Computer Associates International Inc. must deliver better value to shareholders, and the way to do that is to replace top management, said Stephen Perkins, president of Ranger Governance Ltd., in an interview.
Ranger, which is backed by Texas entrepreneur Sam Wyly, last year failed in an effort to unseat the entire CA board of directors. This year, the group is seeking to replace only a minority of the board with its own nominees. However, three of the five board members it seeks to replace are CA Chairman Charles Wang, President and CEO Sanjay Kumar, and Executive Vice President Russell Artzt.
Wyly, whose company Sterling Software Inc. was acquired by CA two years ago, owns millions of options on CA stock. Wyly is taking a much lower profile in this years battle because, Perkins said, “last year, the battle was too focused on Sam. There was too much public debate and rhetoric.” Wyly is not among the five board nominees.
Perkins said the minority slate, if elected, would not turn the board into a debating society of warring factions, even though it could have its views repeatedly outvoted by the majority. “We wont have control, but well be in a position to appeal to the other independent directors,” said Perkins. “The remaining board members will be open thinkers.”
Although the tactics are different this year, Rangers complaints against CA management are much the same as last year. Perkins said the companys stock is woefully underperforming, revenues are declining and customers are unhappy.
What would new management do differently? Perkins said a major goal would be reducing the companys debt, which he pegged at about $4 billion, which was compiled mainly from CAs many acquisitions.
Chief Financial Officer Ira Zar would be replaced and a new CFO would be named who would “have a reporting relationship” to the board. This would give allow the board to provide “oversight into the financial management of the company.”
Other goals would be to “beef up” customer support and to propose a “technology czar” to coordinate market strategy. CAs current chief technology officer is Yogesh Gupta; Perkins would not say whether or not he would be retained.
Customer dissatisfaction was cited last year by Ranger, which at the time pointed to a survey that showed many customers were disenchanted. This year, Perkins cited “anecdotal” evidence of customer dissatisfaction, including at least one large customer that is on the verge of dumping all CA products.
“Among CIOs and top management, satisfied customers are few and far between,” he said. “Theres a problem there that needs to be resolved.”
And even though many technology companies are performing poorly in a difficult economic climate, Perkins said CA is lagging its software rivals. Said Perkins, “CA is not at the top of the list among technology performers.”
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