CA replaces four board members

Computer Associates International Inc. (CA) has added four new members to its board of directors, replacing four directors who intend to step down at CA’s annual meeting in August. Among those departing is longtime director Willem F.P. de Vogel, targeted for removal by a shareholder-led proxy campaign to revamp CA’s board.

Three of the four retiring directors are leaving because of CA’s newly enacted eight-year term limits on the service of outside directors, according to CA. CA adopted the term limits in May as part of a broader corporate governance overhaul.

CA’s board of directors has churned significantly in the past year. Shareholder Sam Wyly launched an expensive proxy campaign last year encouraging shareholders to scrap CA’s entire board and replace it with nominees of Wyly’s choosing. The motion failed, but Wyly’s campaign attracted significant attention and prompted CA’s management to promise consideration of shareholder concerns voiced during the acrimonious fight.

The company has since increased its board size, elected four new directors (one of whom departed before the end of his term) and adopted a set of corporate governance principles. Tuesday’s announcement brings to seven the total of outside directors added to CA’s board since June 2001.

Wyly’s Dallas investment firm, Ranger Governance Ltd., is reprising last year’s proxy campaign but is seeking only minority representation on CA’s board. De Vogel, a CA board member for most of the past two decades, was one of the directors Ranger hoped to replace.

Ranger still plans to field a slate of five candidates and is now evaluating which CA director it will target for removal in de Vogel’s place, according to Ranger president Stephen Perkins, one of the firm’s nominees for CA’s board.

“In spite of the fact that CA has made these changes to the board, there’s been nothing that they’ve done that addresses our key concern – that CA is, in our opinion, being run by three under-performing executives,” Perkins said.

Ranger hopes to remove from the board those three executives: CA Chief Executive Officer (CEO) Sanjay Kumar, Chairman and co-founder Charles Wang and co-founder and Executive Vice-President Russell Artzt.

Also on Ranger’s list is former U.S. Senator Alfonse D’Amato, a CA director since 1999. If the management-backed slate of directors is elected, D’Amato will be the only outside director on CA’s board with more than about a year of service.

That’s a change heavily advocated by several investment analysts, including Institutional Shareholder Services Inc. (ISS), an influential firm that advises institutional investors on contested issues put forth for shareholder vote. ISS initially backed CA’s management in last year’s proxy fight, but did so with reservations; after Ranger revised its bid and said it would seek only minority representation on the board, ISS reversed its recommendation and supported Ranger.

“CA’s governance has been nothing short of deplorable in the eyes of most,” ISS wrote at the time. “The governance issue alone is sufficient to seek an injection of truly independent new blood on the board.”

ISS is currently in the initial stages of analyzing this year’s Ranger-led proxy campaign and will issue its voting recommendation in early August, said Patrick McGurn, ISS’ director of corporate programs.

“Obviously, we’re watching what’s going on there. It looks like our scorecard is going to change some more in terms of who is on the lineup,” he said.

Joining CA’s board are Vivendi Universal Games Chief Executive Officer (CEO) Kenneth Cron, former Salomon Brothers Inc. general partner Robert La Blanc, technology investor and entrepreneur Alex Serge Vieux and former CBS Inc. Chairman and CEO Thomas Wyman.

Leaving the board will be de Vogel, New York Stock Exchange Chairman and CEO Richard Grasso, State University of New York at Stony Brook President Shirley Strum Kenny and investor Roel Pieper.

CA’s entire board will be up for election at the company’s annual meeting Aug. 28 in Islandia, N.Y., near CA’s headquarters.

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