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CA wins proxy battle
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August 29, 2001: 6:20 p.m. ET
Billionaire Sam Wyly fails to replace Computer Associates board members
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - Computer Associates International Inc. Wednesday fought off the attempt by Texas billionaire Sam Wyly to replace four board members.
At its annual meeting in Islandia, N.Y., Computer Associates shareholders voted at least 75 percent in favor of each of the company's nominees to the board. Final results of the voting are to be released within two to three weeks.
CA Chairman and founder Charles Wang and President and CEO Sanjay Kumar were met with cheers from shareholders who gathered for the vote.
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 Charles Wang offers his views on the proxy fight at a news conference after the shareholder meeting. |
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Wang, speaking at the shareholder meeting, said the proxy battle was a sobering experience. "We are pleased that our shareholders believe the existing members are the best qualified," he said.
Shares of Computer Associates (CA: down $0.71 to $32.00, Research, Estimates) dropped more than 2 percent Wednesday.
Wang admitted later Wednesday that the proxy fight has revealed some problems at the company.
"We need to have better communication with our customers and we need to stay close to our investors," he said. "We don't take the time needed to explain what we're doing."
"No one is more proud of Computer Associates than me," he added.
Islandia, N.Y.-based Computer Associates, the world's No. 4 independent software company, makes software for mainframe computers.
Wyly and his investment company originally planned to take control of Computer Associates. Earlier this month, Wyly backed off those plans and instead sought to place a minority slate of four nominees, removing his name from the ballot.
The vote Wednesday ends a two-month battle in which both sides sought to sway stockholders by placing ads in the Wall Street Journal and New York Times.
Wang appeared at the annual meeting Wednesday with a broken right hand but laughingly denied any altercation with Wyly.
The founder of CA said the company has added two new directors in its attempt to bring in fresh blood. CA hired an executive search firm before the proxy battle broke out in its attempt to find more directors, Wang said.
"We would've brought on more but for the proxy fight," he said.
However, Wang did not comment on reports that CA treats its employees "harshly," sometimes firing 13-year employees with no severance and refusing to hire back staff once they leave.
The computer company has also been criticized for the $1 billion in options and pay it hands out to Wang and Kumar. Wang emphasized that the pay packages run over 5 years and were approved by shareholders.
When asked later if the proxy battle might make CA vulnerable to a hostile takeover, Wang said he had little control over the battles people launch.
"We think the shareholders have spoken," he said. "We want to go back to making products."
What's next for Wyly?
Texas billionaire Steve Wyly did not appear at the CA shareholder vote Wednesday, instead allowing nominee Steve Perkins to address the standing room only crowd.
"I didn't speak because I wasn't one of the four candidates nominated to the board," Wyly said.
But the financier did appear at a separate press conference at another location after the vote.
Wyly admitted Wednesday that he and his investor group had a slim chance of adding its board members. Management at CA control 30 percent of shares and 20 percent of shareholders normally do not vote, he said.
"We're talking about mission impossible here," he said. "But I thought we had to shine sunlight on a company that needed sunlight."
But Wyly and his investor group took credit for making CA add new directors and for getting CA to drop using pro forma accounting.
"Our effort changed CA," he said. "They moved closer to customers and are more responsive to shareholders."
Click here for a look at software stocks
But the future of Ranger Governance is unclear.
Wyly has said that if defeated he would not look to launch another battle with CA. But when asked specifically if he would mount another fight next year open, he responded: "Time goes by and circumstances change," he said.
But neither Wang nor Wyly plan to meet or call each other to mend fences.
"I hope he goes away and lets us build our business," Wang said. "Wyly only owns 100 shares."
After declining repeatedly to answer questions about his personal holdings, Wyly admitted he owns only 100 shares of CA. Ranger Governance owns 630,000 shares and 1.5 million options.
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.
When asked about the future of Ranger, which apparently was created to launch its battle against CA, Wyly said he did not know.
"It doesn't end here," Wyly said. "We will continue to look at a number of different ways to pursue our agenda. We wish the new CA board well." 
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Computer Associates
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