Computer Associates International (CA) shareholders rebuffed Sam Wyly's dramatic bid to shake up the company's board of directors, with more than 75 percent voting to retain the 10 incumbent board members in Wednesday's preliminary vote tabulation. Formal certified election results will be available within the next few weeks, according to CA.
Wyly, a CA shareholder, had sought to replace four of CA's directors, including co-founder and Chairman Charles Wang, with nominees of his own choosing. Ranger Governance Ltd., Wyly's investment firm and the vehicle he used for the proxy bid, says it is happy with the changes at CA that were brought about by the campaign.
"We believe this is already an unequivocal victory," said Ranger Governance nominee Steve Perkins in a brief speech before voting closed at 10:25 a.m. ET at the CA shareholder's meeting. "Many of the changes we advocated for CA are already underway."
More than 1,500 attendees crowded into the standing-room-only meeting, doubling last year's attendance. A standing ovation greeted the entrance of Wang and CA Chief Executive Officer (CEO) Sanjay Kumar, while Ranger Governance nominee Perkins' introduction met with only scattered applause.
One dramatic moment during the meeting came when Kumar, after finishing his prepared remarks about CA's performance during the past year, stepped back from the podium and spoke extemporaneously about his personal reaction to the proxy fight. He charged Ranger with making "extremely unfair" allegations about Wang and creating an aura of "negative energy" around CA's co-founder. Kumar also said Wang had to dissuade him from publicly blasting Ranger's plan to retain him as CEO while replacing Wang and several other board members.
"If this team is divided, then this team will not stay around," Kumar said.
Both CA and Ranger Governance say they have no plans for any immediate follow-up contact with each other.
"We hope (Wyly) goes away and lets us continue to build the business," Wang said in a press conference following the meeting. He called the proxy fight a "sobering" experience, and said the most important things he learned from the fight is that CA needs to better communicate its strengths, and that the company's management should be in closer contact with its investors.
Wyly said in his own post-meeting press conference that he has no plans to disappear. He pledged that Ranger Governance will continue to "monitor" CA, but admitted that he doesn't know what form that supervision will take.
"We haven't really decided exactly what we will be doing. We honestly don't know right now," he said. Early in the proxy campaign, Wyly said this bid was a one shot-deal, and that he would not spearhead another campaign next year if this one were unsuccessful. He backed down from that statement a bit at Wednesday's press conference.
"Time goes by and circumstances change," was his only comment in response to questions about whether he would mount another CA proxy bid.
Wyly and Ranger's nominees frequently alluded during the conference to last-minute, behind-the-scenes negotiations between Ranger, CA, and an array of institutional investors that Ranger said led CA to pledge to adopt many of the reforms Ranger was lobbying for, including adding independent directors to its board and creating a committee to investigate CA's relations with its employees.
"We're very, very confident that we've had a significant impact on that company," Perkins said after the meeting. "The shareholders are going to have to be the ones who decide whether we have been victorious or not. We think we have."
Attendees at the shareholder's meeting were overwhelmingly positive about CA's current management and direction during the meeting's question-and-answer session. One twenty-year veteran CA employee said she is "greatly upset that CA naysayers have been given a bigger voice than those of us who work at Computer Associates and take pride in what we do. ... We are not members of some oppressed proletariat."
Shareholders interviewed after the meeting were similarly supportive of CA's management and happy about the company's current strategy.
"It seems they're really making an effort to change things from last year," said Donna Falta, a five-year shareholder who voted for the incumbent directors.
"(The proxy fight) kind of prompted CA to take stock. I think it's a good thing," her husband Richard commented.
Five-year shareholder Alan Fallick said he cast his ballot for nine of CA's 10 incumbent directors. He voted to oust former U.S. Senator Alfonse D'Amato and fill his seat with Ranger nominee Perkins. Fallick said he's not happy with the way his CA shares have underperformed the market in recent years, but he said he has faith in Wang and Kumar and thinks the company is now on the right track.
The proxy campaign has been "very distracting for me, and to our business," said a CA employee who recently became a shareholder as his stock options vested. Technical strategist Sumit Deshpande, who cast his vote for CA's slate of directors, has been with CA for a bit more than two years. "Technically, I think we're going where our customers want us to go," he said. "CA is getting better at communicating with customers and partners. My interaction with clients is that we could do better, and we are."