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Shareholders of Computer Associates International Inc. voted overwhelmingly Aug. 29 to retain the company’s board and reject a proposed replacement board fronted by Texas software mogul Sam Wyly. With more than 80 percent of shareholders submitting votes, CA’s 10 slated nominees each received at least 75 percent of the vote. After conceding defeat, Wyly told reporters he never expected to win but rather waged the war to spur the company to reform. “We entered [the proxy fight] because of growth and governance,” he said following CA’s annual shareholder meeting at its Long Island, N.Y., headquarters. “That’s what it was about from the beginning.” CA’s board nominees included chairman and co-founder Charles Wang; president and CEO Sanjay Kumar; executive vice president of research and development Russell Artzt; and former New York Sen. Alfonse D’Amato. CA plans to release the official results within two weeks. Wyly’s group, Dallas-based Ranger Governance Ltd., proposed four new members to the board. Law firms Covington & Burling of Washington and Wachtell, Lipton, Rosen & Katz of New York advised CA in the proxy battle. More than 1,500 shareholders, executives and employees packed a room at the Wyndham Hotel in Islandia. They watched a splashy presentation by Wang and Kumar and heard a five-minute speech by Ranger board nominee Steve Perkins. Wyly did not speak at the meeting and later said he stayed out of the limelight because he was not one of the replacement board nominees. Following a standing ovation, Wang and Kumar said the acrimonious proxy fight underscored that CA must better communicate with investors, shareholders and the media. “We have learned a lot from this proxy contest,” Kumar said. “If you’re not willing to make mistakes, you’re not willing to grow.” Kumar also said he was disappointed with some of the negativity unleashed in the fight, particularly criticisms directed at his mentor, Wang. “It was extremely unfair on the part of certain institutions and certain people who attempted to tear down 25 years of success,” he said. Shareholders were mixed in their comments, some complimenting CA’s management team and others questioning the software giant’s ethics. One shareholder, in a question-and-answer session, asked Wang, whose right hand was bandaged, if he had entered a fistfight with Wyly. Wang said he had recently broken his hand. A CA employee and shareholder told the audience that workers at the company are “not members of some oppressed proletariat,” responding to Wyly’s charges of employee abuse. Wang dodged a shareholder question about whether the company’s use of pro forma accounting effectively inflated its financial results, suggesting the shareholder talk to the company’s auditors, who attended the meeting. James Buser, a Long Island shareholder, said following the meeting that he voted for Wyly because CA’s brass “overcompensated themselves by a billion-plus dollars. It had to do with the cavalier way they treated us by taking a huge compensation.” Perkins told reporters that Ranger achieved most of what it set out to do, including forcing CA to make certain changes and concessions. CA has already pledged to stay closer to investors, expand its investor-relations staff, reduce its focus on pro forma numbers, set up a committee to evaluate hiring and firing practices and hire governance experts to advise it. Wang said CA will add two board members, a search the proxy fight delayed. About their future association, Wang and Wyly were relatively circumspect. “I don’t know if he’ll go quietly in the night [or] noisily in the night,” Wang said. “We hope he goes away and lets us continue to build our business.” Wyly deflected questions about Ranger’s future plans, but said the company will emphasize promoting good corporate governance. Wyly confirmed he owns 100 shares of CA stock and that Ranger owns 630,000 shares, plus 1.5 million five-year options. “In all, we thought the contest would shine sunlight on a company that needed some sunlight … and that’s happened,” Wyly said. “And we’re real happy with the effort.” Copyright (c)2001 TDD, LLC. All rights reserved.

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