BY MARK HARRINGTON | mark.harrington@newsday.com 
August 13, 2007

A second proxy advisory firm is taking aim at former U.S. Sen. Alfonse D'Amato's proposed re-election to the board of CA Inc., recommending that shareholders withhold votes for him at the coming annual meeting.

In a twist, the advisory firm, Glass Lewis & Co. of San Francisco, also is recommending that shareholders withhold votes for corporate governance guru Jay Lorsch, the Harvard professor and CA director who chairs its governance committee, noting that the committee nominated D'Amato for re-election. A shareholders meeting is scheduled for 10 a.m. Aug. 22 at the Hyatt Regency Wind Watch Hotel in Hauppauge.

"We continue to believe that it would be best for Mr. D'Amato, as a member of the company's audit committee during periods of serious accounting irregularities, be removed from the board due to his lack of oversight," Glass Lewis said last week in a report. The report also sharply criticizes CA disclosures of charitable contributions on behalf of directors.

Dissident investor Sam Wyly's request to invalidate a 2003 shareholder settlement in federal court was recently dismissed by a judge who said he fell short in proving allegations of widespread fraud beyond that already acknowledged. The case is expected to be appealed.

In a statement Friday, a CA spokesman said the company "strongly disagree[s] with the overall reasoning and many of the conclusions of the Glass Lewis report and believe[s] it is uninformed and misguided."

As it did after a similar report from adviser Proxy Governance, CA said D'Amato "has played a key role in the transformation of CA." The spokesman called Lorsch "the driving force behind improvements in CA's corporate governance program" and said shareholders would be "well served" by the re-election of both directors.

But Glass Lewis, noting that 25.9 percent of shareholders withheld votes for D'Amato last year, disagreed. "In our view, the corporate governance committee should heed the voice of shareholders and act to remove directors not supported by shareholders or correct the issues that raised shareholder concern," it said, recommending votes be withheld for Lorsch. "We do not believe that has been done here."

Glass Lewis also advised clients to vote against a "poison pill" proposal and a shareholder proposal calling for two thirds of independent directors to approve chief executive compensation. It recommended ratification of auditor KPMG as well as an executive compensation plan.

Noting the proxy failed to list the amounts of charitable contributions made on behalf of certain directors, but instead discussed amounts that were "less than the greater of $1 million or 2 percent of the organization's total gross revenues" in its past fiscal year, Glass Lewis said, "We find this style of disclosure wholly inadequate."

Investment banker Gary Lutin, who operates a CA shareholder forum, said, "If CA's owners aren't going to insist on a genuine clean start [on the board], then [CA chief executive John] Swainson needs to give up on his "transformation" plan and just sell the company for what he can get."

Glass Lewis also expressed concern that CA senior vice president and corporate controller Robert Cirabisi continues to serve as an executive, noting that he was the company's U.S. controller in 2000, when "serious accounting and financial reporting problems took place."

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