CA management fight intensifies
- 27 June, 2001 14:38
Sam Wyly, the Computer Associates International (CA) shareholder who is launching a proxy fight in hopes of taking over the company, on Tuesday addressed CA institutional investors and financial analysts to promote the coup attempt and to answer questions.
Meanwhile, CA on Tuesday announced two new board members and challenged the results of a CA customer-satisfaction study that Wyly's company, called Ranger Governance, used to support its claim that the software company is sorely mismanaged.
"What you have here is a company that's not growing. It buys products and milks them, it lays off so many technical people that service suffers, and it has an inept board that sleeps through it while the CEO pays himself the most outrageous amount ... even for good performance, and in this case the performance is poor," said Wyly in his opening attack on CA during the investor meeting.
Wyly's proposal to revamp the company entails replacing its entire board of directors with a slate that Ranger Governance has assembled; revamping the company's accounting practices that were recently modified so that all software sales follow a subscription model; and breaking the company into four separate product units focusing on storage management, security, knowledge management, and system management.
In order to win this proxy fight, Wyly's proposed board members must be elected by the majority of shareholders participating in the vote. CA's entire board is up for re-election this summer. The results of the vote will be announced at CA's annual shareholder meeting on August 29.
Wyly on Tuesday also took aim at Swiss investor Walter Haefner, who at 21 per cent owns the largest chunk of CA stock. CA insiders own another 9 per cent. "Walter is the other insider," said Wyly, who added that he has a "personal relationship" with Heafner. Wyly leveraged that relationship to try and win Heafner's support for his takeover proposal, but was rebuffed. "He's backing (CA Chairman Charles) Wang now. Wang and (CA CEO Sanjay) Kumar don't have to care about the other shareholders, they just have to report to one guy in Zurich, they just have to keep Walter happy. Wang's earned his loyalty, every ninety days...he reports to Walter," Wyly said, adding that his proposal would give the stockholders who make up the other 70 per cent of the company greater value for their shares.
In an attempt to defend itself amid this shower of allegations, CA officials on Tuesday said that the customer poll conducted by Penn, Schoen & Berland Associates and sponsored by Ranger Governance was "misleading, self-serving and inflammatory." CA commissioned GuideStar Communications to review the poll, which reported that the methods used "were not up to normally accepted standards for professional research." Specifically, GuideStar said that the polling sample of 76 people was too small, considering there are tens of thousands of CA customers in North America; that the questions were posed in a way to evoke negative responses; and that positive comments about CA were omitted from the poll's findings.
"Wyly's assertions are based on fundamentally flawed and self-serving research ... and we flatly dispute the survey's conclusions," Kumar said in a written statement.
Additionally, CA announced the addition of Lewis Ranieri, founder of Hyperion Partners nd chairman of Ranieri & Co. -- a pair of private investment firms -- and Linus Cheung, deputy chairman of Pacific Century CyberWorks, to its board.