Ranger drops CA proxy fight, picks up $10m
How nice for all concerned
Ranger Governance Ltd has agreed to drop its proxy challenge for five seats on Computer Associates International Inc's board of directors in exchange for $10m and CA's promise that it will add another outside director to its board.
Dallas, Texas-based Ranger was formed in 2001 to launch an unsuccessful attempt to take over Islandia, New York-based CA's board of directors. In June 2002 the organization launched a fresh attempt to oust CA's management team by opposing chairman Charles Wang, CEO Sanjay Kumar, and vice president of research and development Russell Artzt, as well as two other board members, at the company's annual meeting of shareholders.
Ranger has now agreed to drop its proxy challenge and has dramatically changed its views on CA's corporate governance policies, and in particular the responsibility of Wang, Kumar and Artzt for the company's poor performance.
"With the changes that CA has made, and under the leadership of Sanjay Kumar and his management team, I am confident that CA is on course to being recognized as the gold standard in good corporate governance," said Ranger founder, Sam Wyly, in a statement. "CA's new business model and demonstrable focus on corporate governance should yield good results for all shareholders in the future."
This contrasts with comments made last week by Stephen Perkins, president of Ranger, after CA elected four new members to its board. "The fact that Computer Associates continues to make changes to its board of directors does not address our key concern," said Perkins on July 16. "CA, in our opinion, continues to be run by three under-performing executives who also sit on the board: Charles Wang, Sanjay Kumar and Russell Artzt. Nowhere has Computer Associates suggested that these three executives will be held responsible for the company's poor performance."
The $10m payment is for a five-year agreement with Wyly not to launch another proxy contest, and also extends a non-compete agreement between Wyly and CA, which followed CA's March 2000 acquisition of Sterling Software Inc, a company Wyly founded. Although it is a costly way for CA to put the proxy fight behind it, it is also less than the $12m that last year's proxy battle is understood to have cost the company.
CA has also announced that it will elect an additional outside director to its board. The company's corporate governance committee will nominate a candidate, and the entire CA board will vote on the nomination, probably before the end of the year. The election will increase the total number of CA board members to 12 and the number of outside directors to nine.
We are pleased to put this matter behind us," said Kumar of the agreement. "In conversations with Ranger over the last few days it has become clear that Ranger and we are largely in agreement on corporate governance issues. We are pleased that many of their suggestions have already been incorporated in our corporate governance principles announced in May."