Computer Associates Board Backs Executives

In addition, the board members told Stephen Perkins--a member of the team of Texas billionaire Sam Wyly that last summer waged a fight for control of the company--that his claims were unfounded and declined to meet with him.

"We do not believe that a meeting with you to discuss removal of CA's senior officers would be in CA's interest," the board members said in a letter to Perkins made public on Thursday. "Based on the information you have presented we see no reason for further action."

The letter is signed by Computer Associates' eight independent board members. The other three directors are company executives.

Perkins, who was on vacation in Africa, could not be reached for comment. Wyly also was not available for comment. The company also declined further comment.

In his letter, Perkins asked the independent directors of the board to "to do their duty" and remove chairman Charles Wang, CEO Sanjay Kumar and CFO Ira Zar. Perkins suggested they replace the executives with managers of the caliber of IBM's Lou Gerstner.

Perkins repeated many of the same accusations Wyly made during last year's proxy fight: that the executives fostered a culture that abused customers and employees, that the company's new accounting method just masked losses; and that Computer Associates has underperformed.

Perkins' March 25 letter followed news that the company, the world's No. 4 software maker, was the subject of a probe by the U.S. Securities and Exchange Commission and the U.S. Attorney's Office for the Eastern District of New York.

In their response, the board members said Islandia, N.Y.-based Computer Associates has performed better than many others in a prolonged slowdown in technology spending and pointed to their recent announcement that the company will report better-than-expected quarterly results.

On Monday, Computer Associates said its fiscal fourth-quarter revenue would meet its previous outlook and its loss for the period, excluding charges, would be narrower than expected. The news came after several large technology companies, such as IBM, PeopleSoft and Compuware, warned that their results would be worse than expected.

"Your attacks on CA's accounting practices are unjustified," the directors wrote. "We have reviewed CA's accounting practices and have satisfied ourselves--as has KPMG, the company's auditors--that CA's accounting is appropriate."

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