Struggle for CA continues

While denouncing the attempt of a Texas entrepreneur to oust them, the management of Computer Associates International Inc. reported that its top executives won’t receive any bonuses in fiscal year 2002.

In a press release on its Web site regarding its preliminary proxy statement Monday, CA stated that Sanjay Kumar, the company’s president and CEO, and its chairman and founder, Charles Wang, plan to have their compensation limited “to base salary and benefits” as well as stock options. Wang’s base salary is US$1 million, and Kumar’s is $900,000. Critics may argue that the move may be a piece of public relations for company shareholders, who have seen lackluster revenue growth but massive compensation to top CA management.

The Islandia, N.Y.-based company said Wang and Kumar didn’t receive performance-based awards because of a “change in the company’s business model, which changed revenue recognition and resulted in a net loss for the year.”

Shareholders will vote Aug. 29 on whether to keep the existing board or replace it with a board and management team led by Texas entrepreneur Sam Wyly.

Wyly, who last year sold his software firm, Sterling Software Inc., to CA, last month announced his intentions to replace Wang as chairman and break up the company into four independent units. CA last week filed a lawsuit to block Wyly, based on a non-compete clause in Wyly’s Sterling sales agreement.

Meanwhile, a spokesman for Ranger Governance Ltd., Wyly’s Dallas-based investment firm, which is spearheading the proxy fight, Tuesday called CA’s lawsuit “baseless.” It involved a “tortured misreading of the non-compete agreement.” Without offering details, he said the firm will be responding later this week or early next week to the lawsuit.

Moreover, the spokesman said the management’s announcement not to take bonuses this year is immaterial. “There are documented years of shareholder abuse, and one instance of their changing their egregious compensation does not change years of lackluster performance.”

The spokesman noted that Wang, Kumar and executive vice-president Russell Artzt had previously received a total of $1 billion from CA. And by not sending anyone to the upcoming CA World user event to be held in Orlando next week, he said, Ranger “will get its message out in an appropriate way.” He declined to offer details but said Ranger “had no wish to interfere with CA’s relationship with customers.”

For his part, Kumar, in the proxy statement, said Wyly’s plans to break up the company into four organizations “simply do not make sense.” Kumar said, “In addition to decreasing the company’s ability to offer integrated software solutions and engage in cross-selling, Mr. Wyly’s plan would increase overhead costs and potentially be disruptive to employees.” The company’s best course would be “to follow through on the initiatives already put in place, including our new business model, and focus on client service intended to create shareholder value.”

Last month, CA announced that it would focus on six core technology and product areas, including security, storage, enterprise management, application development tools, and visualization and knowledge management technologies.

Computer Associates, can be reached at