Computer Associates board defeats Wyly

Ilaina Jonas

ISLANDIA, N.Y.: The management of Computer Associates International Inc. on

Wednesday fended off a challenge by Texas billionaire Sam Wyly as shareholders

reelected all 10 incumbent board members, assuring founder Charles Wang will

continue as chairman.

Management's win followed a bitter and costly two-month battle over the

world's No. 4 software maker, played out in court and in full-page ads in The

New York Times and The Wall Street Journal. Wyly accused the Wang

team of mismanagement. Each of management's board nominees received at least 75

per cent of the vote at a special shareholder meeting, according to an estimate

by Computer Associates' proxy advisers, the company said. The vote most likely

means the end of Wyly's fight to throw Wang off the board.

The announcement of the management win was greeted by a burst of applause at

the meeting from a crowd of more than 1,500 that spilled out of a hotel and into

two tents outside. The meeting was held in the company's hometown of Islandia on

New York's Long Island. "We are pleased that our shareholders believe the

existing (board) members are the best-qualified to continue driving CA's strong

momentum for growth and enhanced shareholder value," Wang said in a

statement.

Wyly had alleged that Computer Associates' leadership had allowed the stock

price to languish and had created a culture that mistreated customers and

employees. Wyly, a software entrepreneur, created two software companies that

were later sold to Computer Associates.

Shareholder Jane Wong, who voted for the management slate, said, "I feel

the founder and his staff would better understand the company ... I felt (Wyly)

was an outsider coming in and he would downsize and fire people."

Wyly and his group, Ranger Governance Ltd., were not able to overcome the

fact that nearly 29 per cent of the voting shares were held by Wang supporter

Walter Haefner and other company insiders who backed the current board from the

start. "We knew at the outset that the numbers clearly were against

us," Steve Perkins, a Ranger nominee to the Computer Associates board, said

in a statement. "From the beginning of this process, Ranger's primary goal

has been to give shareholders a greater voice in their company and to enhance

shareholder value."

Wyly and Ranger launched the proxy fight in June to oust the current board,

including Wang and Chief Executive Sanjay Kumar, and take control of Computer

Associates. Wyly's initial goal was to replace the entire board with a slate of

his own and become chairman. When the takeover campaign failed to pick up steam,

Wyly changed his strategy and instead offered a slate of four board nominees to

replace Wang, Executive Vice President Robert Artzt, former U.S. Sen. Alfonse

D'Amato, and longtime board member Willem de Vogel. Ranger's slate did not

include Wyly. One shareholder said she had voted for the dissident slate

because, "they could stir things up a little".

The challenge was unusual because Wyly held just 100 Computer Associates

shares and because of the some $20 million both sides are estimated to have

spent to finance the fight. Wyly's scaled-back slate received the endorsement of

Proxy Monitor and Institutional Shareholder Services Inc., two influential

shareholder advisory firms.

The nation's largest pension fund, the California Public Employees Retirement

System (Calpers), had said it would vote its 3.1 million shares, about a 0.5 per

cent stake, in favor of the Ranger slate. Final official results of the

shareholder vote will be announced in the next two to three weeks, the company

said.

(C) Reuters Limited 2001.