Sent: Wednesday, August 15, 2001 12:49 PM
Subject: Shareholder rights to be informed
As reported in the Newsday article distributed yesterday, CA's
management has refused to provide the information requested by the Forum
concerning the relationship with Walter Haefner, a 21% controlling
shareholder. Management has also suggested that the requests for such
information are unfair and may be motivated by my lack of impartiality.
First, I'll readily admit to a lack of impartiality on one subject:
property rights. I advocate them, and am frankly intolerant of those
who oppose them.
Property rights necessarily include the rights of property owners to
obtain information about their property from the people they've employed
to manage it. The laws of Delaware, where CA is incorporated, support
this with a specific provision --
Delaware General Corporation Law, Section 220 titled "Inspection of books
and records" -- for simple court procedures to
enforce shareholder demands for any information relating to the interest
of an investor, including voting decisions.
I can think of no legitimate reason for CA management to withhold the
information requested about the existence of any agreements or
transactions with a controlling shareholder. There is simply no basis for
the assertion by management's representative to the press that such
information should be withheld from shareholders because it's
"proprietary" -- a troubling choice of words raising even more questions
about management's view of property rights. This is pretty basic stuff.
Management should report any agreements or transactions, or state
clearly that there are none.
Returning to the subject of my suspected lack of impartiality, the
issue is raised with surprising frequency when someone doesn't want to
respond to an information request. For those of you who are unfamiliar
with my conduct of investor forums, it's become my practice to respond
once and then to discourage further diversions from our real purpose. My
interests can be stated very simply, as follows:
- To avoid either conflicts of interest or regulatory complications, I
have no direct or indirect interest in any securities of CA, long or
short, and I have no relationship or financial interest with either
CA, Ranger or any candidate for the CA board other than for the conduct of
this Forum. If I establish any such interest, I will voluntarily disclose
it.
- My interest in the CA Forum is simply to conduct it credibly, in a
manner which helps clarify issues considered important to CA shareholders
and to the broader investment community. If I discover any way I
could benefit from compromising either the real or apparent fairness of
the Forum, I will voluntarily disclose it.
- I encouraged the company itself to support the Forum for the benefit
of all its shareholders, and I invited both groups of candidates to
participate on identical terms. The Wyly-Ranger group committed its
support, as I reported. CA's management has declined the company's
support, and told me that the management nominees themselves do not want
to match the Wyly-Ranger commitment. If I find that either side's
decisions about support may impair the Forum's fair and open presentation
of all relevant views, I will voluntarily disclose it.
The conditions of my involvement in the Forum were openly presented in my
introductory communications with CA's chairman and with prospective
Forum participants. Both are copied below, for anyone who doesn't have
the original distributions. If you have questions or want more
information, just ask.
GL - 8/15/01
Text of 7/30/01 letter from
Gary Lutin to Charles B. Wang, chairman of the board of CA
[letterhead]
LUTIN & COMPANY
575 MADISON AVENUE, 10th FLOOR
NEW YORK, NEW YORK 10022
Telephone (212) 605-0335
Facsimile (212) 605-0325
July 30, 2001
By telecopier: 631/342-4900
Mr. Charles B. Wang
Chairman, Board of Directors
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11749
Dear Mr. Wang:
As indicated in my telephone message, I've agreed to conduct a
non-partisan "Forum" for shareholders of Computer Associates, addressing
their consideration of competing director candidates. Efforts have been
initiated to determine what information is relevant to shareholder
decisions, and within about a week the Forum should be able to present the
candidates with a written request for their statements of views on the
identified issues.
The Forum will be open to all Computer Associates shareholders,
including those on both sides of the proxy contest, and to any investment
professionals who are members of the Association for Investment Management
and Research ("AIMR"). It's my intention to assure fair treatment of views
on all sides, following the standards established for similar programs I
co-sponsored recently with the New York Society of Security Analysts. Your
comments or suggestions regarding fairness will be appreciated, now and as
we proceed.
I encourage the company's support of the Forum on behalf of all its
shareholders. Pending the company's assumption of Forum costs, however, I
have accepted partial funding from Ranger Governance according to
conditions stated in the accompanying copy of a July 25, 2001 letter. The
management nominees are invited to make their own commitment to the Forum
according to the same conditions.
I hope you'll participate actively in the Forum, not only as a
management executive and director candidate but also as a shareholder.
Sincerely yours,
/S/
Gary Lutin
cc: Mr. Sam Wyly
----- Original Message -----
Sent: Tuesday, July 31, 2001 11:04 AM
Subject: Initiation of Forum for shareholders of Computer
Associates
Those of you who had expressed an interest in Computer Associates will
be pleased to know that there will, after all, be a "Forum" to address
the current shareholder choice of competing candidates for the board of
directors.
After the new administration of the New York Society of Security
Analysts announced its withdrawal from the Forum program, a fund manager
who supports the dissident slate of candidates led by Sam Wyly initiated
discussions with me to encourage the immediate progress of a forum
program, in time to address the CA proxy contest, without waiting for
the contemplated organization of a new not-for-profit institute. We
defined conditions which I consider satisfactory for a
non-partisan, fair and open forum following the standards established in
the NYSSA programs, and the Wyly group committed its support according
to those conditions. I've therefore agreed to proceed with the Forum,
and have also invited the CA management nominees for the board to commit
their support according to the same conditions.
The CA Forum's activities will of course be focused on the information
required by shareholders to decide who should represent them on the
board of directors. This involves two essential questions, to be
applied to each slate of candidates:
- What is the maximum shareholder value that can be
generated by the candidates' proposed business strategy?
- Can the candidates be relied upon to deliver the
potential value to shareholders?
The first step will be to determine what information is needed to answer
these questions. The CA Forum will be conducting a "Workshop" this week
to define the issues shareholders consider relevant. (For those of you
who have not participated in a Forum "workshop" before, the term is used
to describe a relatively informal process of professional collaboration,
in which participation is considered confidential unless someone
specifically authorizes attribution.) This will be used as the basis
for preparing a written request to all candidates for statements of
their positions.
The CA Forum is open to all CA shareholders and to investment
professionals who are members of the Association for Investment
Management and Research ("AIMR"). Anyone wishing to participate in the
initial Workshop should call me at my office (212/605-0335). You can
also communicate by email, but I may not see your message until the next
morning.
GL - 7/31/01
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