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http://www.newsday.com/business/ny-biz-ca0801x.story
Shareholder Files Suit Against CA
By Mark Harrington
Staff Writer
July 31, 2002, 8:38 PM EDT
A shareholder of Computer Associates International Inc. filed suit against
the company and its directors seeking recovery of the $10 million CA paid to
tycoon Sam Wyly to end his proxy fight.
The suit, filed in Deleware Chancery Court in New Castle County on behalf of
Chevra Machzikai Torah, alleges the company and its 12 directors, including
four new nominees, breached their fiduciary duties in agreeing to the pact,
in which Wyly agreed to call off all future bids for board seats for five
years.
"The sole purpose of the company's payment of $10 million to Ranger was to
obtain agreement to drop his proxy battle and thereby to allow the
individual defendants (at the company's expense) to retain their
directorships and executive positions,” the suit says.
It labeled the payment "a waste of assets” rooted in the "self-interest” of
separate board members.
The derivative suit claims the payment damaged CA and its stock price, and
seeks "all losses or damages” and legal fees, none of which was specified.
Torah's law firm declined comment.
At least one other shareholder is expected to file a similar suit against
the company, according to an informed source.
Last week, CA and Wyly announced the $10 million agreement to end his second
proxy battle in as many years, a deal that also extends by five years his
no-compete agreement with the company. Nor will Wyly's Ranger Governance
attempt to buy out the company or even publicly comment on CA, according to
Ranger managing director Stephen Perkins. The group had no comment
yesterday. CA doesn't comment on ongoing litigation.
Gary Lutin, an investment banker who led a forum for investors during last
year's proxy fight, said he wasn't surprised to hear about a lawsuit
concerning the payoff, which he also denounced.
In a note he sent to investors last week, Lutin suggested investors
investigate the payout:
"Any shareholder ... has the right to demand an inspection of Computer
Associates' board records to investigate the directors' reasons for
approving a $10 million payment to stop a challenge to their election, so
that you can make an informed decision about voting for them-now or in the
future-or about seeking recovery of corporate funds from them.”
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