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If you listen to Texas businessman Sam Wyly, the bitter fight for control of Computer Associates International Inc., comes down to this: The software vendor has wronged employees, customers and shareholders. “Why have the shareholder values been destroyed?” at CA, Wyly said Tuesday in a telephone interview. “Because of bad structure, bad culture and a method of operation that doesn’t work anymore.” Although Wyly’s equity stake in Islandia, N.Y.-based Computer Associates is less than 1 percent, his personal fortune and outsize reputation have allowed him to take the fight to CA. Among other strategies, he has taken full-page ads in the country’s major newspapers and assembled a high-profile dissident board. As many observers have commented, however, neither such tactics nor Wyly’s noted business savvy may be enough to win. Walter Haefner, CA’s largest shareholder, already has pledged allegiance to Chairman Charles Wang and President and CEO Sanjay Kumar. Despite these obstacles, Wyly, with his investment firm, Ranger Governance Ltd., appears committed to the fight. He spoke Tuesday with The Daily Deal about the governance struggle and his plans for CA, should he win. The Daily Deal: If your takeover bid is successful, what real benefits, other than the usual promises of maximizing shareholder value, do you propose to deliver to investors in Computer Associates? Sam Wyly: CA employees, with their 401(k) accounts and all the other shareholders, have stock in their company that by any measure has really melted away a lot of their savings. A lot of these folks, they have the 401(k) and their Social Security and maybe they own their equity in the house, but that’s pretty much it. So when you take their 401(k) and cut it in half in a year, the performance is simply awful by any standard of measurement. The company is not growing, and there are basic problems with the structure and with culture and the method of operating. This company buys products and milks them to the extreme, and the appearance of growth in recent years has been created by the way the accounting has been handled. DD: Charles Wang says your plan to divide CA into four separate business units is a bad idea for shareholders and customers, especially since the latter prefer dealing with a single vendor. How do you respond? Wyly: We’re talking about taking a company that is autocratic. Everything runs through Kumar, and orders come down from the top. It takes a village to raise a child — lots of villages where product development takes place, and villages small enough to be able to take advantage of this huge opportunity brought about by the crash in the tech market. We’ll have at least four teams looking for growth products and get this company growing. Four [divisions at CA] is just the beginning. You’re going to save money. We’ll get rid of the overpriced people at the top who do nothing and get rid of the Draconian group that runs out to fire people on orders from Kumar. DD: Wang also says that you and your proposed replacement board members lack the experience to run CA. I suspect you take exception to this view. Wyly: What they’re saying just ain’t so. We have people who have been very successful, software entrepreneurs, major players as officers and CEOs. And we have people who have and still are venture capitalists who have created software businesses. Look at each of the 10 on the Ranger slate. Then look at each one of the 10 incumbents, other than the managers on the board, because basically the managers are rehiring themselves every year. If Wang is saying he is smarter at understanding programming than Dixon Doll (founder and manager of venture capital firm Doll Capital Management), come on. This is not just about Wang versus Wyly or when did Charles Wang last write a computer program. DD: On what basis did you select your board members? Wyly: People of independence, people of good judgment, people who have experience. You have two Ph.Ds on the list: Wendy Gramm (former chairman of the U.S. Commodity Futures Trading Commission and wife of Senator Phil Gramm) and Dixon Doll. With Wendy you have a great American success story. Her grandfather came from Korea to work in the sugar plantations of Hawaii. She graduated from Northwestern. She’s been the chair on the commodities board. And with Wendy and Cece Smith (former chair of the Federal Reserve Bank of Dallas), you have two experienced regulators and very smart people who will actually understand the accounting. DD: CA is spending about $10 million on this proxy fight. What will you spend? Wyly: About $5 million to $10 million. But this is bigger than CA. This is about power and the abuse of power. Lord Acton said, “Power corrupts.” That’s what happened here. [Wang, Kumar and Executive Vice President of Research and Development Russell Artzt] are spending the shareholders’ money to try to protect their own jobs. Why don’t they spend their own money? Three of them got $1 billion at a time when they were losing shareholders’ money. DD: You’ve been critical of the compensation paid to CA’s top managers. Yet Wang said 85 percent of the shareholders approved the compensation plan. Wyly: So what? It’s the most egregious example of abuse of power, between pay and performance. There is no performance over the last five years. It’s really bad stuff. DD: What are your odds for winning the proxy, given that Haefner has pledged his support to management? Wyly: That’s the big issue. Since 1987, Haefner has decided who the management is going to be. He picked Wang and Kumar to be his managers, and ever since 1987 the return is lousy. They have underperformed. Haefner is a nice man, but he doesn’t care. He’s 92 years old. He’s a good guy and he used to mind the store really well, but he’s no longer minding the store. No [shareholder] votes come in until Aug. 29. Institutional holders look at both boards. We are 10 or 12 days into a 70-day debate. DD: What good will have been done for the company if you lose the proxy vote? Wyly: That’s a good question. If we’re not successful here, nothing will change. But it won’t be for nothing. Next year you’ll see 400 resolutions to do a lot more things by the incumbents who have not given shareholders any choice. You’ll see more choices. DD: You’ve attacked CA for abusing employees and customers alike, yet you must have been aware of the company’s reputation when you sold Sterling Software last year. Why did you forge ahead with a deal? Wyly: We made a decision in the summer of 1999 to sell both Sterling Commerce and Sterling Software. I placed a call to both CEOs (of SBC Communications and CA) and said, “It’s time.” It was the best thing we could do for our shareholders. Also, I didn’t know so much then. I had people tell me as a generality that they have a reputation for not treating employees well. Now I see real world examples there. Copyright (c)2001 TDD, LLC. All rights reserved.

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