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Update: CA's Sanjay Kumar stepping down as CEO

Instead, he will become the company's chief software architect

By Stacy Cowley
April 21, 2004 12:00 PM ET

IDG News Service - Computer Associates International Inc. Chairman and CEO Sanjay Kumar will vacate those two positions, the company announced today.
Kumar will remain with CA in the newly created role of chief software architect.
Board member Lewis Ranieri has been elected chairman. CA will soon name an interim CEO, the company said.
"We believe the decisions we have made today are fair and responsive to the situation and in the best interests of CA's customers, shareholders and employees," said Ranieri in a statement. "The Audit Committee's and the entire Board's exhaustive review of these matters resulted in the removal of a number of individuals from the Company.
"The changes in Sanjay's role are not based on the conclusion that he engaged in any wrongdoing," he said. "Nonetheless, the conduct in question occurred during his tenure, and the Board felt this action was appropriate.
"We are pleased that Sanjay has agreed to assume the role of chief software architect, enabling CA's stakeholders to continue to benefit from his extraordinary knowledge, expertise and experience," Ranieri said. "He is highly regarded in the industry and has made remarkable contributions to CA's business."
The move comes after a series of indictments earlier this month that netted guilty pleas to securities fraud and other charges from several former finance executives at CA, prompting speculation last week about Kumar's fate as CEO (see story).
CA has admitted to improper accounting practices in its 2000 fiscal year that were under investigation by the Securities and Exchange Commission and U.S. Department of Justice. The company revamped its accounting methods, replaced most of its board and pushed out a number of executives tainted by fraud.

Computer Associates International Inc. (CA) Chairman and CEO Sanjay Kumar will vacate those two positions
Computer Associates International Inc. (CA) Chairman and CEO Sanjay Kumar will vacate those two positions
But one executive from that era, Kumar, remained, and questions lingered about the then-president and chief operating officer's involvement in CA's accounting manipulations.
The DOJ complaint against Ira Zar, CA's chief financial officer until October, charges that he regularly met with two unnamed "high-level" executives who allegedly knew and approved of the financial sleight of hand. Zar at the time reported directly to Kumar, who in turn answered to then-Chairman and CEO Charles Wang.
Wang, a company co-founder, has since retired.
The DOJ is continuing its investigation in conjunction with the SEC, and speculation persists that Wang and Kumar could be targets of future actions.
In its statement today, CA reiterated an earlier acknowledgment that it can't predict the scope or outcome of the SEC and DOJ investigations and that the company and its officers may face criminal and civil charges.
The four executives charged to date have pleaded guilty to charges including securities fraud and obstruction of justice.
Richard Ptak, an analyst at Ptak, Noel & Associates, said Kumar's decision to step down as CEO and chairman is "not great for CA, but not the worst that could happen.
"We would expect some customer unease and difficulties for the company while the role of CEO remains unfilled," Ptak said.
As for Ranieri's selection as chairman, he called the move "interesting."
"Clearly, as the leading independent member of the board with a strong background in finance, the strategy here is to indicate a sharp break with the past financial practices. This decision sends a strong message of repudiation of past financial practices...."
Meanwhile, he expects CA's rivals to begin circling overhead in hopes of picking off customers. Hewlett-Packard Co. is particularly aggressive in circumstances like these, Ptak said, and IBM, while less opportunistic than HP, has the product set to attract disaffected CA prospects.
"I don't think CA can go more than a quarter without a replacement without serious disruptions," he said.
Computerworld's Ken Mingis contributed to this report.

Additional Resources:
Computer Associates Special Coverage Page
Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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