SAM WYLY LEADS THE WAY down the art-filled halls of his office in the posh Crescent Center, near downtown Dallas, and stops in front of a painting titled Fires of Santa Anna. “That’s Uncle Christopher,” Wyly says, pointing at a handsome young man gazing into the blue twilight at the distant campfires of the Mexican general’s troops. Christopher Parker, Wyly’s ancestor, was just 22 when he died in the Battle of the Alamo. “His name’s on the monument there,” Wyly says proudly. Other family forebears, I learn, served under George Washington at Valley Forge and took up arms in the Battle of New Orleans. Wyly can trace his Scotch-Irish roots to the rebellious borderland country depicted in the Mel Gibson movie Braveheart.

Given his scrappy family history, it’s not surprising that fighting is in Wyly’s blood too. The 67-year-old Dallas billionaire and his 68-year-old brother, Charles, have spent almost four decades battling mammoth competitors and building companies like University Computing, Earth Resources, Sterling Software, Michaels Stores, the Bonanza restaurant chain, and most recently, the “clean electricity” supplier Green Mountain Energy. This month the Wyly team is gearing up for another big fight: round two in the ongoing war with software giant Computer Associates, based in Islandia, New York. Along with Ranger Governance, a limited partnership that the Wylys formed last year to address corporate government issues, Sam is trying to persuade shareholders to elect a slate of five directors to replace company chairman Charles Wang, chief executive Sanjay Kumar, and three other directors. The showdown will come at CA’s annual meeting in Long Island on August 28.

The irony here is that CA has built itself by acquiring two software companies that Wyly once owned: University Computing and Sterling Software. He sold Sterling Software to CA in 2000 for almost $4 billion, including the option to buy three million shares of stock. Then Wyly got a call from a former Sterling employee who said that CA was trying to cancel his early-retirement benefits. After sniffing around, Wyly and his associates decided that CA had great potential but needed new direction and, especially, new management. CA had outraged many investors in 2000 when they learned that the company had given its top three executives a total of $1 billion in bonuses despite a huge revenue shortfall (a court ruling in a class-action shareholder lawsuit reduced the awards). The company also had changed its accounting practices so that investors could hardly compare current financial results with those of past years. So last summer Wyly and Ranger Governance, which is run by Steve Perkins, launched a shareholder proxy battle to unseat CA’s top officials, who, according to Wyly, were enriching themselves at the expense of shareholders, employees, and customers. Wyly proposed replacing the entire CA board of directors with a group that included himself and Dallas Mavericks owner Mark Cuban. It was an expensive war: Ranger sank $12 million into the fight, and the two sides waged a highly publicized battle with dueling full-page ads in the New York Times and the Wall Street Journal. In the end only about 30 percent of the non-insider block of shareholders cast their votes for Wyly’s team, but the campaign got a lot of attention. “The insiders had reason to feel invulnerable up until last summer,” Wyly says. “What was different was they got the sunlight shined on them.”

Now that light has turned into a glare, and CA’s credibility is in serious jeopardy. The company posted its fifth-straight quarterly loss this spring, and this summer its shares have been trading at less than half of their $38 price in January. Moody’s Investor Service downgraded the company’s debt, and CA had to tap into backup bank credit lines to repay part of a loan. Even worse, CA is the target of two federal investigations into whether the company deliberately overstated profits to inflate its stock price and enrich its senior executives, which is exactly what Wyly accused the company of doing a year ago.

And Wyly has another advantage this time around: The Enron fiasco and a wave of other corporate scandals have investors running scared. “It’s just a sea change from last year,” he says. “Shareholders are asking, ‘Do we trust the incumbents?'” Indeed, the Investor Responsibility Research Center in Washington, D.C., says it expects to see record support for shareholder proposals this year. Carol Bowie, the center’s director of corporate governance research, gives Wyly more than a fighting chance, particularly because he is no longer on the slate of directors being proposed. “Clearly, CA is under the microscope,” she says.

CA, for its part, has taken steps this year to improve its corporate governance practices. It unveiled a laundry list of policy changes in May and has added two new independent directors, bringing its board to eleven members. But even if CA manages to convince shareholders that it’s more responsive, Wyly is not going away. His CA stock options don’t expire until 2006 and 2007. That means Wyly and Perkins can continue to agitate for change for years. “We’re both patient and persistent,” Wyly says with a wry smile.

I was curious how someone like Wyly—who has been taken to task himself in the past for not having the most progressive corporate governance practices—had evolved into a self-described “born-again good-governance guy.” Given his reputation as a well-connected, street-smart player with friends in the White House (the Wylys have been strong supporters of the Bushes and spent $2.5 million on TV ads attacking Senator John McCain during George W.’s campaign), one would expect to meet a tycoon-type dressed in a Wall Street power suit. Instead, a trim man, rather short and boyish-looking, with shaggy hair and wire-rimmed glasses perched on his head, greets me in his office. Wyly wears a casual cobalt-blue long-sleeved shirt and black pants.

He’s an avid reader—of history, not business—and during the course of our interview, he quotes everyone from Rudyard Kipling to Bob Dylan and Warren Buffett in a low, gravelly voice. The culture at Wyly’s office is anything but corporate; everyone in the office calls the boss “Sam.” “He’s a plain guy,” says Perkins, who has known Wyly for more than thirty years. “We go to New York and walk to our meetings. At lunchtime we’ll stop in a deli and have a five-dollar sandwich and a bottle of water and love it. Sam isn’t the kind of guy who needs to be treated with kid gloves and chauffeured and pampered.”

“He’s a very curious mix for a man who is a dyed-in-the-wool Republican,” says state representative Steve Wolens, a Democrat from Dallas and a co-author of the 1999 law that deregulated Texas’ electricity market. “He’s pro-environment, cultured, shares his money, and believes in a lot of progressive social issues. I like him a lot, and I like what Green Mountain is doing.” And, he adds, Wyly never lobbied him once during the debate over deregulation.

Wyly claims to disdain the heavy-handed tactics of wealthy power brokers. “Lord Acton said, ‘Absolute power corrupts absolutely,'” Wyly says. “This is true for kings and emperors, some elected governments, and in a corporate America where there is no accountability to the owners.” But his opponents paint him in less-than-flattering hues as a rich corporate raider riding in from Texas, no less, to create battles for his own economic gain. Critics also say that Wyly has used some of the same questionable tactics that he now condemns. For instance, the powerful California Public Employees’ Retirement System, or CalPERS, a large pension fund that is one of the most outspoken activists for shareholder rights and better corporate governance, lambasted Michaels in 1998 for poor financial performance, a languishing stock price, and for repricing stock options so that Wyly and other top officers would still get rewards if the company’s stock went down. Wyly says he took the criticism to heart and made the necessary changes. “This company is squeaky clean,” says Michaels CEO Michael Rouleau. “We are right on the money on these issues.” In fact, last year CalPERS sided with Wyly on the CA proxy vote and continues to own a big chunk of Michaels stock. As for the profit motive, Wyly freely admits he’s seeking financial gain at CA—as are all of CA’s shareholders, he adds. “We believe if the incumbents [top executives] stay, our options are worthless. Zero,” he explains. “If we can put in a world-class leadership team, instead of zero, we think we’ll have a lot of value during the four and a half years left on our options.”

Wyly has always been something of a contrarian when it comes to business. After getting his MBA at the University of Michigan, the Louisiana native came to Dallas in 1958 and worked for five years as a salesman at IBM and Honeywell before taking his first big risk: He founded University Computing, a company based on the idea that big clients would pay for access to computing power. He bought a used computer housed on the campus of Southern Methodist University and began signing up clients like Sun Oil and Texas Instruments.

Wyly didn’t see why computers should have to communicate over plain-old phone lines, so in the late sixties he set out to build a national communications network through an enterprise he founded called Data Transmission, or Datran. The AT&T monopoly tried to block Datran, and Wyly spent millions fighting for the company. Though Datran eventually went bust, it became a footnote in business history for its role in challenging Ma Bell’s monopoly in court.

After that loss, Wyly found other opportunities. He dabbled in silver mining and built oil refineries with Earth Resources. The Bonanza restaurant chain grew from twenty restaurants to six hundred in twenty years. Sam and his brother bought the Michaels Stores arts and crafts chain in 1984, growing it from ten stores to more than seven hundred. Wyly also started the Maverick Capital hedge fund, which has grown to $7 billion and is now run by Lee Ainsley and Wyly’s son Evan. Wyly’s new hedge fund, Ranger Capital Group, manages the family’s assets from the $8 billion sale of Sterling Software and an electronic business spin-off, Sterling Commerce. His newest passion, though, is Green Mountain Energy, which began as an obscure idea in a tiny Vermont utility and aims to be the leading national “green” electricity provider (BP and the Dutch utility Nuon are also major investors). Green Mountain currently has 500,000 customers in seven states, where it provides power from solar arrays and wind turbines. Now the company is making a push in Texas’ newly deregulated electricity market to offer power generated by wind, which the company buys from turbine owners in West Texas. Wyly is betting that Texans will pay a little more for electricity generated from nonpolluting sources. “It’s a company for Texans who like to breathe,” Wyly says.

As our interview draws to a close, I ask Wyly where he sees himself in five years. Will the guy known as an entrepreneur’s entrepreneur create any more companies? Wyly says he’s in transition, becoming more of an investor and a “cheerleader.” “I don’t run anything,” he says. Then he adds with a laugh: “What I do is bet my grandchildren’s college money.”