SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
COMPUTER ASSOCIATES INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
RANGER GOVERNANCE, LTD.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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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
-----------------
Ranger press release, dated as of August 1, 2001.......... Item 1
Ranger press release, # 2, dated as of August 1, 2001..... Item 2
Ranger press release, # 3, dated as of August 1, 2001..... Item 3
Ranger white paper, dated as of August 1, 2001............ Item 4
Content of Item 1 - 4
---------------------
For Immediate Release
---------------------
STATEMENT OF RANGER GOVERNANCE
Dallas, Texas, August 1, 2001 - Ranger Governance, Ltd. today issued the
following statement in response to Computer Associates' response to Ranger's
counterclaims:
"Ranger Governance holds CA's shareholders' interests in the highest regard. In
fact, the very reason Ranger Governance began this proxy solicitation was to
improve shareholder value at Computer Associates.
"We believe that what works against shareholders' interests is CA's not
acknowledging the Company's customer dissatisfaction problems that are well
documented in the marketplace and confirmed by their own study.
"We believe CA is playing games with their survey and trying to have it both
ways. Despite their protestations that this survey is `not secret research,' we
believe they want to continue to hide the survey and are afraid to stand before
their shareholders and admit that they have significant levels of
dissatisfaction among their largest customers. So instead of admitting this
significant customer relations issue to their shareholders, they are falsely
claiming that revealing the study would have a substantial adverse effect on the
Company.
The bottom line is that if Mr. Wang and Mr. Kumar really believe that the
disclosure of this survey would damage the Company, they would have already had
their lawyers in court seeking to prevent its disclosure as they are obligated
to do as the current stewards of CA. We believe that any such marketing survey
is only a diagnosis - and not a cure - for what ails the Company.
"We believe this is a case of top managers trying to cover up material facts
that owners need to know to make an informed choice between these two Boards on
August 29.
"We believe the real issue is which slate of nominees has a plan that will fix
CA's customer dissatisfaction problems and get the Company growing. We contend
the Ranger Plan is about creating value for owners by changing CA's structure
and culture so that both employees and customers are treated with dignity and
respect. We are confident that once shareholders take a look at our
comprehensive plan for growth they will realize that the election of the Ranger
nominees on August 29th is the right choice for CA."
About Ranger Governance, Ltd.
Ranger Governance is a Dallas-based investment company created by entrepreneurs
Sam Wyly and Charles Wyly, and an affiliate of Ranger Capital Group, a
multi-manager investment fund also based in Dallas. On July 27, 2001, Ranger
Governance filed a definitive proxy statement
with the Securities and Exchange Commission in connection with Ranger's
solicitation of proxies to elect its director nominees at the 2001 annual
stockholders meeting of Computer Associates and has mailed copies to
stockholders. Ranger is proposing a comprehensive restructuring plan which it
believes will maximize shareholder value, position Computer Associates for
future growth, and dramatically improve its relations with customers, employees
and investors. Ranger urges stockholders to read its proxy statement because it
contains important information. More information about Ranger Governance and
copies of its definitive proxy statement are available at www.rangergov.com.
Copies of Ranger's definitive proxy statement and other Ranger soliciting
materials are also available at the Securities and Exchange Commission's website
at www.sec.gov.
Contact:
Media: Investors:
Dan Katcher/Joele Frank
Joele Frank, Wilkinson Brimmer Katcher Morrow & Co., Inc.
(212) 355-4449 (212) 754-8000
###
For Immediate Release
---------------------
RANGER GOVERNANCE OUTLINES PLAN FOR COMPUTER ASSOCIATES
Ranger Calls for Good Governance,
Good Management and Enhanced Shareholder Value Through Growth
Dallas, Texas, August 1, 2001 - Ranger Governance, Ltd. today announced that it
has published "The Ranger Governance Plan for Computer Associates." This plan,
Ranger believes, will enhance value and install accountability at Computer
Associates (NYSE: CA). Ranger has nominated a slate of ten directors for
election at the Computer Associates annual meeting on Wednesday, August 29th.
Sam Wyly, manager of Ranger Governance, said, "The Ranger Plan is about creating
value for owners by changing CA's structure and culture so that both employees
and customers are treated with dignity and respect. We believe this will
radically change the world's fourth largest software company from an enterprise
which is not growing to one enjoying healthy growth. Computer Associates'
shareholders have, for too long, been given no alternative to the current board
of directors. Ranger is now offering shareholders a clear choice on how their
company will be managed."
The Ranger plan focuses on improving CA in three major areas:
Governance
Ranger is committed to providing CA with a strong, independent Board and
exemplary governance practices. Ranger's candidates have, in combination,
deep information industry knowledge, governance experience, and
entrepreneurial success. If its nominees are elected, the Ranger Board will
eliminate Computer Associates' poison pill, and will match manager pay with
manager performance.
Management
Ranger intends to establish four business units, each headed by a world
class CEO. The four independent business units are: Storage Management,
Security Management, Network Management and Knowledge Management. Each unit
will be benchmarked against comparable companies and each group's financial
results will be reported on a quarterly basis.
-more-
-2-
Shareholder Value
Of the top ten companies included in the Standard & Poor's Computer
Software and Services Index, Computer Associates ranks last on price/cash
flow and price/book ratios and next to last on price/revenue ratios as of
June 30, 2001. Ranger believes this is a market judgment on CA's lack of
ability to achieve healthy growth with its present structure, culture and
method of operation. Ranger believes that market segment focus - when
combined with its plan to achieve incremental growth and an improved
balance sheet - could significantly improve these ratios and shareholder
value.
Ranger believes that significant enhancement of shareholder value cannot and
will not be achieved without fundamentally changing the Company's existing
management and its policies. This plan demonstrates the nature of the changes
Ranger proposes and provides insight into its plan so shareholders can more
appropriately evaluate the Ranger approach.
Sam Wyly added, "We believe Ranger is uniquely able to hit the ground running on
behalf of the owners of CA and to implement our comprehensive plan for growth.
That's why we have outlined the action steps Ranger would take to rapidly
improve the management of CA during the first 100 days following the certified
election of the Ranger nominees."
CONFERENCE CALL AND AUDIOCAST INFORMATION
Ranger will present its plan to investors via teleconference on Wednesday,
August 1, 2001 at 10:30 a.m. EDT. Domestic callers may participate by dialing
(888) 489-9487. International callers may dial (212) 346-6599. Callers should
dial in at least 15 minutes before the call is scheduled to begin and ask to be
connected to the Ranger Governance conference call. A live listen-only audiocast
of the teleconference along with the slide presentation will be available on the
Ranger website at www.rangergov.com. Real Network's Real Player or Microsoft
Media Player is required to access the audiocast and can be downloaded from
www.real.com or www.microsoft.com.
-----------------
-more-
-3-
About Ranger Governance, Ltd.
Ranger Governance is a Dallas-based investment company created by entrepreneurs
Sam Wyly and Charles Wyly, and an affiliate of Ranger Capital Group, a
multi-manager investment fund also based in Dallas. On July 27, 2001, Ranger
Governance filed a definitive proxy statement with the Securities and Exchange
Commission in connection with Ranger's solicitation of proxies to elect its
director nominees at the 2001 annual stockholders meeting of Computer Associates
and has mailed copies to stockholders. Ranger is proposing a comprehensive
restructuring plan which it believes will maximize shareholder value, position
Computer Associates for future growth, and dramatically improve its relations
with customers, employees and investors. Ranger urges stockholders to read its
proxy statement because it contains important information. More information
about Ranger Governance and copies of its definitive proxy statement are
available at www.rangergov.com. Copies of Ranger's definitive proxy statement
and other Ranger soliciting materials are also available at the Securities and
Exchange Commission's website at www.sec.gov.
Contact:
Media: Investors:
Dan Katcher/Joele Frank
Joele Frank, Wilkinson Brimmer Katcher Morrow & Co., Inc.
(212) 355-4449 (212) 754-8000
The full text of the "The Ranger Governance Plan for Computer Associates"
follows:
For Immediate Release
---------------------
RANGER GOVERNANCE ANNOUNCES INVESTOR CONFERENCE CALL
TO OUTLINE ITS PLAN FOR COMPUTER ASSOCIATES
Presentation to be Webcast on the Ranger Governance Website:
www.rangergov.com
Dallas, Texas, August 1, 2001 - Ranger Governance, Ltd. will hold an investor
conference call at 10:30 a.m. EDT today to discuss "The Ranger Governance Plan
for Computer Associates," a plan that it believes will enhance value and install
accountability to Computer Associates (NYSE: CA).
Callers may participate in the investor conference call by dialing the following
numbers:
Domestic callers: (888) 489-9487
International callers: (212) 346-6599
Callers should dial in at least 15 minutes before the call is scheduled to begin
and ask to be connected to the Ranger Governance conference call.
A live listen-only audiocast of the teleconference along with the slide
presentation will be available on the Ranger website at www.rangergov.com. Real
Network's Real Player or Microsoft Media Player is required to access the
audiocast and can be downloaded from www.real.com or www.microsoft.com.
About Ranger Governance, Ltd.
Ranger Governance is a Dallas-based investment company created by entrepreneurs
Sam Wyly and Charles Wyly, and an affiliate of Ranger Capital Group, a
multi-manager investment fund also based in Dallas. On July 27, 2001, Ranger
Governance filed a definitive proxy statement with the Securities and Exchange
Commission in connection with Ranger's solicitation of proxies to elect its
director nominees at the 2001 annual stockholders meeting of Computer Associates
and has mailed copies to stockholders. Ranger is proposing a comprehensive
restructuring plan which it believes will maximize shareholder value, position
Computer Associates for future growth, and dramatically improve its relations
with customers, employees and investors. Ranger urges stockholders to read its
proxy statement because it contains important information. More information
about Ranger Governance and copies of its definitive proxy statement are
available at www.rangergov.com. Copies of Ranger's definitive proxy statement
and other Ranger soliciting materials are also available at the Securities and
Exchange Commission's website at www.sec.gov.
Contact:
Media: Investors:
Dan Katcher/Joele Frank
Joele Frank, Wilkinson Brimmer Katcher Morrow & Co., Inc.
(212) 355-4449 (212) 754-8000
# # #
THE RANGER GOVERNANCE PLAN
FOR COMPUTER ASSOCIATES
Prepared by:
Ranger Governance, Ltd.
August 2001
THE RANGER PLAN FOR COMPUTER ASSOCIATES
TABLE OF CONTENTS
I. Executive Overview ......................................................... 2
II. Governance ................................................................. 2
III. Organization ............................................................... 3
a. Management ............................................................. 3
b. Special Services ....................................................... 4
c. Product Focus .......................................................... 4
d. Sales .................................................................. 5
e. Customer Support ....................................................... 6
f. Professional Services .................................................. 6
g. Finance and Administration ............................................. 7
h. Employee Relations ..................................................... 7
IV. Enhanced Value for Shareholders ............................................ 8
a. Investor Relations ..................................................... 8
b. Balance Sheet .......................................................... 8
c. Sum of the Parts ....................................................... 9
V. Conclusion ................................................................. 9
APPENDICES:
Appendix A: Corporate Governance Charter ................................. 10
Appendix B: Plan for the First 100 Days .................................. 12
THE RANGER PLAN FOR COMPUTER ASSOCIATES
I. Executive Overview
The Ranger plan for Computer Associates has three major themes:
. Governance: Independent and Informed - Ranger is committed to providing
Computer Associates with a strong, independent Board of Directors and
exemplary corporate governance practices. Ranger's candidates have, in
combination, deep information industry knowledge, governance
experience, and financial expertise.
. Management: Innovative vs. Centralized - Ranger intends to establish
four business units, each headed by a world class CEO. The four
independent business units are: Storage Management, Security
Management, Network Management and Knowledge Management. Each unit will
be benchmarked against the appropriate comparable companies.
. Shareholder Value: Performance vs. pro forma - Of the top ten companies
included in the Standard and Poor's Computer Software and Services
Index, Computer Associates ranks last on price/cash flow and price/book
ratios and next to last on price/revenue ratios as of June 30, 2001.
Ranger believes that market segment focus when combined with its plan
to achieve incremental growth and an improved balance sheet could
significantly improve these ratios and shareholder value.
Ranger believes that significant enhancement of shareholder value cannot and
will not be achieved without fundamentally changing Computer Associates'
existing management and its policies. This plan demonstrates the nature of
the changes Ranger proposes and provides insight into Ranger's plan so
shareholders can more appropriately evaluate Ranger's approach for
themselves.
II. Governance: Independent and Informed
--
Ranger Governance is committed to basic principles of good corporate
governance, which have been reviewed and are supported by the Ranger
nominees (see Appendix A: The Ranger Corporate Governance Charter).
Specifically, Ranger believes that in order to best serve the Company and
its shareholders in the discharge of its fiduciary duty, the Board of
Directors must be composed of highly competent individuals of diverse
capabilities and qualifications who are committed to the active oversight of
management. The directors must act as diligent agents of the shareholders
and must be dedicated to the optimization of shareholder value.
2
If its nominees are elected, the Ranger Board intends to undertake a review
of Computer Associates' corporate affairs and consider governance issues of
a more specific nature. If its nominees are elected, the Ranger Board will
eliminate Computer Associates' poison pill and repricing of options.
Ranger believes that governance of Computer Associates under the leadership
of its Directors and under these principles will embody the best corporate
practices for the Company going forward.
III. Organization
a. Management: Innovative vs. Centralized
-------------------------------------------
Ranger believes the best way to drive profitability and growth with
Computer Associates' diverse group of 1200 products is to focus sales,
marketing, development and service resources around focused business units
for each major segment of Computer Associates' broad range of product
offerings. To that end, Ranger advocates establishing four business units,
each headed by a world-class Chief Executive Officer with the authority and
resources necessary to achieve success. Each of these business units will
be directly responsible and accountable, through that CEO, to the Computer
Associates Board of Directors. Ranger believes that this decentralized
management structure will be better able to cope with the demands for quick
action, nimble decision-making and creative development than Computer
Associates' existing structure.
The four business units - Storage Management, Security Management, Network
Management and Knowledge Management - reflect logical groupings of product
capability and customer demands. This proposed realignment under the
Computer Associates umbrella is intended to preserve those synergies
between the business units that contribute value to the Company. In fact,
Computer Associates' recent announcement to brand four product groups is a
tentative, but insufficient, step in the very direction advocated by
Ranger.
Ranger expects that full implementation of the Ranger strategy for four
separately organized profit centers will result in renewed growth and
profitability at Computer Associates. Ranger envisions that each of these
business units will produce separate income statements, balance sheet and
cash flow information, and that summaries of such information will be made
available to the investing public following the conclusion of each quarter.
Ranger envisions that the teams managing each of these four business units
will be composed primarily of existing Computer Associates employees who
are very talented and well qualified for these tasks but who simply have
yet to be given the authority and responsibility to build these businesses.
In addition, some managers are expected to be hired from outside of
Computer Associates to accelerate change. Ranger believes, if its nominees
are elected, it can have a world-class management team in place within 100
3
days of a certified favorable vote by the shareholders of Computer
Associates.
Appendix B outlines the steps Ranger would take immediately following the
certified election of the Ranger nominees.
b. Special Services: Company-Wide Functions
---------------------------------------------
Ranger intends that the Knowledge Management business unit will serve dual
functions. In addition to focusing on existing database, application
development, information retrieval and other products, it is intended to
house those Company-wide operations that will continue to be centralized.
These common corporate functions will be shared across all business units
to maximize efficiency. Examples of these shared resources include
corporate finance, external reporting, legal and an elite national account
sales organization. Initially it is also expected to host the international
sales and support organization until those functions can be transferred to
the appropriate business units. We envision this will require twelve to
eighteen months.
c. Product Focus: Best of Breed vs. Ubiquity
----------------------------------------------
Ranger expects that autonomy will allow renewed focus on marketing,
development and support resources for each of the units. We believe that
the conceptualization and initial architecture of innovative software
products happens best with small, flexible teams that are structured to be
rapidly responsive to changing customer needs. Ranger also believes that
the construction of innovative new products will also be more effectively
handled through programming resources dedicated to specific product areas -
and that this has been proven by countless entrepreneurs and internal
"skunk works" teams housed within many large, sophisticated companies such
as Hewlett-Packard, General Electric and Texas Instruments.
Our plan contemplates that development organizations that allow and
encourage advantageous product interfaces to exist among the breadth of the
Computer Associates offerings will be used. In addition, we expect to use
open programming standards such as XML and J2EE and open our own
proprietary systems through interfaces where appropriate. It should also
continue to promote the concept of Unicenter at a higher level of
abstraction - enabling components to be utilized within an overarching
control structure - in all business units. For example, storage management
products can interface with Unicenter, thus extending the Unicenter focus
on enterprise management. This inter-operation will allow, but not require,
the sales organization to cross sell products as well as offer more new
products to new clients.
Ranger intends to implement a program of internal royalties payable to the
development team members, rewarding their commitment and incentivising the
development of world-class software. We believe that such a program would
allow the marketplace to reward superior development activity, will involve
the developer in the sales cycle and will improve employee loyalty and
longevity.
Finally, Ranger believes there are numerous niche market acquisitions of
specific products and key technologies that could be rapidly and
effectively executed with smaller
4
units focusing on product specialties, particularly given the lack of a
viable exit strategy for many venture-backed software companies in the
current market. Ranger expects accelerated revenue growth and product
development through strategic acquisitions to be a significant benefit of
its business unit focus. We see a significant opportunity for growth made
available with the recent stock market crash, an opportunity which cannot
be accessed by Computer Associates with its present structure and present
culture.
d. Sales: Customer Focused vs. Contract Focused
-------------------------------------------------
As in the case of product development, Ranger believes that focused teams
of sales people and sales engineers dedicated to specific products can more
effectively assess customer needs and respond to those needs through
delivery of software. Simply put: we think that Ranger's team-based
approach will enable the Company to better solve a customer's problems and
do so at an accelerated pace.
Within this team structure, the sales organization will be able to pursue
new product sales to both existing and new customers. Ranger expects
significant sales acceleration due to this approach. One of Kumar's
objections to the Ranger plan is that separate business units require
customers to deal with more than one point of contact. Ranger believes that
buyers of software want to deal with sales people specifically trained to
help solve their product needs and that anecdotal evidence based on years
of experience in the software business make that clear.
To allow customers who wish to have a single point of contact for
contracting purposes, Ranger intends to create an elite national account
organization with the ability to tap into the expertise of each of the four
business units. This special group of sales people will work with the
customer to efficiently navigate through the buying process while the
business units will focus on the customer's technology requirements. These
sales people will be specially trained and selected for their ability to
deal at the CEO, CFO, CIO and other senior executive levels, solving what
Ranger believes is a significant issue for customers today. As discussed
above, we expect this organization to be included in the Knowledge
Management Group business unit. To repeat, we believe strongly that this
will facilitate cross selling, where cross selling is appropriate.
Ranger believes that the product focus in the international sales channel
is as important as it is in the USA. Accordingly, Ranger supports
reorganizing over time the existing international sales organization to
become a part of the four independent business units. To assure that
appropriate development resources are applied to international needs,
Ranger envisions that the international organizations will pay royalties to
the development organizations as discussed above. The international sales
and support organization will initially be managed by the Knowledge
Management business unit. This will leave the existing structure in place
until the business units can effectively absorb their international
operations.
5
e. Customer Support
---------------------
Ranger believes that autonomous business units provide an excellent
opportunity to improve customer support by moving the Company closer to its
customers and their specific, and rapidly evolving, needs. Customers who
require assistance with product installation, implementation, education and
problem resolution must be able to interact with experienced
representatives who understand both the customers' business problems as
well as the correct use of products to address those problems. Ranger
believes that in-depth product knowledge is critical to assure that
customers have excellent experience with customer support. Ranger expects
that that Computer Associates would compensate its support staff based on a
formula that includes customer satisfaction - a subjective measure - and
customer retention - an objective measure.
Automation of key shared business processes is particularly important to
the customer support function. A customer support system that is common to
the operating business units will allow customer support staff to provide
seamless interaction and will efficiently capture and maintain critical
customer information. Ranger anticipates that such a system will be built
utilizing existing Computer Associates technology and be accessible by the
customer work groups -- thus enhancing efficiencies.
Customer support must work closely with the development organizations in
order to be up-to-date with respect to the products being delivered to the
field. In critical situations the support staff must have access to
development personnel in order to react properly. The establishment of
distinct business units will, we believe, allow the Company's support team
to be more responsive and effective by aligning all business unit
functions.
f. Professional Services
--------------------------
For customers to realize the full value of acquired software, Ranger
believes that successful implementation, not simply installation, is
necessary in all the appropriate areas of an enterprise. This effort
consists of planning, installation, application and process integration,
product training and follow up. The general approach is to do this in a
phased manner with required resources selected from outside service
providers, from the supplying vendor or from within the enterprise. This
task is often one that is carried out, in the case of Computer Associates
products, by business partners.
Ranger believes that Computer Associates business partners are valuable to
this part of the operation and will initiate enhanced efforts to promote
programs that offer these services to Computer Associates customers.
Additionally, we believe it is appropriate to serve the customers with
Computer Associates resources that carry expertise in the Computer
Associates products, including all of the implementation steps outlined
above.
Ranger expects to promote the development of appropriate professional
services within each business unit. These services will be limited to only
those that relate directly to Computer Associates products, not those
focused on providing strategic planning or other general business
consulting. We expect that this will avoid channel conflict with the
Company's systems integration partners, thus encouraging these partners to
recommend and refer Computer Associates' products to their customers.
6
g. Finance and Administration
-------------------------------
Ranger believes that each administrative department must be significantly
involved in pursuit of business unit goals. Ranger further believes that
its plan for Computer Associates will enhance identification of
administrative personnel with their respective operating units. Ranger's
plan contemplates that only high quality professionals, dedicated to
support the business, will be employed, and that other departments will
rate the performance of the administrative organization, at least once per
year. Close coordination will be maintained among the finance and
administration departments of each business unit.
Ranger believes that smaller is better in the case of the administrative
organizations in each business unit. This approach should allow for tighter
supervision of administrative functions by the related operating executives
and minimization of bureaucratic delays. Computer Associates' management
has charged that Ranger's plan would increase overhead costs. Ranger
expects no immediate increase and that finance and administration expenses
will decline as a percentage of sales, over time, as revenue growth
accelerates.
Finally, Ranger recognizes that certain common administration and finance
functions - such as benefits administration, facilities management,
external reporting, tax compliance, and banking relationships - are best
accomplished on a centralized basis. Ranger intends that these functions
would be most efficiently handled by the special services organization of
the Knowledge Management Group.
h. Employee Relations: Nurtured vs. Neglected
-----------------------------------------------
Ranger believes that the key to any good Company, and especially a Company
competing with leading edge technology, is the establishment of a Company
environment which states clear objectives for its employees, provides
constructive feed-back with respect to both the Company's and the
employees' attainment of those objectives, and encourages employee input
across all levels.
Ranger believes that its proposal to reorganize the Company into separate
business units provides the starting point for enhanced team building among
employees. The construction of the annual strategic plans will be a "bottom
up" process coupled with a "top down " review that will involve all levels
of employees. The annual plan for each of these units will be reviewed
appropriately with all employees prior to its adoption. We believe that
each employee will understand the role he or she plays in attaining plan
objectives.
Ranger expects that an "open door" management policy will serve to further
ensure that fair treatment of employees and that employee suggestions are
given due consideration. We believe that empowering employees will enable
Computer Associates to move all aspects of the business closer to the
customer and promote rapid growth of the Company. We intend that
performance versus plan will be reviewed with all employees no less
frequently than once each quarter.
7
We expect that employees will be rewarded in at least four ways. First,
they will see clearly where their efforts impact the Company. Second, they
will participate in active discussions with all levels of management to
assure their ideas are heard. Third, they will be compensated with a profit
sharing plan directly related to performance of their business unit versus
plan. Finally, employees will be compensated through stock options and a
stock purchase plan to further align their interests with other
shareholders.
In addition, Ranger intends for Computer Associates to offer consistent
employee benefits across the four business units and intends for Computer
Associates to maintain existing benefit programs except where these
programs can be improved.
IV. Enhanced Value For Shareholders
--
a. Investor Relations: Performance vs. pro forma
--------------------------------------------------
Ranger believes candid and open communication consistent with appropriate
regulations is the cornerstone of good investor relations.
Within 100 days of certification of its proposed slate of directors, Ranger
expects that Computer Associates will establish clear metrics for each of
the four business units. These metrics - including revenue, operating
profit and customer statistics for each unit - will be made available to
the Company's investors and included in segment information in each of the
Company's quarterly financial reports.
Additionally, Ranger intends that senior managers will be available to
answer investors' concerns to the maximum extent permitted under the
applicable securities laws. The Board's Audit Committee is intended to have
independent resources available, as appropriate, to help it understand
investor concerns without management filters. The Audit Committee will
ensure that the full Board has a candid assessment of our investors' view
of the Company and that significant issues are addressed quickly, openly
and clearly.
b. Balance Sheet: Stable vs. Leveraged
----------------------------------------
Ranger believes that a strong balance sheet is necessary to enhance
investor confidence and to provide the foundation for the growth of
Computer Associates. With a working capital ratio of only .85, and debt as
a percentage of equity of more than 76 percent based upon Company
information provided as of June 30, 2001, Computer Associates is one of the
more highly leveraged of the major software companies. Under new
management, Ranger expects that Computer Associates will aggressively
pursue debt reduction and improved balance sheet strength while continuing
to enhance shareholder value through the following steps:
1. Establish specific cash flow and day sales in receivables
objectives for each of the four major business units. Computer
Associates' current practice of recording
8
long term receivables outside of an annual cycle will be curtailed
significantly - if not stopped completely. Ranger believes that
revenue growth in conjunction with improved days sales in
receivables can provide for significant near term debt reduction.
2. Execute its year old strategy of realizing value from selected
business units. Computer Associates has established strategic
business units for several of its application software businesses
as well as a separate business unit dedicated to Applications
Services Providers and hosting providers. To the extent these units
consume cash (a fact Ranger cannot verify as existing management
does not report results for these business units separately),
Computer Associates should end this practice as soon as possible.
3. Consider whether, in three years or less, one or more of the newly
established business units could be partly sold to the public with
residual spin off to Computer Associates shareholders. This might
be undertaken if it would generate cash for debt reduction or
acquisition, and more importantly, let Computer Associates owners
directly own and enjoy higher valuations from the fastest growing
businesses. Ranger does not intend to establish tracking stocks for
these business units.
c. Sum of the Parts
---------------------
Ranger believes that the investment community, once it understands the
individual strengths and significant growth potential of each of these
business units, may seek to value the sum of each of the pieces of Computer
Associates when valuing the whole Company. To the extent each segment
performs well versus its peers, then Computer Associates shareholders may
expect their Company to be valued more highly.
V. Conclusion
The Ranger Plan is all about creating value for Computer Associates owners,
as well as treating employees and customers with dignity and respect.
Ranger believes that its program of corporate governance by an independent
Board of Directors coupled with its plan to establish business units
focused around significant systems software markets can substantially
increase shareholder value.
9
APPENDIX A
----------
RANGER GOVERNANCE, LTD.
-----------------------
CORPORATE GOVERNANCE CHARTER
Commitment
----------
Ranger is committed to providing Computer Associates with a strong, qualified,
independent Board of Directors and exemplary corporate governance practices.
Ranger's candidates have, in combination, deep information industry knowledge,
governance experience and management expertise. Ranger firmly believes that the
new Computer Associates Board will:
. Be accountable to shareholders and dedicated to shareholder value
creation;
. Support whatever actions are required to grow the Company, improve
financial performance and build trust and credibility with investors,
customers, and employees, and improve performance;
. Oversee and support decentralizing the Computer Associates
organization and consolidating and streamlining operations, as
required; and
. Be dedicated to creating an entrepreneurial culture throughout the
Company so that Computer Associates can attract and retain the top
industry talent necessary to achieve strong growth.
Statement of Principles
-----------------------
The members of the Computer Associates Board will be responsible for its
activities in directing the management of the Company. Specific future actions
will depend on the exercise by the members of their judgment in light of
prevailing circumstances and their fiduciary responsibilities to owners. Each
Ranger candidate has pledged to observe the highest standards in discharging his
or her fiduciary responsibilities for the benefit of all Computer Associates
shareholders. Ranger is committed to support the following corporate governance
principles, however, and believes that each of its candidates shares its
commitment to the values on which they are based.
. Ranger has nominated ten candidates, the current size of the Computer
Associates Board. Subject to temporary vacancies and to review based
on future operations, the size of the Computer Associates Board will
be maintained at 10 to 12 directors, enough to ensure substantial
expertise while encouraging full engagement by each director.
. Directors will be highly qualified, with shared competence and diverse
capabilities, and will act as the agents of the shareholders in
overseeing management.
10
. Initially, the Computer Associates Board will have four committees:
- Audit
- Human Resources and Compensation
- Product Development and Acquisition
- Governance and Nominating
. There will be no executive committee. The committees will be comprised
solely of independent directors who have no business ties to Computer
Associates other than through their services as board members. The
Computer Associates Board will review the role and effectiveness of
its committees annually and make any changes necessary. Each committee
will have independent resources as appropriate to carry out its
duties.
. Director compensation will be equity-based, with no fringe benefits.
Equity interests will be subject to a vesting schedule to insure
continued dedication to the Company's affairs.
. There will be guidelines for stock ownership by directors and a
timetable by which targeted levels of ownership are to be
accomplished.
. The Computer Associates Board will use equity-based compensation
extensively to align Computer Associates managers' and employees'
interests with those of shareholders; executive compensation will be
tied closely to Computer Associates' financial performance and
shareholder value.
. The Computer Associates Board will ensure that shareholders' ownership
interests are not excessively diluted as a result of the use of
equity-based compensation. No Board, CEO, or top manager options will
be repriced. Any repricing of a Board list of employee options will be
in the form of a lesser number of shares at a lower price.
. The Computer Associates Board will cancel the Company's poison pill.
. The Computer Associates Board will be actively engaged in the
governance of the Company through the following practices:
- Development and ownership of the Board's meeting agendas;
- Participation in determining Computer Associates' strategy,
structure, operating style, and corporate culture;
- Appointment, evaluation, and, when necessary, removal of top
management; and
- Careful attention to the quality of financial reporting,
accounting practices, and internal controls.
. The Governance Committee will establish policies and practices for the
Board, covering such matters as meeting frequency, executive sessions,
Board evaluation and director effectiveness, mandatory retirement age, and
the director nomination and removal process.
11
APPENDIX B
RANGER GOVERNANCE, LTD.
-----------------------
PLAN FOR THE FIRST 100 DAYS
The Ranger plan for accomplishing the realignment of Computer Associates
will be the focus of the first 100 days following the certified election of
the Ranger Board. The basic elements of these efforts include:
Introductory Announcements
Ranger believes it is vital that the Company's important stakeholders be
properly introduced to changes. Conversations with employees, customers,
channel partners and other stakeholders will take place through a variety
of communication vehicles. A particular focus of these efforts will be on
current Computer Associates employees - especially Computer Associates
managers and sales and technical professionals.
Communications
First, an initial series of meetings will be held with employees both in
groups and individually in all major offices throughout the world. This
will take place as a part of the "Data Gathering" phase. These sessions
will allow employees to understand the planning process, provide
participation in planning teams and allow direct interaction with a broad
group of employees. Second, as a part of the "Plan Launch" phase, another
round of sessions in offices throughout the Company will take place. The
purpose is to maintain closeness, to monitor initial implementation actions
and to obtain feedback.
Data Gathering
As part of the data gathering effort, four parallel sessions will be guided
by managers with the assistance of outside resources to review product
sales statistics, product financial performance, market analysis and
existing organization structure. Periodic sessions will be held to
consolidate and review these findings.
Strategic Planning
Strategic planning will begin immediately following data gathering. Initial
planning sessions will establish overall Company direction and approach to
be used by each of the four business units. Subsequently, parallel sessions
will be held by each unit to map out its particular product, organization,
sales strategies and financial and other objectives. This process will take
place over six weeks. Additionally, the international strategy and
administrative processes will be developed during this time period.
Special sessions will be conducted to both sustain ongoing sales activities
and to concentrate on the realignment of the selling process to one of
specialization by unit. During this time the structure and operating rules
for the account executive program will be determined with involvement by
sales management.
12
Organization
Ranger believes a critical element of the development of the organization
is the selection of the leadership of the business units. As early in the
process as is practical and possible top management for each business unit
will be identified and the CEOs will begin directing the strategic planning
efforts.
Plan Launch/Initial Implementation
During the last week of the initial 100-day period, focus will be given to
the activities surrounding the launch of the new organization. Kick off
meetings will be organized for each element of the Company including
International. These meetings will serve to provide for employee
orientation and training, launch the out-reach campaign to the customer
base and answer employee questions.
IMPORTANT INFORMATION The Ranger Plan is a comprehensive plan which we believe
will realize the full potential of Computer Associates' winning products, people
and customers, and achieve substantial new growth and success. No assurance,
however, can be given that electing the Ranger nominees will enhance stockholder
value. Ranger's nominees, if elected, are committed to acting in the best
interest of Computer Associates' stockholders and, subject to their fiduciary
duties as directors of Computer Associates, will pursue the proposed plan
diligently and promptly. On July 27, 2001, Ranger Governance, Ltd. filed a
definitive proxy statement with the Securities and Exchange Commission in
connection with Ranger's solicitation of proxies to elect its director nominees
at the 2001 annual stockholders meeting of Computer Associates International,
Inc. Ranger's proxy statement was mailed to Computer Associates stockholders on
July 30, 2001. Ranger urges stockholders to read its proxy statement because it
contains important information. You may obtain a free copy of Ranger's
definitive proxy statement, as well as other soliciting materials that have been
filed by Ranger, at the Securities and Exchange Commission's website at
www.sec.gov. The definitive proxy statement and other documents filed by Ranger
may also be obtained for free by writing to Ranger at 300 Crescent Court, Suite
1000, Dallas, Texas 75201, by contacting Morrow & Co., Inc. at 800-634-4458 or
at www.rangergov.com. Detailed information regarding the names, affiliations and
interests of individuals who may be deemed participants in Ranger's solicitation
is available in the definitive proxy statement filed by Ranger. In addition, the
Ranger Nominees' plans for Computer Associates could change after election based
on the exercise of their fiduciary duties to the stockholders of Computer
Associates in the light of their knowledge and the circumstances at the time.
# # #
13
In connection with the Solicitation, Ranger and its representatives are
distributing to certain investors the following documents, each of which has
been previously filed with the Commission via the EDGAR system:
Company: STERLING SOFTWARE INC
Form Type: 10-K/A SEC File #: 001-08465
Description: AMENDMENT NO. 1 TO FORM 10-K
SEC File Date: 1/28/00
Company: STERLING SOFTWARE INC
Form Type: 10-K405/A SEC File #: 001-08465
Description: FORM 10-K405 AMENDMENT NO. 1
SEC File Date: 1/27/99
Company: STERLING SOFTWARE INC
Form Type: 10-K405 SEC File #: 001-08465
Description: FORM 10-K
SEC File Date: 11/12/99
Company: STERLING SOFTWARE INC
Form Type: 10-K SEC File #: 001-08465
Description: FORM 10-K FOR THE PERIOD ENDED SEPTEMBER 30, 1998
SEC File Date: 11/19/98
Company: STERLING SOFTWARE INC
Form Type: 10-K SEC File #: 001-08465
Description: FORM 10-K
SEC File Date: 11/20/97
Company: STERLING SOFTWARE INC
Form Type: 10-K SEC File #: 001-08465
Description: FORM 10-K
SEC File Date: 11/26/96
IMPORTANT INFORMATION
On July 27, 2001, Ranger Governance Ltd. filed a definitive proxy
statement with the Commission in connection with Ranger's solicitation of
proxies to elect its director nominees at the 2001 annual stockholders meeting
of Computer Associates International, Inc. Ranger's proxy statement was mailed
to Computer Associates' stockholders on July 30, 2001. Ranger urges stockholders
to read its proxy statement because it contains important information. You may
obtain a free copy of Ranger's definitive proxy statement, as well as other
soliciting materials that have been filed by Ranger, at the Commission's website
at www.sec.gov. The definitive proxy statement and other documents filed by
Ranger may also be obtained for free by writing to Ranger at 300 Crescent Court,
Suite 1000, Dallas, Texas 75201, by contacting Morrow & Co., Inc. at 800-634-
4458 or at www.rangergov.com.
Detailed information regarding the names, affiliations and interests of
individuals who may be deemed participants in the Ranger's solicitation is
available in the definitive proxy statement filed by Ranger. In addition, the
Ranger Nominees' plans for Computer Associates could change after election based
on the exercise of their fiduciary duties to the stockholders of Computer
Associates in the light of their knowledge and the circumstances at the time.