholders and any professionals concerned with their decisions, without charge, according to standard Forum conditions.[7]  Investors with sufficient interests in CA will be encouraged to consider additional participation in advisory panels to help define the issues addressed by the Forum.  All participants are expected to make independent use of information obtained through the Forum, and Forum participation will be considered private unless the party specifically authorizes identification.

            The Forum will be managed by Gary Lutin, the investment banker who conducted the 2001 CA Forum as well as the forum programs to resolve investor interests in public demonstration cases regarding, Chesapeake-Shorewood Packaging, Crowley Maritime, Dun & Bradstreet, Farmer Bros., Lone Star Steakhouse, National Presto, and Willamette Industries.[8]  Professionals with relevant expertise may be engaged for services or advice as required to support the evolving information needs of Forum participants.


November 1, 2004

[1] Compared with the averages for all companies in the Reuters Software & Programming Industry index as of the October 29, 2004 market close, CA’s $27.71 stock price was 33.2% below the average ratio to book value, 31.4% below the average ratio to revenue, and 46.0% below the average ratio to free cash flow.

[5] See September 30, 2004 Forum Report: Significance of Deferred Prosecution Agreement; see also CA’s most recent Form 10-Q filed July 30, 2004, page 30, reporting three new shareholder lawsuits against directors for breaches of duty.

[6] It is assumed that management will respond cooperatively to Forum requests for records and other information relating to investor interests in CA, without formal shareholder actions pursuant to Section 220 of the Delaware General Corporation Law, since Section 12(d) of the DOJ-SEC Deferred Prosecution Agreement requires the company’s establishment of “enhanced corporate governance procedures providing for improved shareholder, community and governmental communications,” with provisions for a court-appointed examiner to report on management’s compliance.  The Forum may also be able to obtain information developed from the company’s investigations, to the extent that privilege was waived by the company’s attorney in his statements to the press.  (See, for example, September 24, 2004 Wall Street Journal, “In CA Probe: Recovered E-Mails, Surprise Cache of Documents.”)

[7] See the CA Forum’s Conditions of Participation.

[8] Mr. Lutin has no investment in any CA securities.



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.