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Technology Stocks : Computer Associates -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (5185)	10/17/2003 8:56:06 PM
From: DEER HUNTER	Read Replies (2) \| Respond to of 5232

One day I love em the next day I hate em. I wish this whole thing would just wash itself out one way or the other. biz.yahoo.com Reuters CA's Kumar has trouble cutting link to darker days Friday October 17, 2:48 pm ET By Wei Gu NEW YORK, Oct 17 (Reuters) - Software maker Computer Associates International Inc. has seen its sales rise and share price triple in the last year, but the company still carries the baggage of darker times. ADVERTISEMENT Chairman and Chief Executive Officer Sanjay Kumar has pledged to set a "gold standard" in corporate governance, but his links to the period of an accounting scandal and a related controversy over his compensation have left a cloud over him and the company. Kumar's latest attempt to clean up shop came last week when the company ousted three executives, including Chief Financial Officer Ira Zar, after an internal probe discovered premature booking of revenue in its financial year ended March 2000. The move may not be enough. The company remains under investigation by the both securities regulators and federal prosecutors. And clearly Kumar's presence as chief operating officer during the accounting period that is under review means that the company has not completely severed links to its recent past. By contrast, many of the companies who have faced accounting blowups, such as MCI (previously known as WorldCom) and Tyco International Ltd. (NYSE:TYC - News), have made greater changes than CA. replacing entire management teams and, in some cases, entire boards. "Sanjay is associated with the success and failure at CA," said Kevin Buttigieg, an analyst at Kaufman Brothers. "Investors are concerned whether there is additional accounting discrepancies, which might lead to additional pressure on additional members of the management." Some investors and corporate governance experts are calling for Kumar to give up a $7.9 million bonus that was related to the company's misstated performance. Some have also raised concern about his continued links to the company's founder and former chairman, Charles Wang. "Kumar was the COO and was well aware of what was happening," said Nitsan Hargil, an analyst of Friedman, Billings, Ramsey. "People do see Wang and him as part and parcel." Shares of CA have fallen 14 percent since the company last week announced the findings of its internal audit. GO FOR THE GOLD The 2000 payout also remains damaging to Kumar's image, according to shareholder activists, at a time when investors are increasingly angry about oversized CEO paychecks. "This is definitional for him," said Nell Minow, editor of the Corporate Library, a corporate governance watchdog. "At a minimum, I expect there might be some callback on the compensation." Minow said that if Kumar keeps the 2000 bonus, the company can only claim a gold standard if "it means the CEO gets the gold." Kumar, who was named chief executive in August 2000, received a cash bonus of $3.2 million and $4.7 million in shares. A CA spokesman wouldn't comment on the bonus, except to say that sales contracts were valid, products were delivered and money was received. It was the timing of booking that has been in dispute, he said. The departure of Wang last year capped off a series of corporate reforms. CA installed to the board heavyweights such as a former chief accountant of the U.S. Securities and Exchange Commission (News - Websites) . It also began a new way of recognizing revenue which gives it more predictable long-term sales. Analysts said Kumar has improved relations with customers, investors and employees. At its annual shareholders' meeting in August, Kumar spent an hour shaking hands and chatting with investors over breakfast. Personally, Kumar gave up his own bonuses in the last two years which would have been more than $1 million annually. However, he has stopped short of distancing himself from Wang. At the urging of Kumar, shareholders at the annual meeting applauded Wang, who was absent. Wang and Kumar still co-own a Long Island, New York, hockey team, and Wang's wife, Nancy Li, heads a subsidiary of Computer Associates, iCan SP. Analysts said Kumar, whose involvement with the company's past problems had been largely brushed aside by investors, may face a tougher battle now. "Maybe the board believed Kumar's ability is more than his liability, but they may feel differently about that now," said Minow.