Management Responses to Issue of Director's Independent Status

(September 8, 2004)

In a letter dated September 8, 2004, a legal executive of Computer Associates responded to an August 27, 2004 Forum letter suggesting that the company's board resolve the issue of a director's independent status after he was paid $125,000 additional compensation for "extraordinary services."

The legal executive's letter states that the response is the same as what had been provided to a columnist for an August 29, 2004 New York Times article on the issue raised by the Forum and addressed in a report by its adviser, Glass Lewis & Co.  The opinions and arguments presented in this letter, however, concern the legality of the director's payment and the quality of the work he performed.  These issues were not raised by the Forum, and the Glass Lewis report clearly stated that there appeared to be no questions about these matters.  The information the Forum had encouraged management to provide  – which both Glass Lewis and the New York Times had also observed was lacking  – concerned only the simpler issue of whether the director's additional payment was for services performed "in his or her capacity as a member" of the board or its committees, according to the requirements for independent status as defined by Rule 10A-3(b)(1)(ii) of the Exchange Act of 1934.  The letter does not indicate any management intention to provide the information needed for investors or the SEC to make that determination of independence.

The board's non-executive chairman, to whom the Forum's manager had addressed the August 27 letter and a follow-up September 3, 2004 request for a response by September 8, had faxed his own September 8, 2004 letter stating that the company would respond.

Both letters, from the legal executive and from the chairman, can be downloaded from links in the box below.