Texas billionaire Sam Wyly's abandoned bid to shake up the board of Computer Associates ( CA) is still causing aftershocks.

In a report released last week and updated Monday, advisory firm Institutional Shareholder Services recommended that investors withhold votes for the seven incumbent board members up for election at the company's annual meeting Aug. 28.

The reason, ISS says in its report, is because the incumbents unanimously supported what the firm characterized as a greenmail payment to Wyly's Ranger Governance.

In its report, ISS, whose clients tend to be large institutional shareholders, recommended voting for the four nonincumbent candidates also on the ballot.

The firm was referring to a settlement in which Computer Associates, an Islandia, N.Y., software company, paid Wyly $10 million in exchange for his agreement to abandon his second proxy contest against CA, to not launch another proxy battle for five years and to extend a noncompete clause for five years.

"The standstill provision in the settlement agreement renders the payment as a form of greenmail," ISS said in its report, referring to the 1980s practice in which companies got rid of corporate raiders by buying their shares at a premium. "In this case, the company paid a 'hostile' shareholder to remove himself from attacking the company and the board for five years with no benefit to the other shareholders."

The report added that the payment denies shareholders the right to make their own decision about Wyly's platform and also suggested that it sets the precedent for the company to pay off other noisy shareholders in the future.

However, ISS ranked Computer Associates' corporate governance practices in the top 5% of companies in the S&P 500 and software and services group, based on practices such as electing board members annually and placing only independent outside directors on key board committees.

Withholding a vote for the incumbents is unlikely to change the outcome of the election because no other candidates are running against them, acknowledged Ram Kumar, director of research at ISS. But "it's really one of the most effective ways to send a message to management," Kumar said. " It's kind of a black eye if a director gets a significant "no" vote."

Computer Associates said in a statement that it fundamentally disagrees with ISS.

"Facing another disruptive and costly proxy contest, the board believed strongly that it was in the best interests of CA's shareholders and customers to reach an agreement with Ranger Governance and put this matter behind us," Jay Lorsch, one of CA's independent shareholders and a Harvard Business School professor, said in the statement.

In a meeting with ISS, Computer Associates CEO Sanjay Kumar said the company would have spent $10 million to $15 million to defend itself against Wyly's proxy battle, and said Wyly had hurt the company's business by approaching customers in addition to shareholders.

The seven incumbent shareholders targeted by ISS are Lorsch; Sanjay Kumar; Russell Artzt, CA executive vice president of alliances and eTrust solutions; Charles Wang, board chairman; Walter Schuetze, former chief accountant to the Securities and Exchange Commission and the SEC's enforcement division; Alfonse D'Amato, a former U.S. senator from New York; and Lewis Ranieri, former vice chairman of Salomon Brothers.

Shares of Computer Associates -- which is facing an investigation of its accounting by the SEC and U.S. attorney's office -- have lost two-thirds of their value since the beginning of the year. Shares rose 56 cents, or 5.2%, to close Wednesday at $11.33.