Computer Associates 2007 Annual Report Download - page 123

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Company’s Current Report on Form 8-K filed with the SEC on April 13, 2007 and in the bullets below, the Special Litigation
Committee concluded as follows:
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of
the claims against Charles Wang (CA’s former Chairman and CEO) including filing a motion to set aside releases granted
to Mr. Wang in 2000 and 2003. The Special Litigation Committee has determined and directed that these claims be
pursued vigorously by CA using counsel retained by the Company. Certain other claims against Mr. Wang should be
dismissed as they are duplicative of the ones to be pursued and are for various legal reasons infirm. The Special Litigation
Committee will seek dismissal of these claims.
•The Special Litigation Committee has reached a binding term sheet settlement (subject to court approval) with Sanjay
Kumar (CA’s former Chairman and CEO). Pursuant to this settlement, the Company will receive a $15.25 million judgment
against Mr. Kumar secured in part by real property and executable against his future earnings. This amount is in addition to
the $52 million that Mr. Kumar will repay to CA’s shareholders as part of his criminal restitution proceedings. Based on his
sworn financial disclosures, the Special Litigation Committee believes that, following his agreement with the government,
Mr. Kumar had no material assets remaining. As a result, the Special Litigation Committee will seek dismissal of all claims
against him.
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of
the claims against former officer Peter Schwartz (CA’s former CFO). The Special Litigation Committee has determined and
directed that these claims be pursued vigorously by CA using counsel retained by the Company. Certain other claims
against Mr. Schwartz should be dismissed as they are duplicative of the ones to be pursued and are for various legal
reasons infirm. The Special Litigation Committee will seek dismissal of these claims.
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of
the claims against the former CA executives who have pled guilty to various charges of securities fraud and/or obstruction
of justice — including David Kaplan (CA’s former head of Financial Reporting), Stephen Richards (CA’s former head of
Worldwide Sales), David Rivard (CA’s former head of Sales Accounting), Lloyd Silverstein (CA’s former head of the Global
Sales Organization), Steven Woghin (CA’s former General Counsel, and Ira Zar (CA’s former CFO). The Special Litigation
Committee has determined and directed that these claims be pursued by CA using counsel retained by the Company,
unless the Special Litigation Committee is able to successfully conclude its ongoing settlement negotiations with these
individuals shortly after the conclusion of their criminal restitution proceedings.
•The Special Litigation Committee has reached a settlement agreement (subject to court approval) with Russell Artzt
(currently Executive Vice President of Products and a former CA Board member). The Special Litigation Committee noted
that during its investigation, it did not uncover evidence that Mr. Artzt directed or participated in the “35 Day-Month”
practice or that he was involved in the preparation or dissemination of the financial statements that led to the accelerated
vesting of equity granted under the Company’s Key Employee Stock Ownership Plan (“KESOP”) as alleged in the Derivative
Actions. Pursuant to this settlement, the Company will receive $9 million (the cash equivalent of approximately 354,890
KESOP shares) and, as a result, the Special Litigation Committee will seek dismissal of all claims against him.
•The Special Litigation Committee has reached a settlement agreement (subject to court approval) with Charles McWade
(CA’s former head of Financial Reporting and business development). Pursuant to this settlement, the Company will
receive $1 million and, as a result, the Special Litigation Committee will seek dismissal of all claims against him.
•The Special Litigation Committee believes that the claims (the “Director Claims”) against current and former CA directors
Kenneth Cron, Alfonse D’Amato, Willem de Vogel, Gary Fernandes, Richard Grasso, Shirley Strum Kenny, Robert La Blanc,
Jay Lorsch, Roel Pieper, Lewis Ranieri, Walter Schuetze, and Alex Vieux should be dismissed. The Special Litigation
Committee has concluded that these directors did not breach their fiduciary duties and the claims against them lack merit.
•The Special Litigation Committee has concluded that while the Company has potentially valid claims (the “McElroy
Claims”) against former officer Michael McElroy (CA’s former senior vice president of the Legal department), it would be in
the best interests of the Company to seek dismissal of the claims against him.
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