SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
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[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
COMPUTER ASSOCIATES INTERNATIONAL, INC.
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(Name of Registrant as Specified in its Charter)
RANGER GOVERNANCE, LTD.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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EXPLANATORY NOTE
Ranger Governance, Ltd., a Texas limited partnership ("Ranger"), is filing
the materials contained in this Schedule 14A with the Securities and Exchange
Commission in connection with a solicitation of proxies (the "Solicitation") in
support of electing Ranger nominees to the board of directors of Computer
Associates International, Inc. ("Computer Associates") at the 2001 annual
meeting of stockholders of Computer Associates.
Table of Contents
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Ranger press release, dated as of August 14, 2001.............. Item 1
Content of Item 1
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[Logo Ranger Governance]
RESPONSE TO ERRORS IN ISS' ANALYSIS AND CONCLUSION
Ranger Governance is pleased that in its analysis of the Computer Associates
proxy contest, Institutional Shareholder Services (ISS) agreed with Ranger that
CA management is in "dire need" of change and that the Ranger slate of nominees
are qualified, credible and well suited to implementing the needed changes. The
ISS report concluded, however: "while the credentials of the Ranger team are
unassailable, and Mr. Wyly's record of generating value for shareholders is
impressive, the dissidents bear a sizeable burden of proof in seeking to acquire
CA without paying a premium to its shareholders. We do not believe this burden
has been met."
Ranger believes that ISS has based its conclusion on a faulty premise that is
not relevant to the facts of Ranger's proxy challenge. We are obligated to
correct this error by pointing out that Ranger is not "seeking to acquire CA."
Put simply: Ranger is seeking a change in the management of CA, not a change in
ownership.
The program Ranger has put forward for CA can properly be characterized as a
change of control in only one sense: we call for the existing shareholders of CA
to wrest control of their company from a Board of Directors and management which
Ranger believes has performed poorly and has indulged itself at the expense of
shareholders. The shareholders of CA, however, still retain equity in CA and
still retain control of the Company under Ranger's plan.
If Ranger is successful, all the benefits of CA's reformation as part of
Ranger's new leadership and comprehensive plan will be realized by the existing
CA shareholders. Ranger believes the true premium for shareholders exists
inside CA, and can only be unlocked by a new Board and management. The point is
that we believe the current Board and management are not growing the company or
bringing value to the shareholders. Thus Ranger cannot understand the
suggestion that it must acquire CA and pay a premium as part of its effort to
bring a new Board and management to CA.
The logical consequence of the ISS position is to abandon the potential of a
proxy contest as a means for shareholders to control the direction of management
of any company. If the ISS position is accepted, then the shareholders of CA
are condemned to acceptance of their existing Board and management unless a
buyer who is willing to pay a premium can be found for the Company. Ranger's
extensive analysis indicates that the hope for such a buyer to come forward is
simply unrealistic and totally unfeasible given CA's current financial state and
substantial debt load.
More importantly, Ranger's analysis concluded that it is highly unlikely that CA
in its current state could command a premium from either a financial buyer or a
strategic buyer. Ranger even considered advocating sale of the Company as part
of its proxy challenge, but concluded that sale at a premium was highly
unlikely.
2
Ranger believes that CA will be unable to command a premium without a radical
change in its structure, culture and method of operations to address employee
morale and motivation, customer satisfaction and economic performance. Further,
Ranger believes that the need for change at CA is so fundamental and so great
that these improvements can only be achieved with a change of management. We
maintain that the only realistic way management at CA can be changed by
shareholders is through the election of a new Board of Directors - and not
through a change in ownership.
Ranger also believes that the ISS report has made an important factual error
when it observed "... had Mr. Wyly adopted the ongoing governance reforms of
Michaels' [Stores] a year ago, he could have proven his commitment to principles
of good governance and thereby offer CA shareholders a clear choice today." In
fact, Michaels' implementation of the CalPERS recommendations began in August
1998 and August 1999, and was completed by August 2000, with the installation of
an independent majority board.
Moreover, Michaels recruited a fully independent CEO - who reports to but does
not serve on its Board - in 1996. In addition, this Board set a policy in 1998
that stock options for Board members and executive officers cannot be repriced
without shareholder approval, and Michaels has never had any poison pill to
deter a change of control.
The combined impact of last month's changes at Michaels and the shareholder
accountability steps it has taken over the years go well beyond CalPERS' 1998
requests. Michaels' governance principles are also superior to those of CA in
another important respect: CA still has a poison pill - a provision that Ranger
has publicly pledged it will abolish as quickly as possible.
Ranger would also like to clarify an important aspect of its proposed management
structure. The ISS Report notes: "It is not clear that he will be able to land
even one, much less four world class CEO's given the decentralized business
model he is proposing." Ranger believes that ISS may have overestimated the
difficulty of recruiting these executives because of a semantic
misunderstanding. To further clarify our proposal, we now intend to name these
jobs "Group CEO's," reporting to the Board of Directors.
Ranger is highly confident that we will have many well-qualified candidates from
within CA and from former CA employees and others currently outside the Company.
In fact, we've already heard from quite a number of people who really know these
products and customers. We are confident that some of these former employees
and some of CA's 18,000 current employees will be both qualified and eager to
serve the Company in this capacity and other important capacities.
Ranger is putting its trust in the hands of the shareholders to give
consideration to all the facts, including its comprehensive plan for Computer
Associates as well as its correcting the errors contained in the ISS analysis
and recommendation. We believe the logical conclusion of any objective
shareholder concerned about the future of CA is to vote for the Ranger slate of
nominees.