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Plans for Independent Review of Director
Candidates
(May 11, 2005)
Copied below is the text of a letter to the corporate
secretary and chief legal officer of Computer Associates requesting his advice,
and that of the Examiner recently
appointed pursuant to the Deferred Prosecution
Agreement, regarding the development of procedures for the Forum's review
and reporting of information about the past performance of directors standing
for re-election.
Reference is made to an April
5, 2005 letter to the current members of the company's board asking whether
those who were responsible for management during the period of acknowledged
misconduct intend to follow the conventional practice of leaving the board now
that new leadership is in place. As indicated, there had been no response
to that letter.
The Forum review process summarized in the letter below is
intended to address shareholder needs for information about voting decisions in
a context that requires responsible independent inquiry. Its provisions for
special counsel's confidentiality agreements to investigate facts and prepare
public reports would be applicable to voluntary management responses to
information requests as well as to court-enforced responses to records demands
under
Section 220 of the Delaware General Corporation Law.
In May 13 and May 20, 2005
letters, CA's chief legal officer declined to provide the requested
cooperation. A formal shareholder
demand for records was submitted to the company on June 27, 2005, to which
the company agreed to respond "amicably."
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[letterhead]
LUTIN & COMPANY
575 Madison Avenue
New York, New York 10022
Telephone (212) 605-0335
Facsimile (212) 605-0325
May 11, 2005
By telecopier: 631/342-3300
Mr. Kenneth V. Handal
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11749
Dear Mr. Handal:
In the absence of any response to my April 5, 2005 letter to
CA’s directors, it is assumed that shareholders should be prepared to
consider voting for the re-election of currently serving board members at
the company’s annual meeting in a few months.
Responsible shareholder voting decisions will require
information about the past performance of each director candidate, including
the individual’s responsibility for CA’s management during the period of
acknowledged misconduct which continued until April 2004. This information
must necessarily be based on an independent review of relevant facts.
Especially since the review may involve facts which are also the subject of
government investigations or shareholder litigation, I will welcome your
advice – and also that of Mr. Richards, as CA’s court-appointed Examiner –
to guide the development of sensible CA Forum processes for the needed
research and public reporting.
As indicated in the CA Forum’s “Summary”
and other communications,
it will be important to organize a review process that works in the context
of reasonably anticipated confidentiality and privacy rights. The following
provisions are suggested for this purpose:
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Special counsel: The Forum will engage legal counsel to conduct
the required research and prepare reports for use by CA’s public
shareholders in their voting decisions. Counsel will be able to enter
into appropriate confidentiality agreements – as required by CA, its
directors, litigation parties, government authorities or the courts – to
review whatever records or other information may be relevant. They will
then prepare reports, based on their research but excluding any details
that CA or a court deems confidential, which can be publicly presented to
investors for their use in considering voting decisions.
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Advisory panel: Individuals representative of a range of investor
perspectives will be invited to offer informal advice to the CA Forum’s
special counsel regarding the kind of information shareholders may
consider relevant to their voting decisions. Participants in this panel
are not expected to be provided with any non-public information, so they
will not be asked to enter into confidentiality agreements or otherwise
restricted in their use of information.
Please let me know if you have any initial suggestions to make
this process as efficient as possible. I look forward to learning how you
think the Forum and CA’s current management can best work together to serve
the company’s shareholders.
Sincerely yours,
Gary Lutin
cc:
Lee S. Richards, Esquire
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