18 November 2002 Charles Wang, founder and chairman of Computer Associates (CA), the embattled systems management software company, today stunned the IT industry by announcing his immediate retirement.
In a prepared company statement, Wang said: “I will remain a loyal fan and supporter of CA while I now devote more of my time and energies to my many other interests and charitable endeavours.”
Wang has been granted the honorary position of chairman emeritus. He has been replaced as chairman by Sanjay Kumar, CA’s president and CEO, who joined the company in 1987.
Kumar paid tribute to his predecessor, hailing Wang as a “true pioneer of the software industry.” He added: “From the first multi-platform software products, to the first integrated set of software solutions, to the broadest portfolio of software solutions in the industry today, Charles led the way for CA and for the industry.”
China-born Wang’s sudden retirement comes at a difficult time for the company he founded in New York with three associates and one product back in 1976.
CA is currently the subject of a formal investigation into its accounting practices by the Securities and Exchange Commission, the US financial markets regulator. The probe has focused on CA’s revenue-recognition practices and use of pro forma bookkeeping techniques.
The SEC inquiry comes at the end of a four-year period in which CA has been dogged by controversy. The vendor has been the focus of persistent accusations of overly aggressive selling techniques and poor after-sales service. In 1998, Wang and Kumar became the targets of shareholder anger after they and a third executive received stock bonuses tied to the rise of CA’s share price and worth almost $1 billion. The company’s stock fell heavily soon afterwards when it issued a profit warning.
The episode led to an unsuccessful campaign by Texan billionaire Sam Wyly to replace Wang, Kumar and three other CA board members. Although Wang and Kumar eventually won that proxy battle, it renewed concerns about CA’s corporate governance standards.
The company has since overhauled its board and named a corporate governance executive in recent months. Nine of the board’s 12 directors are outsiders.
Nevertheless, the news has not all been bad of late. In October 2002, CA reported strong revenue growth and surprised Wall Street by boosting profit expectations for the rest of its financial year.