Wyly's Ranger Governance Ends Quest For CA Board Seats

Ranger Governance Computer Associates International

The two companies said Wednesday they reached an agreement through which Ranger Governance, the firm spearheaded by entrepreneur Sam Wyly, has dropped its proxy challenge for a minority slate of five seats on CA's board.

Under the agreement, CA has pledged to elect one additional independent director to its 11-member board, according to a statement issued jointly by CA and Ranger Governance.

The new director will not come from the Ranger Governance slate of nominees, a CA spokesman said, adding that Ranger Governance had approached CA about the deal.

In addition, CA will pay $10 million in exchange for Wyly's agreement to a five-year standstill from engaging in another proxy contest and to extend Wyly's noncompete agreement with CA for another five years, the spokesman said. The noncompete agreement was implemented after Wyly's sale of Sterling Software to CA in April 2000.

"In conversations with Ranger over the last few days, it has become clear that Ranger and we are largely in agreement on corporate governance issues," said CA President and CEO Sanjay Kumar in a statement.

Executives from CA and Ranger Governance were not immediately available for comment.

Ranger Governance in June announced plans to nominate five directors to CA's board in a proxy contest that would have been decided at CA's annual shareholders meeting, scheduled for Aug. 28.

Wyly's firm said CA had been financially under-performing and was calling for the ouster of CA's top management, including Kumar.

CA shares have lost half their value since Ranger Governance announced its plan to challenge for seats on its board, trading down 7 cents at $8.01 Wednesday morning, well off its 52-week high of $38.74

The firm last year lost a caustic battle for four seats on CA's board.

"With the changes that CA has made, and under the leadership of Sanjay Kumar and his management team, I am confident that CA is on a course to being recognized as a gold standard in good corporate governance," said Wyly in the statement.

As late as last week Ranger Governance was still calling for change at CA.

In an interview with CRN, Ranger Governance President Stephen Perkins, one of its nominees for CA's board, said CA's replacement of four directors earlier this month didn't go far enough to remedy problems he observed at the Islandia-based company.

"None of this gets to the key concern that we have, which is that the company is underperforming and that the board should be holding the executive management, specifically Kumar, [Chairman Charles Wang and [Executive Vice President Russell Artzt, accountable for that performance. And any way you stack it up, stock is down, they're performing worse from many aspects with respect to their peers, and the board, independent though they may be, is not taking any action," Perkins said last week.

Ranger Governance was awaiting approval by the Securities and Exchange Commission of its preliminary proxy and had not yet begun soliciting votes, Perkins said.

Earlier this week CA reported a $65 million loss for its first quarter on single-digit revenue growth.

The company is in the midst of a federal inquiry into its accounting practices.