Company Name: CA, Inc.
Public Availability Date: June 20, 2006Document Sections:INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
April 21, 2006 Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549 Re: CA, Inc.Omission of Shareholder Proposal Pursuant to Rule 14a-8 Ladies and Gentlemen: This letter is submitted by CA, Inc. (f/k/a Computer Associates International Inc., the "Company") pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934 (the "Exchange Act"), with respect to a proposal submitted for inclusion in the Company's proxy materials for its 2006 annual meeting of shareholders (the "Proxy Materials") by Amalgamated Bank LongView Collective Investment Fund (the "Proponent"). The proposal (the "Proposal") and the accompanying supporting statement (the "Supporting Statement") are attached to this letter as Annex A. The Company believes that the Proposal may be omitted from the Proxy Materials because it relates to the election of directors. In accordance with Rule 14a-8(j), the Company hereby gives notice of its intention to omit the Proposal and Supporting Statement from the Proxy Materials and respectfully requests that the staff of the Division of Corporation Finance (the "Staff") of the Securities and Exchange Commission (the "Commission") indicate that it will not recommend enforcement action to the Commission if the Company omits the Proposal and Supporting Statement from the Proxy Materials. This letter constitutes the Company's statement of the reasons why it believes this omission to be proper. Enclosed are five additional copies of this letter, including the annexed Proposal and Supporting Statement. The Proposal The Proposal states: RESOLVED: That pursuant to section 141(k) of the Delaware General Corporation Law, the shareholders of CA, Inc. hereby remove from the Board of Directors Alfonse M. D'Amato and Lewis S. Ranieri or whichever of them should be serving as directors at the time this resolution is adopted. Grounds for Omission The Proposal relates to the election of directors (Rule 14a-8(i)(8)) Rule 14a-8(i)(8) permits the exclusion of a shareholder proposal if it "relates to an election for membership on the company's board of directors or analogous governing body." Messrs. D'Amato and Ranieri are currently members of the Company's board of directors. They were elected directors by the Company's shareholders at the annual meeting in August 2005, for a term that is scheduled to expire at the next annual meeting, which is to be held in August 2006. In addition, the Company expects Messrs. D'Amato and Ranieri to be nominated for election to a new term at the upcoming annual meeting. Thus, the Proposal seeks to prevent Messrs. D'Amato and Ranieri from completing their current term as directors, and/or from serving for a new term, and would interfere with the annual shareholder election process. The Proposal, in short, relates directly to an election for membership on the Company's board of directors. Recent applicable authority The Staff has repeatedly found proposals of this kind to be excludable pursuant to Rule 14a-8(i)(8). See, e.g., Fresh Brands, Inc. (January 7, 2004)(proposal to oust board member excludable); Lipid Sciences, Inc. (May 2, 2002)(proposal to remove board member excludable); Mesaba Holdings, Inc. (May 3, 2001)(proposal to remove all board members excludable); NetCurrents, Inc. (April 25, 2001) (proposal to remove and replace chairman and chief executive officer excludable); J.C. Penney Company, Inc. (March 19, 2001)(proposal to require resignation or removal of current board of directors excludable); Second Bancorp Incorporated (February 12, 2001)(proposal that board request director to resign excludable). As the Commission has stated in the past, Rule 14a-8 is not the proper means for conducting campaigns for the election of directors. See Release No. 12598 (July 7, 1976). Request for Staff Concurrence The Company hereby respectfully requests that the Staff confirm that it will not recommend enforcement action to the Commission if the Proposal and Supporting Statement are excluded from the Company's Proxy Materials for the reasons set forth above. In accordance with Rule 14a-8(j), the Company is contemporaneously notifying the Proponent, by copy of this letter, of its intention to omit the Proposal from its Proxy Materials. The Company anticipates that it will mail its definitive Proxy Materials to shareholders on or about July 14, 2006. * * * * * If you have any questions regarding this request or need any additional information, please telephone the undersigned at 631-342-3550 or, in the undersigned's absence, Rachel Lee at 631-342-3382. Please acknowledge receipt of this letter and the enclosed materials by stamping the enclosed copy of the letter and returning it in the enclosed self-addressed stamped envelope. Very truly yours, /s/ Lawrence M. Egan, Jr.
Director of Corporate Governance
Vice President, Senior Counsel and Assistant Secretary cc: Kenneth V. Handal, Esq. Cornish F. Hitchcock (On behalf of the Amalgamated Bank LongView Collective Investment Fund) (Enclosures)
[INQUIRY LETTER]
28 March 2006 Kenneth V. Handal, Esq.
Executive Vice President, General Counsel and Corporate Secretary
CA, Inc.
One Computer Associates Plaza
Islandia, New York 11749 By overnight courier and fax: (631) 342-6800 Dear Mr. Handal: On behalf of the Amalgamated Bank LongView Collective Investment Fund (the "Fund"), a long-term institutional investor in CA, I submit the enclosed shareholder proposal for inclusion in the proxy materials that CA plans to circulate to shareholders in anticipation of the 2006 annual meeting. The proposal is being submitted under SEC Rule 14a-8 deals with the removal of directors. The Fund is an S&P 500 index fund, located at 11-15 Union Square, New York, N.Y. 10003, with assets exceeding $4 billion. Created by the Amalgamated Bank in 1992, the Fund has beneficially owned more than $2000 of CA common stock for more than one year. The Fund plans to continue ownership through the date of the 2006 annual meeting, which a representative is prepared to attend. A letter from the Bank confirming ownership will follow under separate cover. If you require any additional information, please let me know. Very truly yours, /s/ Cornish F. Hitchcock
[APPENDIX] RESOLVED: That pursuant to section 141(k) of the Delaware General Corporation Law, the shareholders of CA, Inc. hereby remove from the Board of Directors Alfonse M. D'Amato and Lewis S. Ranieri or whichever of them should be serving as directors at the time this resolution is adopted. SUPPORTING STATEMENT Over two years have passed since Computer Associates (as CA was then known) announced the need to restate financial results because of significant accounting irregularities. Since then, several top executives have been indicted and pled guilty, and the Company's former CEO is awaiting trial on criminal charges. CA was forced to enter into a Deferred Prosecution Agreement ("DPA") in order to avoid a criminal trial. CA acknowledged making false and misleading statements to the SEC and to obstructing a government investigation into accounting and financial fraud. CA paid $225 million in restitution to shareholders. Although CA has made some governance changes to satisfy the DPA, we believe that more change is needed. In particular, we deem it important to replace those directors who served during the period of misconduct, who continued on the board during the board's failure to effectively investigate accounting issues that were raised in 2001 newspaper reports and government investigations, and whose initial response was merely to demote the CEO and offer a $10 million payment to end the law enforcement inquiries. Despite the DPA, we believe that the CA board has been unable to break with the past. For example, Chairman Ranieri stated at the 2004 annual meeting that shareholders should "be patient" and that CA would not tolerate former executives retaining "ill gotten gains" that were paid as bonuses based on false numbers. However, CA has not undertaken to recover money from any executives who received unjustified compensation. Moreover, within the past year, CA reversed the position of its attorneys and refused to disclose the minutes of board meetings that had been requested by shareholders under a Delaware law providing access to such records. We believe that this failure to make a clean break may be delaying CA's financial recovery. As of March 23, 2006, CA stock has trailed the S&P 500 index for the preceding one-, two-, and five-year periods; a share of CA stock was worth 10% less than it was ten years ago, whereas the S&P 500 index has risen 100%. We believe that an effective turnaround and a restoration of investor confidence will require the service of directors who bear no responsibility for management before 2002. We thus propose removing those directors who served during that period. At present, that group includes Messrs. D'Amato and Ranieri. The law of Delaware, where CA is incorporated, expressly authorizes shareholders to remove directors. This resolution is the only cost effective way to raise this issue, since CA shareholders do not have the right to call a special meeting. We urge you to vote FOR this proposal.
[INQUIRY LETTER]
13 May 2006 Office of the Chief Counsel
Division of Corporation Finance
Securities & Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549 Re: Request for no-action relief from CA, Inc. Dear Counsel: I write on behalf of Amalgamated Bank LongView Collective Investment Fund (the "Fund") in response to the letter dated 21 April 2006 from Lawrence M. Egan, Jr. on behalf of CA, Inc. In that letter CA requests no-action relief in connection with a shareholder proposal submitted by the Fund for inclusion in CA's proxy materials in conjunction with CA's 2006 annual meeting. For the reasons set forth below, the Fund respectfully asks the Division to deny the requested no-action relief. The Fund's Proposal. The Fund's resolution would, if adopted, "hereby remove from the Board of Directors Alfonse D'Amato and Lewis S. Ranieri or whichever of them should be serving as directors at the time this resolution is adopted." The resolution is proposed pursuant to section 141(k) of the Delaware General Corporation Law ("DGCL"), which expressly permits shareholders to remove directors without cause when, as here, a company elects all directors annually.
1 Factual background and discussion. As the supporting statement explains in more detail, the Fund's proposal seeks to remove those directors who were on the board of Computer Associates International (as CA was known until recently) prior to 2002.
2 Mr. D'Amato began service in 1999 and Mr. Ranieri in 2001. It was prior to 2002 that a serious accounting scandal began to unfold, one that would ultimately result in guilty pleas by six senior executives, including the Chief Executive Officer, the Chief Financial Officer and the General Counsel, as well as CA having to enter a Deferred Prosecution Agreement ("DPA") in 2004 in order to avoid criminal prosecution. CA's accounting scandal became public on 29 April 2001, when The New York Times published a lengthy article entitled A Software Company Runs Out of Tricks. A copy is attached. The article recounted how CA had shown phenomenal growth over the years and managed with regularity to hit its projected earnings targets. The article suggested that "much of the growth" was a "mirage," according to over a dozen former employees and independent industry analysts, who charged that CA had "used accounting tricks to systematically overstate its revenues and profits for years." Specifically, the fifth paragraph of the article referred to the "35-day month" at the end of each quarter, referring to CA's attempts to boost operating results in a given quarter by recognizing revenue, for example, from a contract that had not been signed until several days after the quarter ended. This procedure is contrary to Generally Accepted Accounting Principles. It is not known what the CA board of directors did in response to these revelations. It appears that management used a law firm to look into the matter, although it is not clear how aggressively the board of directors pursued the matter. As the Fund's supporting statement points out, CA has refused to make public the minutes of board of directors meeting during that crucial period.
3 What is known, however, is that CA's accounting practices attracted the attention of the Department of Justice and the Commission, which undertook an investigation in early 2002 and convened a grand jury in June of that year. CA acknowledged the existence of this investigation in a Form 8-K filed 22 February 2002, which said that CA had contacted federal investigators "in response to media reports indicating that these governmental entities had initiated an inquiry into certain of CA's accounting practices." What is significant hereparticularly as it relates to the conduct of the CA boardis the timing of these events. The federal investigation began shortly after accounting scandals caused Enron to collapse in the biggest bankruptcy in U.S. history. Over the next few months, WorldCom and Global Crossing would collapse as well. As all this was happening, Congress was considering remedial legislation, and hearings before the Senate Banking Committee opened the same month that CA acknowledged the federal probe. That legislative process culminated in the Sarbanes-Oxley Act, signed in July 2002. All these events took place while the two directors affected by the Fund's resolution were serving on the CA board. One would expect that, even before the Enron collapse shone a spotlight on the perils of aggressive accounting, the CA board would have perceived that accounting irregularities can be a serious matter and that shareholder money can be at risk unless the board moved swiftly to get to the bottom of things. That did not happen. It was not until July 2003 that the CA board decided to act. On 2 July 2003, the CA board met with counsel, who reviewed a meeting with representatives of the Justice Department and the Commission about the information being produced in the grand jury probe.
4 According to the minutes, the government investigators recommended that CA conduct an internal investigation and waive attorney-client and work product privileges with respect to information generated during that investigation. In a not so subtle hint, CA's counsel warned that "a failure to conduct an internal investigation would likely be interpreted [by prosecutors] as non-cooperative and could therefore create difficulties." Minutes at 2. The CA board then voted to have its Audit Committee conduct an investigation using independent counsel, auditors and advisors. Id. With a criminal probe providing the impetus, it was only a matter of months before the CA Audit Committee "preliminarily" concluded that results needed to be restated, as it appeared that earnings for 1999 and 2000 had been restated by over $2.2 billion because of the accounting irregularities. Several executives, including the CFO, resigned. The CFO, the General Counsel and two other executives, were subsequently indicted and pled guilty in 2004. Unfortunately for CA shareholders, the problems did not end there. In April 2004, with the government investigation then in its third year, CA decided to demote Sanjay Kumar, the Chairman and CEO throughout this period, to the newly created position of "Chief Software Architect." CA announced as well that it was willing to pay $10 million to settle the government investigationan amount identical to what CA paid to Sam Wyly, when he agreed to drop a proxy fight for seats on the CA board. These moves prompted some measure of ridicule in the media (Mr. Kumar eventually severed all ties to CA as of 30 June 2004), but things were not over yet. On 22 September 2004 the Government filed a Deferred Prosecution Agreement with CA in the United States District Court for the Eastern District of New York. This DPA was an agreement whereby the Government would not indict CA on criminal charges if CA agreed to $225 million in restitution to CA shareholders (a far cry from the $10 million offered a few months earlier) and to undertake certain governance changes, including scrutiny by an Independent Examiner. The DPA, as well as a stipulation of facts that CA conceded would be admissible in any criminal trial, focused on various accounting irregularitiesincluding the 35-day month that had first been highlighted in The New York Times over three years earlier. The DPA did not end matters, for the CA scandal has had as many shoes to drop as a centipede. On the same day that the DPA was announced, the Commission charged Sanjay Kumar and CA's former Executive Vice President for Sales with various violations of federal securities laws. On the following day the Department of Justice indicted both men on ten counts involving securities fraud and other charges. These charges came only five months after the CA board was willing to do no more than demote Mr. Kumar to the post of Chief Software Architect. In April 2006, Mr. Kumar and Mr. Richards pled guilty to some of the criminal charges and await sentencing. It appears that the SEC civil actions against them and other CA executives continue on. The foregoing chronology is important to place the Fund's resolution in context. It is a cardinal principle of corporate crisis management that when bad news hits, management and the board should move aggressively to get all the news out in the open, so that the company can move on. Failure to do sowhich is precisely what happened herecan make things worse for all concerned. Here, at a time when accounting scandals were destroying shareholder value at other companies, were the subject of federal legislation, and were extensively covered in the news media, the CA board waited more than two years before launching its own independent investigationand that was undertaken only after counsel spelled out for the board that failure to do so could be construed as a failure to cooperate with a criminal investigation. A board's failure to move decisively can have a profoundly negative effect on shareholders. Not only is the immediate response to bad news often a drop in the stock price, but long-term recovery may not begin until there is more confidence in the stock. The sooner that recovery process can begin, the better. Progress will be needlessly detailed if management and the board dribble out bad news in stages, rather than focusing on the company's long-term growth. That is what happened at CA. Ultimately, it is CA shareholdersparticularly long-term indexed shareholders such as the Fundwho bear the burden. As the Fund's resolution points out, as of 23 March 2006 (immediately prior to the filing deadline), CA stock has trailed the S&P 500 index for the preceding one- two- and five-year periods. As of that date, CA stock was trading ten percent below where it was a decade ago (well before the tech "bubble"), while the S&P 500 index had risen 100% over the same period. It would not surprising for directors who served on the board of directors of a troubled company to step down after such a scandal and let a fresh board take the reins. That has not happened at CA, where several directors who served during the critical early phase remain on the board.
5 It should thus not be surprising if shareholders who would like to see the value of their shares recover seek the removal of directors who had a chance to deal with the problem forcefully in 2001 and 2002but who failed to do so. The issue presented here is a simple one: Will the Commission allow CA shareholders to exercise a right expressly granted by state law to remove directors, regardless of how or when those directors are elected? Or will the Commission construe its regulations to deny shareholders that right? As suggested by the prior discussion, there are sound policy reasons why shareholders should be able to express themselves on the topic. As we explain in the following section, there are compelling legal reasons for doing so as well. Legal analysis. CA is seeking to omit the Fund's proposal under SEC Rule 14a-8(i)(8), which permits the exclusion of a shareholder proposal from a company's proxy materials if the proposal "relates to an election for membership on the company's board of directors or analogous governing body." CA explains that it expects the two affected directors to be nominated for an additional one-year term at the CA annual meeting in August 2006. Accordingly, CA argues, the proposal would prevent Messrs. D'Amato and Ranieri "from completing their current term as directors, and/or from serving for a new term, and would interfere with the annual shareholder election process. The Proposal, in short, relates directly to an election for membership on the Company's board of directors." CA's argument is flawed because it misperceives some critical differences between the election of a director and the removal of a director, both under state law and under Rule 14a-8. Under the law of Delaware (where CA is incorporated), election of directors is analytically distinct from the removal of directors, and the fact that a director may be elected to a fixed term does not degrade the ability of shareholders to remove that director. Under section 141(b) of the Delaware General Corporation Law ("DGCL"), "[e]ach director shall hold office until such director's successor is elected and qualified or until such director's earlier resignation or removal." However, a director's right to remain in office is qualified by the shareholders' right to remove that director. Under DGCL §141(k)which is expressly cited in the Fund's resolutiondirectors may be removed without cause at any point during their tenure when, as here, the board of directors elects all directors annually. Thus, it seems clear that the Delaware legislature was untroubled by the fact that removal might occur close to the time that directors are elected. Indeed, CA has drafted its bylaws so that shareholders do not have the right to call a special meeting, with the result that a meeting called by the CA board is the only time that CA shareholders can vote on whether to remove a director. CA Bylaws, Art. II, sec. 2 ("Special meetings of the stockholders, for any proper purpose or purposes, may be called only by the Board of Directors"), Ex. 3.1 to Form 8-K (4 February 2005). Given that CA shareholders are expressly empowered under state law to remove directors any time, why then should the Commission interpret the (i)(8) exclusion to prevent such action? The concern cited by CAthat a vote on removing directors would somehow "interfere" with the election processignores the fact that the (i)(8) exclusion was enacted with very different concerns in mind. In the 1976 release proposing the predecessor version of the (i)(8) exclusion, the Commission suggested that "with respect to corporate elections," this exclusion "is not the proper means for conducting campaigns or effecting reforms in elections since other proxy rules ... are applicable thereto." Release No. 12598, 1976 WL 160410 (7 July 1976). The reference is apparently to regulations dealing with proxy solicitations for candidates being nominated for the board of directors in contested election situations. Apart from obligations imposed under state law, those rules require a party soliciting proxies for such candidates to print proxy materials that meet the requirements of Rule 14A by giving information about the candidates, the participants in the solicitation and related data, so that shareholders can review the competing proxy materials and make an informed choice as to who should run their company. See, e.g., Rule 14a-4(b)(2) (proxy materials must identify candidates); Rule 14a-101, Item 7 (specifying information to be disclosed "[i]f action is to be taken with respect to the election of directors"). The Division has expressed a concern about whether shareholders might be able to skirt rules of the sort just cited by nominating candidates through Rule 14a-8 or proposing procedures for the inclusion of shareholder-nominated candidates in company-prepared proxy materials. See Unocal Corp., 1990 SEC No-Act. LEXIS 183 (6 February 1990) (proxy access procedure is "a matter more appropriately addressed under Rule 14a-11 [now 14a-12]"); BellSouth Corp., 1998 SEC No-Act. LEXIS 151 (4 February 1998). More specifically, the Division has expressed concern that such provisions may lead to "contested elections" that may not be subject to the regulatory constraints required in election contests. E.g., Sears, Roebuck & Co. (28 February 2003); AOL Time Warner Inc.
(28 February 2003). Any concern about encouraging "contested elections" is simply misplaced in this context, given that under Delaware law, a vote to remove a director does only that without implicating the electoral process.
6 This is yet another way that removing directors is analytically distinct from electing them. Thus, whatever specific rules may apply to the election of directors, the pertinent provisions of Rule 14A and Schedule 14A do not address resolutions seeking to remove directors. If a shareholder wants to mount an independent solicitation to remove specified directors, he or she would not have to make the types of Schedule 14A disclosures that are required when a candidate is being nominated for election to the board. Nor do the rules governing presentation of one's voting options on the proxy card treat the removal of directors as similar in character to the election of directors. A proposal to remove a director or directors is treated as a single "matter" to be voted under Rule 14a-4(a)(3) (a proxy card must simply identify "each separate matter intended to be acted upon"). By contrast, Rule 14a-4(a)(4) requires an opportunity to vote yes, no, or abstain as to "each separate matter referred to therein as intended to be acted upon, other than elections to office" (emphasis added), as to which SEC rules require that shareholders be given a chance to vote for each nominee separately or as a bloc. Thus, the SEC's rule have never viewed solicitations aimed at removing a director as requiring the same treatment that is required for proposals to elect directors.
7 Thus, allowing proposals to remove directors on a company-prepared ballot would not interfere with other proxy solicitation rules because no other rule specifically addresses director removal. Under the circumstances, it cannot be said that a proposal to remove directors somehow "relates to" the sort of election contests that the Commission apparently had in mind in the 1976 rulemaking. Nor can it be said that a vote on whether to remove directors "interferes with" the election of directors, particularly when CA has drafted its bylaws to permit the introduction of a director removal resolution only at the annual meeting or at special meetings that CA's board may see fit to convene. Any "interference" with CA elections is of the sort that CA is willing to tolerate, having drafted its bylaws that way. In making these arguments, we are of course aware of the no-action letters that CA cites in its letter to the Division.
8 We have reviewed those letters, as well as letters that predate the ones cited, and we acknowledge that CA has correctly characterized the results reached by the Division there. We submit that those letters should not be viewed as precedential here for several reasons. First, it does not appear that the proponents submitted legal argument in any of those cases that explained how Delaware law recognizes a clear dichotomy between election to office and removal from office. Given the lack of counter-arguments on this key legal point, the most that can be said of the cited letters is that the company sustained its burden under Rule 14a(g). They do not compel the result that CA seeks here. Second, none of the letters analyzed our point that SEC rules fail to treat proposals to remove directors as subject to the heightened disclosure and other requirements that are imposed on solicitations involving elections to office. It thus cannot be said that shareholder proposals under Rule 14a-8 would interfere and possibly conflict with a separate set of regulatory requirements. Third, the fact that this Fund's proposal will be voted at an annual meeting where the candidates are standing for re-election has no bearing on the proper interpretation of Rule 14a-8. As noted above, CA has arranged its governance structure so as to limit the exercise of shareholder rights in this fashion. Moreover, the issues in question are straight-forward: A shareholder who wishes to re-elect a director being challenged can vote for the nominee and against the shareholder proposal, and the nominee will be elected. Ironically, the converse is not true, which is an additional policy reason for not construing Rule 14a-8(i)(8) as CA argues. CA operates under a plurality election system, under which any nominee whose seat is not contested may be elected with one vote, even if all other shares are voted "withhold." CA does not have a "majority election" policy or bylaw under which directors who fail to achieve a majority of the votes cast must tender their resignation. Thus, the only way that shareholders may remove a CA director, short of mounting an independent solicitation, is by exercising their rights under DGCL §141(k). Simply put, the Fund is not asking the Commission or the Division to adopt any new rules, procedures or substantive rights in this area. State law provides CA shareholders with remedies that do not implicate existing SEC regulations and that allow shareholders to decide things for themselves without government interference. All the Fund is seeking is that the Commission allow shareholders decide for themselves whether directors who had a chance to stem the losses at CA four and five years ago should remain in office at this time. Conclusion. For these reasons, the Fund respectfully asks the Division to deny the noaction relief requested by CA. Thank you for your consideration of the matters raised in this letter. Please do not hesitate to contact me directly if you have any questions or if there is further information that we can provide. Very truly yours, /s/ Cornish F. Hitchcock
cc: Lawrence M. Egan, Jr., Esq. -----FOOTNOTES-----
1 Section 141(k) states in pertinent part: Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote an an election of directors, except as follows: (1) Unless the certificate of incorporation otherwise provides, in the case of a corporation whose board is classified as provide din subsection (d) of this section, shareholders may effect such removal only for cause .... [Paragraph 2 deals with removal if there is cumulative voting.]
2 We refer here to CA and Computer Associates International interchangeably, particularly as Computer Associates International was often know as "CA" prior to its name change.
3 The chronology set out below relies on statements in CA's public disclosures, notably CA's 2005 proxy materials (at pp. 13-16) and the criminal information and stipulated facts filed as Exhibits B and C to the Deferred Prosecution Agreement. The DPA and relevant attachments are available at CA's web site at http://investor.ca.com/phoenix.zhtml?c=83100&p=irol-govdeferred.
4 Although, as noted, CA has refused publicly to disclose its board minutes during the period, these July 2003 minutes (the "Minutes") were publicly filed as an exhibit in support of a Government motion in the criminal case against former CEO Kumar and another executive. They are attached as an exhibit to this letter.
5 We note that in public statements responding to media accounts of the Fund's resolution, CA has touted the service of the two directors covered by the Fund's resolution, praising their service in bringing the government investigation to an end. Of course, what a director may have done to rescue a bad situation is irrelevant to what he could have done to prevent the situation from spiraling out of control in the first case.
6 Under DGCL §141(b), a director who is removed from office may not "hold over" until his or her successor is selected. Removal is effective immediately.
7 We acknowledge of course that if the Fund or any other proponent of a resolution to remove directors decided to solicit support for its resolution through "Dear Shareholder" letters or otherwise, the proponent would be subject to generally applicable requirements, such as the prohibition on materially false or misleading statements in Rule 14a-9.
8 Fresh Brands, Inc. (7 January 2004); Lipid Sciences, Inc., (2 March 2002); Mesaba Holdings, Inc. (5 March 2001); NetCurrents, Inc. (25 April 2001); J.C. Penney Co., Inc. (19 March 2001); Second Bancorp, Inc. (12 February 2001).
[INQUIRY LETTER]
June 1, 2006 Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549 Re: CA, Inc.Omission of Shareholder Proposal Pursuant to Rule 14a-8(j) (election of directors) Ladies and Gentlemen: This letter is submitted by CA, Inc. (f/k/a Computer Associates International Inc., the "Company") in response to the letter dated May 13, 2006 from Cornish F. Hitchcock on behalf of Amalgamated Bank LongView Collective Investment Fund (the "Fund") requesting that the staff of the Division of Corporation Finance (the "Staff") of the Securities and Exchange Commission (the "Commission") deny the no-action relief requested by the Company in its letter of April 21, 2006. In its April 21 letter, the Company asked the Staff to confirm that it will not recommend enforcement action to the Commission if the Company, pursuant to Rule 14a-8(j), omits from its proxy materials for its 2006 annual meeting of shareholders (the "Proxy Materials") a proposal (the "Proposal") by the Fund to remove Alfonse M. D'Amato and Lewis S. Ranieri from the Company's board of directors. The Company's April 21 letter and the Fund's May 13 letter are attached as Annex A. In its May 13 letter, the Fund argues that the Company should be required to include the Proposal in the Proxy Materials because inclusion is the only way for the shareholders to exercise their statutory right to remove directors pursuant to Section 141(k) of the Delaware General Corporation Law ("DGCL"). According to the Fund, the fact that the Company's by-laws do not provide shareholders the right to call a special meeting to consider removing directors means that they have no means to consider a removal proposal unless the proposal is included in the Proxy Materials. Unless the Proposal is included in the Proxy Materials, this argument goes, the shareholders will be unable to exercise the removal right granted to them under Section 141(k). We submit that this argument is not persuasive for two important reasons. First, Delaware law does not require the Company to permit shareholders to call special shareholder meetings, for removal or any other purpose. The DGCL is clear that, unless a right to call special meetings is specifically granted in the Company's charter or by-laws, shareholders have no right to call such meetings.
1 Neither the Company's charter nor its by-laws provide for such a right; on the contrary, the by-laws expressly provide that the shareholders shall have no right to call special meetings. While the Fund may wish the Company's charter and by-laws were written differently, they are not. There is nothing illegal or inappropriate about the fact that the Fund is not able to call a special meeting to remove directors. Second, the fact that the shareholders cannot call a special meeting does not prevent them from exercising their right to remove directors under the DGCL. Section 141(k) of the DGCL, as well as the Company's own by-laws, permit a shareholder to make a proposal to remove directors at the Company's annual meeting, provided the shareholder follows the procedures set forth in the by-laws for bringing proposals before an annual meeting. In addition, under SEC rules, the Fund is free to solicit shareholders to vote - or even to grant the Fund proxies to vote on their behalfin favor of any removal proposal that is properly brought before an annual meeting.
2 The fact that the Fund is not permitted to include the Proposal in the Company's Proxy Materials is entirely consistent with Delaware law and does not prevent the shareholders from exercising their right to remove directors, nor does it prevent the Fund from soliciting shareholders with regard to any particular removal proposal that is properly brought before an annual meeting. There is nothing illegal, inappropriate or unusual about this situation. While the Fund may believe that it should not have to make the effort or bear the expense of soliciting shareholders in connection with the Proposal, this is not the current state of Delaware law or the Commission's proxy rules. The Company is not required to include the Proposal in the Proxy Materials so that the Fund's solicitation effort can be conducted at the expense of the Company and ultimately its shareholders. The Staff has consistently declined to require inclusion of shareholder proposals to remove directors from a company's proxy materials pursuant to Rule 14a-8(j) under the Exchange Act. The Fund has acknowledged this longstanding position and, we believe, has made no persuasive argument that merits the reversal of the Staff's position. We believe that the Staff adopted this position after due consideration of the merits of the issue and the consequences of its decision. There are important reasons why companies should not be required to include shareholder proposals regarding the election or removal of directors in their proxy statements. These proposals circumvent and interfere with the normal corporate processes for the nomination and election of directors. The Staff has recognized this point for many years. Requiring the Company to include the Proposal in the Proxy Materials would require the Company to facilitate efforts that are contrary to the governance procedures that the Company and its shareholders have lawfully established. If the Fund wants to propose a course of action outside of these processes, it is free to try to persuade the shareholders to do so- but at its own expense. Additionally, it should be noted that Messrs. Ranieri and D'Amato both received over ninety percent of the votes of the shareholders cast at the Company's previous annual meeting. Both Messrs. Ranieri and D'Amato have rendered highly valuable service to the Company in their capacity as directors, particularly in helping the Company during the accounting-related investigations and the subsequent transition to a new management team in recent years. Request for Staff Concurrence We see no reason why the Staff should reverse its long-standing position that shareholder proposals regarding the removal of directors may be excluded from proxy statements. The Company hereby respectfully requests that the Staff confirm that it will not recommend enforcement action to the Commission if the Proposal and Supporting Statement are excluded from the Company's Proxy Materials for the reasons stated in its letter of April 21, 2006. * * * * * If you have any questions regarding this request or need any additional information, please telephone the undersigned at 631-342-3550 or, in the undersigned's absence, Rachel C. Lee at 631-342-3382. Please acknowledge receipt of this letter and the enclosed materials by stamping the enclosed copy of the letter and returning it in the enclosed self-addressed stamped envelope. Very truly yours, /s/ Lawrence M. Egan, Jr.
Director of Corporate Governance
Vice President, Senior Counsel and Assistant Secretary (Enclosures) cc: Amalgamated Bank LongView Collective Investment Fund c/o Cornish F. Hitchcock Kenneth V. Handal, Esq.
David B. Harms, Esq. -----FOOTNOTES-----
1 DEL. CODE ANN. tit. 8, §211(d)(2006).
2 See, e.g.,Rule 14a-4(c) under the Exchange Act, which provides that a proxy may confer discretionary authority to vote on "any proposal omitted from the proxy statement and form of proxy pursuant to §240.14a-8".
[STAFF REPLY LETTER]
June 20, 2006 Response of the Office of Chief Counsel Division of Corporation Finance Re: CA, Inc. Incoming letter dated April 21, 2006 The proposal seeks to remove members of the board. There appears to be some basis for your view that CA may exclude the proposal under rule 14a-8(i)(8) as relating to an election for membership on its board of directors. Accordingly, we will not recommend enforcement action to the Commission if CA omits the proposal from its proxy materials in reliance on rule 14a-8(i)(8). Sincerely, /s/ Ted Yu
Special Counsel | 
