Computer Associates International announced Monday its co-founder Charles Wang has retired as chairman and stepped down from the board of directors.
His departure from the e-business software company he helped found 26 years ago follows a tenure that's been marked by hostile bids and proxy battles, shareholder lawsuits, and an inquiry this year by the Securities and Exchange Commission into CA's accounting practices.
Sanjay Kumar, who replaced Wang as chief executive two years ago, will assume the position of chairman immediately.
Wang, 58, who will now serve as an honorary chairman emeritus, is relinquishing his board seat before his one-year term is up. CA did not announce a replacement to take Wang's seat, which reduces the board to 11 members.
"I am confident that Sanjay (Kumar) and his management team will carry CA even higher in the years to come. 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 endeavors," Wang said in a statement.
CA, which develops software for electronic business management as well as for security, storage and data management, has faced a rigorous test in the past four years.
In 1998, the Islandia, NY-based company launched a hostile bid for consulting firm Computer Sciences (CSC). CA offered $9.8 billion in cash, which CSC's board rejected. But after a month of wooing CSC shareholders in a bid to pressure the company's board into removing its antitakeover provisions, CA allowed its hostile bid to expire.
The tables turned on CA a couple of years later. Texas financier Sam Wyly launched a proxy battle for control of the software maker last year with his own slate of directors. Wyly, through his company Ranger Governance, wanted CA to split into four separate businesses--storage, security, systems management and knowledge management.
In addition, CA faced allegations from investors that it had hidden slumping sales by switching to a new subscription-based license model, which charged customers over the life of a contract instead of collecting revenue as one lump sum. The company has denied those allegations.
In the end, shareholders ultimately sided with CA's management, voting down Wyly's slate of candidates. But that did not stop Wyly from making another run at the board this year. Ranger Governance announced in July it planned to solicit proxies for its slate of five nominees to CA's board. But a month later, it withdrew its plans and entered into a five-year truce with CA, according to SEC filings.
As part of the truce, Wyly--who had sold a couple of companies to CA in previous years--agreed to extend his noncompete clause with the company to 2007 and also to adopt a "standstill" provision, which meant he would not to be involved in another proxy contest with CA for five years. In return for this agreement, the software maker agreed to pay Wyly $10 million, according to SEC filings.
This year, other issues CA had to contend with included a joint inquiry by the U.S. Attorney's Office in New York and the SEC into its accounting practices. According to the company's SEC filing, "At this point, the company cannot predict the scope or outcome of the inquiry."
The inquiry continues, and CA is still cooperating, said Robert Gordon, a CA spokesman.
"Charles was anxious to get going on a lot of projects, but he felt like he would be deserting his baby," said one source familiar with Wang and the board. "CA was facing the proxy battles, a new business model that was not fully accepted and shareholder lawsuits. But now, Wyly is out of the way, the company's earnings have started to recover, and he felt it was time to step down."
Wang was also particularly eager to step off the board to assuage the sour sentiment of institutional investors.
"Institutional investors were saying it was a downer to still have (Wang) on the board and he was pulling the stock down," the source noted. "Since he's still a larger holder, he felt it was best to get off the board, and the time was right."
CA's shares inched up 23 cents, or about 1.5 percent, on Monday to close at $15.35.
Wang's departure comes a few weeks after CA turned over a couple of quarters of financial information to the SEC, the source said, noting that the regulators have not contacted the company since that time.