Computer Associates announces new guidelines for its board of directors intended to ensure it follows best practice for corporate governance and names its first lead independent director.
Even as the Securities and Exchange Commission widened the scope of its investigation into Computer Associates International Inc., the company sought to improve on the structure of its board of directors.
The Islandia, N.Y., company announced Thursday that its board of directors has adopted a set of guidelines intended to ensure it follows best practices for corporate governance, and that it has appointed member Lewis Ranieri as its first lead independent director.
The move comes on the heels of news that the SEC, in its joint investigation with the Justice Department of CA accounting practices, has issued subpoenas to several third parties. Such subpoenas signal that the SEC formalized its investigation.
CA reacted in a formal statement, saying, "We understand that the SEC issued subpoenas for information to third parties and that for the SEC to issue subpoenas, a formal order must be in place. We know of no other change in the status of this matter."
In its own 10-K filing with the SEC earlier this week, CA said of the subpoenas, "The investigation appears generally to be focused on issues relating to the companys historical revenue recognition policies and practices. The company cant predict the scope of outcome of the inquiry ... which may include the institution of administrative, civil or criminal, proceedings, the imposition of fines and penalties, or other remedies and sanctions."
The appointment of Ranieri as lead independent director and the adoption of corporate governance guidelines follow on the heels of several other changes in CAs board. The changes stem from the bitter proxy battle waged last summer by Sam Wylys Ranger Governance Ltd.
Although Ranger Governance lost its bid for control over the board, CA has responded to the criticisms leveled by Wyly, who suggested that CA was not acting in the best interest of CA shareholders or employees.
Ranieri, a former Salomon Brothers vice chairman, in his new role will act as a spokesperson for the directors who are not affiliated with CA, chair discussions with those directors and facilitate communication between those directors and CA management. He was elected to the CA board in June of last year.
The new corporate governance guidelines describe procedures for annual CEO evaluations and annual board self-evaluations; establish a policy that non-management directors must meet New York Stock Exchange guidelines for independence; and set out guidelines on the size and compensation of CAs board. The board will be made up of 12 directors, with no more than three of those directors representing the companys management.
CAs board also elected Walter Schuetze to serve as chair of its Audit Committee. Schuetze is a former chief accountant for the SEC.