Computer Associates Chief Steps Down
Amid an intensifying federal investigation into the accounting practices of Computer Associates International Inc., Sanjay Kumar stepped down Wednesday as chairman and chief executive, assuming the new role of chief software architect at the Islandia, N.Y., company.
The two-year investigation already has led to the firing of 14 other officials.
The software maker said director Lewis Ranieri would become chairman and that a search had begun for a new CEO. Kumar, 42, had been CEO since 2000 and was president under founder Charles Wang when the company hid sales shortfalls.
Kumar’s resignation may help the company reach a settlement with the Justice Department and Securities and Exchange Commission, which in May 2002 began a formal probe into whether sales were booked prematurely. Former Chief Financial Officer Ira Zar, when he pleaded guilty to securities fraud this month, said executives helped hide revenue declines.
Computer Associates said it would soon name an interim CEO. Kumar also resigned from the company’s board.
“The changes in Sanjay’s role are not based on the conclusion that he engaged in any wrongdoing,” said Ranieri, who joined the Computer Associates board in 2001. “Nonetheless, the conduct in question occurred during his tenure, and the board felt this action was appropriate.”
Computer Associates rose $1.09 to $29.66 on the New York Stock Exchange.
Computer Associates joins Tyco International Ltd. and MCI Inc., formerly WorldCom, in overhauling its management and bringing in independent directors to improve corporate governance and appease regulators. Computer Associates in August settled lawsuits claiming Kumar and others hid negative sales news so they could receive $1.1 billion in bonuses tied to the company’s share price.
Directors such as Ranieri, audit panel chairman Walter Schuetze and Harvard University professor Jay Lorsch, all brought in after the fraud, are leading the move to oust managers. Kumar stepped down after a two-day board meeting that ended Wednesday. Nine other managers were fired this week.
