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CA board fight imminent
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August 29, 2001: 7:34 a.m. ET
Shareholders to decide fate of Computer Associates board Wednesday
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NEW YORK (CNNfn) - A two-month proxy battle between Computer Associates International Inc. and Texas billionaire Sam Wyly comes to a head Wednesday with a shareholder vote at the software maker's annual meeting.
The battle pits Wyly against Charles Wang, chairman and founder of Islandia, N.Y.-based Computer Associates (CA: Research, Estimates) , the No. 3 independent software company behind Oracle and Microsoft.
Both sides have spent between $5 million and $10 million in the battle, including taking full-page advertisements in the New York Times and the Wall Street Journal.
Early returns suggest Computer Associates is the winner, according to the results of an early vote count Tuesday ahead of the meeting, the Wall Street Journal reported in Wednesday's edition.
The company's shares slid $1.29 to finish Tuesday's session at $32.71.
The preliminary vote showed CA shareholders nearly 4-to-1 in favor of the slate of existing board members, which includes Wang, the Journal reported, citing unnamed sources.
But people close to the matter cautioned that institutional investors and other shareholders could still change their votes at the meeting, scheduled to begin at 10 a.m. at a hotel near the company's Islandia headquarters.
Wyly, who is seeking control over four board seats, has charged Wang and CEO Sanjay Kumar allowed the company's stock to languish, and created a culture that mistreats customers and employees alike.
In the five-year period ended March 31, shares of Computer Associates had fallen 14 percent, compared with a 169 percent rise in the S&P Computer Software Index. So far this year, the company's shares have outperformed the index by 77 percent.
Analysts and shareholder advisors have said many of the things Wyly has said he would do -- put more independent members on the board, improve customer relations and improve the company's share price -- have already happened.
Before the battle, about 30 percent of Computer Associates shares had been pledged to the incumbent board. Swiss billionaire Walter Haefner, who owns 21 percent of CA, also supported the board and Wang.
Wyly, who holds just 100 shares of the company's stock, would need at least 73 percent of remaining voting shares to reach his goal of four seats on the company's 10-seat board. Analysts doubt that outcome.
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 BOARD FIGHT SHAPING UP
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Texas Billionaire Sam Wyly is seeking four board seats of Computer Associates currently held by CA Chairman Charles Wang, co-founder Robert Artz, former U.S. Senator Alfonse D'Amato and William de Vogel.
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Wyly and Ranger Governance Ltd., the group he established to fund the battle, are seeking the four seats held by Wang; Executive Vice President Robert Artz, a co-founder; former U.S. Sen. Alfonse D'Amato; and longtime member Willem de Vogel. CEO and President Sanjay Kumar escapes the line of fire.
Computer Associates makes software for mainframe computers. The company's stock was stagnant during the long technology boom, and it was accused of overstating revenue and cash flow for several years.
Wyly and his investment company, Ranger Governance, had originally planned to take control of Computer Associates. Earlier this month, Wyly backed off those plans and instead sought to replace four board members, removing his name from the ballot.
The change of tactics to seek only minority representation without Wyly at the helm swayed two investor advisory firms, Institutional Shareholder Services and Proxy Monitor, to change their endorsements from the present board to Ranger's slate.
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Despite all the money, Wyly faces an uphill battle.
Perhaps Wyly's most effective move was to remind shareholders of the controversial $1.1 billion stock package management received in 1998 -- two months before warning of a slowdown.
While even those who said they have voted for the present board don't look favorably on the stock package, it wasn't enough to abandon Wang and the board.
"Over the years one can acquire some decent gripes against the existing board, especially the billion-dollar package," said Edward Schrems, technology analyst for Tom Johnson Investment Management. "In terms of on-going operation of the company, I don't have a problem." 
From staff and wire reports
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