Forum for Shareholders of CA, Inc.

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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


Forum Summary

(November 1, 2004)

     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.

For Pending Forum Activities,


Shareholder Oversight

Note: Inquiries relating to director performance were suspended September 6, 2005 pending the court-appointed Examiner's report on board policies for management compliance with requirements of shareholder demands for information.  The minutes of a July 2003 board meeting were subsequently made available in a court filing by the U.S. Attorney.


For current monitoring issues,


September 4, 2008 Forum Report:

Renewing Request for CA's Public Release

of Examiner's Report


September 24, 2008 Forum Report:

Board Opposition to Release of Report on Their Conduct

Also see

October 12, 2007 Forum Report:

Reports of Undisclosed Payments and Failure

to Protect Corporate Rights


December 11, 2007 Forum Report:

Ranieri, Responsible for Settling CA Legal Charges, Resigning from Board




See Also

Proposal to Remove DIRECTORS


Current News Reports


September 10, 2008 Newsday:

"10 keep positions on CA's board"

September 3, 2008 Newsday:

"Former CA chief accuses D'Amato, Ranieri of cover-up"

and subsequent reports

AmLaw Daily



Wall Street Journal

December 20, 2007 Newsday:

"Some CA shareholders ordered to return payments"

See also:

December 20, 2007 Wall Street Journal:

"Computer Associates Investors Received Too Much. Doh!"

August 23, 2007 Newsday:

"D'Amato, 11 others re-elected at CA"

See also:

August 13, 2007 Newsday:

"Firm opposes D'Amato re-election to CA board"


August 9, 2007 Newsday:

"CA shareholders advised to vote against D'Amato"

July 18, 2007 Newsday:

"Top CA Inc. execs take home more than $23 million"

June 14, 2007 Newsday:

"CA chairman steps down"

May 22, 2007 Newsday:

"Criminal case against CA ends"

April 15, 2007 Sunday Times:

"For Hire"

April 13, 2007 New York Times:

"Ex-Executive Agrees to Pay $800 Million in Restitution"

March 12, 2007 Newsday:

"Poker expert folds chunk of CA shares"

February 25, 2007 Newsday:

"Ethics commission will review Kenny's role on board"


"How lucrative relationship developed | College president who also served as a director of CA defends dual roles and denies any conflict of interest"

February 20, 2007 Newsday:

"CA dissident to get settlement data"

January 30, 2007 Newsday:

"CA begins rebranding as rumors swirl"

January 17, 2007 Bloomberg:

"CA Inc.'s Shareholders Say Ex-Chief Should Pay Software Maker"

November 17, 2006 Wall Street Journal:

"CA Sues Ex-CEO To Recoup Legal Fee"

November 14, 2006

"CA Shareholder Unwinds Stake"

October 28, 2006 Wall Street Journal:

"Former CA Chief Is Sentenced To 12-Year Prison Term, Fined"

October 16, 2006

"CA Adopts Poison Pill Plan"

September 19, 2006 Newsday:

"CA wants funds from ex-execs | Recovery of millions among software company's goals as shareholders re-elect 11 directors, including embattled D'Amato"

September 8, 2006 Newsday:

"CA turnover continues"

August 1, 2006 Newsday:

"CA explains its errors in report | LI software giant lists mistakes in latest financial statement, separately says board member to depart"

See also

August 9, 2006 Newsday:

"CA needs 2nd extension | Islandia software giant asks SEC for five extra days to report results for first quarter due to internal review"

June 29, 2006

"CA Hits Targets, Delays 10-K"

June 22, 2006 Newsday:

"Ex-CA exec guilty in hush-money plot"

June 15, 2006 Newsday:

"CA asking SEC for extension | Software company needs more time to ready financial statements for its annual report; chief tech officer expected to be named soon"

June 6, 2006 Wall Street Journal:

"CA Global Sales Chief Becomes
The Latest Executive to Depart | Company Has No Plans To Fill Corgan's Position; Commissions Issue Simmers"

June 2, 2006 Newsday:

"CA cuts workers' extra 401(k) pay"

May 30, 2006 Reuters:

"CA delays earnings, sees quarterly loss"

May 16, 2006 Newsday:

"CA finance execs make an exit | Latest resignations at embattled software maker comes on heels of a 4Q revenue slide, 2 top-level departures"


May 15, 2006 The Deal:

"CA faces executive exodus"

May 11, 2006 Newsday:

"Another top exec leaves CA | Second high-level official to depart; software company sees no connection with financial woes"

April 25, 2006 New York Times:

"Software Chief Admits to Guilt in Fraud Case"

see also

April 24, 2006

"Former CA Chief Expected to Plead Guilty"

April 13, 2006 Newsday:

"Claim on auditor switch | Prosecutors suggest CA wanted to keep payout details quiet"

March 16, 2006 Reuters:

"Relational to press for change at CA"

August 26, 2005 Newsday: "CA nixes request for minutes"

(See August 22-23, 2005 letters)

July 27, 2005

"Computer Associates to Cut 5% of Jobs"

July 27, 2005 Newsday: "CA co-founder to leave board"

June 28, 2005 Newsday: "Could a name-change help CA?"


June 27, 2005 "CA Shareholders Seek Board Minutes"

April 12, 2005

"CA Doubles Dividend"

April 12, 2005 Newsday: "CA director takes step back"

April 6, 2005 Newsday: "CA board shake-up?"

(see April 5, 2005 letter)

February 20, 2005 Washington Post (Bloomberg):

"Seeking Companies Poised for Recovery - Nuveen NWQ Has Placed a Big Bet on Computer Associates' Revitalization"



Reports of Chief Executive Officer Appointment


Open Issues

December 2008 American Institute of Philanthropy,

Charity Rating Guide & Watchdog Report:

"A Wink and a Smile Train"

May 27, 2008 Columbia Journalism Review

Debits & Credits:

"Ranieri’s CA record: down the memory hole"

November 27, 2007 Newsday:

"Suit: Lawyers cut deal on CA claims to grab fat fees"

See also

November 27, 2007 Wall Street Journal:

"Sam Wyly Sues Milberg Weiss Over CA Class Action"

October 10, 2007 Newsday:

"Judge denies CA's request to pursue Wang's fortune"

See also

October 4, 2007 Newsday:

"Sam Wyly makes new accusations against CA board"

April 17, 2007 Newsday:

"Q&A | Banker: Jury still out on CA's future"

April 14, 2007 New York Times:

"CA Says Its Founder Aided Fraud"

See also:

April 14, 2007 Newsday:

"Blaming the boss


April 14, 2007 Wall Street Journal: "Directors' Probe Ties CA Founder To Massive Fraud | Report Suggests Suing Wang for $500 Million; Evidence of Backdating"

January 26, 2007 The Deal:

"The question of CA"

November 16, 2006 Fortune:

(November 27, 2006 print issue):

"CA: America's most dysfunctional company"

November 3, 2006 Newsday:

"Business shadowed by ills"

October 30, 2006 Newsday: "Wang watches CA from afar"

October 6, 2006 Investment Dealers Digest:

"The Trouble With Lewie: The iconic former Salomon Brothers trader finds himself targeted by shareholder advocates"

September 19, 2006 New York Post:

"Angry CA Vote - D'Amato May Lose Board Seat"

September 18, 2006 Financial Times:

"Accounting lapses anger CA investors"

See also

September 16, 2006 Wall Street Journal:

"D'Amato, Others Under Fire at CA"


September 15, 2005 Newsday:

"CA, investors gear up to meet | Sagging stock prices and activists urging shareholders to withhold votes for board members promise a lively Monday session"

June 8, 2006 Wall Street Journal:

"Behind CA's Woes: Holes in Internal Controls"

June 5, 2006 Newsday:

"Challenge at CA: End the turmoil"

May 30, 2006

"CA Shareholders Tested Again"

May 15, 2006

"CA Stability Still on Hold"

May 2, 2006 Fortune-CNN:

"CEO pay: They didn't earn it - and should return it"

April 25, 2006

"CA Slashes Profit Forecast"

See also referenced

April 25, 2005 Management Report of Unanticipated Accounting Adjustments

April 25, 2006 Newsday:

"CA investors eye restitution | Experts say guilty pleas of 2 will help the troubled company, but questions remain on who'll repay money"

December 2, 2005 Newsday:

"CA's boxing match | His hands finally on 23 cartons of files, millionaire gadfly presses fight to nullify shareholder pact"

See also

April 25, 2005 Forbes: "Wyly's War"


July 2, 2004 Reuters: "Wyly lawsuit wins little support from CA investors"

November 21, 2005 BusinessWeek:

"Computer Associates: Clearing A Cloud"

 See also

 December 5, 2005 CA management response

November 15, 2005 Forbes:

"Computer Associates May Execute Better In Coming Year"

October 20, 2005 Financial Times:

"CA issues accounts restatements"

June 24, 2005 The Deal:

"The long road to recovery"

June 13, 2005

"Computer Associates Gets a Closer Look"

May 31, 2005 SmartMoney:

"A Crummy Stock Gets Crummier"

April 18, 2005 Financial Times:

"CA chief candid about fall-out from scandal"

February 13, 2005 New York Times:

"Giving Away Lots of Money Is Easy, Right?"

See related Video:

October 20, 2004 Newsday:

"CA offers tutorial on its accounting"

October 7, 2004 CASH:

"bilanzskandal - Bei dieser Firma sind alle Pferde durchgegangen" ["Accounting scandal - At this company, the horses have bucked their riders"]

September 25, 2004 Associated Press:

"Computer Associates Could See More Changes"

August 29, 2004 New York Times:

"Just a Friendly Group of 'Independent' Directors"






Professional Analyses



M&A Research


December 18, 2007


"CA could tap cash for targeted buys, execs say; reformed company attracts bidder, source says"



Proxy Advisor Voting Recommendations


August 22, 2007 Annual Meeting

Glass Lewis & Co.

PROXY Governance, Inc.


see also recommendations for

September 18, 2006 Annual Meeting

Glass Lewis & Co.

Institutional Shareholder Services (ISS)

PROXY Governance, Inc.



Credit Ratings Services


August 3, 2006

Moody's Investor Services (Ba1 rating with negative outlook)

"Moody's Investors Service has confirmed CA's Ba1 senior unsecured rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on June 30, 2006. The Ba1 rating confirmation reflects the company's completed accounting review and reestablishment of current filing of its 10-K and subsequent 10-Q's, including the company's filing of its 10-K for its March 2006 fiscal year on July 31, 2006.
"The negative outlook reflects challenges the company has to implement effective financial controls, remediate material weaknesses to its financial reporting, contain sales force compensation costs, and revive client billings performance. ...Moody's notes that for fiscal 2006, the company's former sales compensation plan resulted in an unexpected $75 million increase to commission expenses (2% of total expenses), while client billings declined slightly, excluding acquisition related products and accelerated customer payments. In Moody's opinion, current revisions to the former sales force compensation plan could negatively impact morale, the retention of key sales executives, and financial performance.
"...the rating also reflects the uncertainties surrounding the company's ineffective internal controls, subdued organic client billings performance, unsettled fulfillment of the terms of the Deferred Prosecution Agreement (DPA), modest returns on net assets, competition from integrated and non-integrated technology vendors, and exposure to mature mainframe and Unix markets, which drive the overall Ba1 rating."


July 5, 2006 press release

Standard & Poor's (lowered ratings, negative watch)

"Standard & Poor's Rating Services said today that it lowered its corporate credit and senior unsecured debt ratings on Islandia, N.Y.-based CA Inc. to 'BB' from 'BBB-', and placed them on CreditWatch with negative implications.
"'The rating action follows the company's announcement that its board of directors authorized a $2 billion share repurchase that partly will be debt-financed," said Standard & Poor's credit analyst Philip Schrank. The rating downgrades reflect our assessment that CA no longer possesses an investment-grade financial policy in light of the announced share repurchases. ...Additionally, CA did not meet the deadline for filing its 10-K, and likely will need to restate previously reported results and report additional material weaknesses. The delay is from accounting issues surrounding its stock option grants and revenue recognition."


June 8, 2006 press release

Fitch Ratings (negative outlook)

"The Negative Outlook and ratings concerns primarily center on CA's delayed earnings release for the fourth quarter and fiscal year ending March 31, 2006, due to additional accounting work necessary to accurately determine sales commission expense and income taxes. ...Fitch is concerned the material weaknesses in internal accounting controls identified by CA management and its auditor, KPMG, could lead to identification of further inaccuracies in the company's financial statements and additional restatements. Previous misstatements of CA's earnings in fiscal years 1999 and 2000 resulting from weaknesses in accounting controls were the subject of shareholder lawsuits, which have required significant litigation and settlement costs, and resulted in a Securities and Exchange Commission (SEC) investigation.
"The negative outlook also considers what Fitch believes are on-going risks for meeting corporate governance and internal controls initiatives to satisfy any additional recommendations by the government-appointed independent examiner as required under the company's September 2004 agreement with the Department of Justice (DOJ) and SEC. Although previously anticipated to conclude in September 2006, Fitch believes the independent examiner's report and presence at the company could be extended due to the aforementioned earnings delay and additional accounting challenges. A satisfactory and timely conclusion to the independent examiner's reports could stabilize the ratings.
"Also considered for the ratings are continued senior management changes..."


June 1, 2006 press release:

Moody's Investor Services (negative outlook)

"The outlook revision to negative is prompted by the company's May 30th announcement that it will delay the release of its fourth quarter and fiscal year ended March 31, 2006 earnings report and has yet to conclude its review of forecasting, processing, and monitoring of sales commissions. The revision reflects challenges the company has to implement effective financial controls, the recent departure of key personnel, including the company's chief software architect, financial officer, and operating officer, as well as subdued billings performance, which the company announced on May 30 declined slightly in fiscal 2006, excluding acquisition related products and accelerated customer payments."


May 27, 2005 press release:

Standard & Poor's (negative outlook)

"The outlook revision reflects Computer Associates' recent announcement that it has identified apparent improper accounting practices related to transactions entered into between fiscals 1998 and 2001....  The company expects the impact of the adjustments to fiscal years 2002 through 2004 to be minor and not affect current or future cash flows. In addition, Computer Associates has determined that former members of senior management, who are no longer employed by the company, were involved in approving the transactions in question. Nevertheless, Standard & Poor's had assumed that Computer Associates' accounting issues were behind it."


November 15, 2004 press releases:

Fitch Ratings (BBB-)

"...while a legal agreement was reached with the Department of Justice (DOJ) and Securities & Exchange Commission (SEC) in September 2004, the credit ratings for CA assume that the company will improve its corporate governance and internal controls and satisfy any additional recommendations by the government-appointed independent examiner as required under the agreement."

Moody's Investors Service (Ba1)

"Moody's would view positively CA's fulfillment of the terms of the Deferred Prosecution Agreement (DPA) with the Department of Justice and the SEC regarding their investigation of CA's prior accounting mismanagement, recruitment of a permanent CEO and CFO, continued evidence that the company has not suffered a deterioration in bookings and billings due to adverse factors over the past two years, and the company's maintenance of financial flexibility from internal and external liquidity sources. Continued progress on these matters could lead to a positive outlook in the near term and a subsequent ratings upgrade."

See also

December 28, 2004

Moody's Liquidity Rating (SGL-1)


Glass Lewis “Proxy Paper” Addressing Forum Issues

(August 19, 2004)









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.