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CA is to pay $10m ($6.36m) to Ranger Governance, the firm led by dissident CA shareholder Sam Wyly, in exchange for an agreement that the group will not initiate further proxy actions against CA for five years.
The deal also adds a five-year extension of a non-compete agreement Wyly signed when he sold Sterling Software International to CA in 2000.
CA planned to submit a US Securities and Exchange Commission filing within the next day or so that will detail the terms of the settlement between CA and Ranger.
Wyly's agreement became a point of contention in last year's acrimonious battle between CA and Ranger which, initially, sought to replace CA's entire board.
CA filed a lawsuit against Wyly, charging that he violated the agreement's terms with his campaign urging shareholders to oppose the re-election of CA's existing board of directors and instead vote in a new board. Ranger counter-sued, accusing CA executives of making a host of false and misleading statements.
The costly campaign - CA claimed the battle cost $12m (£7.62m) - ended in defeat for Ranger, as each of CA's directors was easily re-elected. However, CA took some public relations hits in the process, including reports from a pair of influential investor advisory firms that harshly criticised CA's board and its corporate governance.
The campaign also highlighted investors' uncertainties about CA co-founder and chairman Charles Wang. Three times as many shareholder votes were withheld for his board nomination as for any other candidate.
Since the start of last year's proxy fight, CA's board has changed significantly. In May, the company adopted a set of "best practices" corporate governance principles, including eight-year term limits on outside directors.
That new provision prompted the resignations of three long-standing directors, who will vacate their seats at CA's annual shareholder meeting in late August. A fourth director is also resigning, citing extensive commitments in Europe.
Last week, CA named four new independent directors to fill those positions. The announcement brought to seven the total of outside directors added to CA's board since June 2001.
CA said it would elect an additional independent director before the end of the calendar year. However, plans to add a 12th member were already in the works at CA. The corporate governance principles it adopted in May called for a 12-member board. None of Ranger's nominees will be considered for the spot.
CA has made "great strides" in its corporate governance, and Ranger believes the company is now well positioned to deliver shareholder value, Ranger president Stephen Perkins said.
Yesterday CA's share price hit a nine-year low, following a quarterly financial report in which the company posted year-on-year revenue growth and a narrowing net loss but lowered its full-year revenue forecast.