BY MARK HARRINGTON
STAFF WRITER

April 6, 2005

As new management of Computer Associates International Inc. reshapes the company, a shareholder-forum leader yesterday wrote to CA board members suggesting most consider giving up their posts in the aftermath of its financial scandal.

CA, as it signaled earlier this year, yesterday said it had restructured itself around four core business groups - enterprise systems management, security, storage and a new business-service optimization unit. A fifth CA Products group includes products that fall outside the core businesses but remain important to clients.

The move is in line with new chief executive John Swainson's effort to organize the company along the lines of his former employer, IBM Corp., while moving away from the structure of CA's former leaders.

In an interview, Swainson said "past reorganizations [at CA] kept all the power centralized." His efforts have "pushed a lot more autonomy and power into the organization."

As part of the restructuring, CA promoted three senior vice presidents to oversee the groups as general managers - Toby Weiss, security; Jacob Lamm, business optimization, and Chris Broderick, storage. Earlier this month, former Novell chief technology officer Al Nugent was named to oversee the enterprise management group. CA veteran Mark Combs oversees CA Products. All report to co-founder Russell Artzt, executive vice president for products.

The reshuffling comes as Gary Lutin, an investment banker who has led a four-year shareholder forum on CA, yesterday sent a letter to all board members asking those who had been CA directors during its accounting scandal whether they intended to leave their posts. The note says those in office as late as April 2004 would be expected to follow the "conventional practice" of resigning "now that new leadership is in place." The request targets nearly all CA board members with the exception of Swainson, and newly named directors Laura Unger and William McCracken, Lutin said.

"Most people would expect directors who had been through this [accounting scandal and federal investigation] process to stand up for a round of applause and leave the stage," Lutin said.

An executive management expert said such a move is not without precedent. "It would really be a benefit to the new CEO to have a clean [director] slate," said Jeffrey A. Sonnenfeld, associate dean of the executive programs at the Yale School of Management, who called board members present during the improprieties "part of the problem."

CA spokeswoman Shannon Lapierre, in a statement, disagreed with the assessment.

"CA's board of directors acted quickly, decisively and in the best interest of shareholders once it became aware of the misconduct of certain members of former management," she wrote, noting its audit committee launched an independent probe and the board removed 15 senior executives. It also reached a deferred prosecution agreement with federal prosecutors and rebuilt the management team, she wrote.

 

Separately, Swainson dismissed the notion of some CA insiders that the company has been riding on successes of past products while failing to spark innovation in core markets. He pointed to recent and forthcoming Unicenter and eTrust products as major upgrades requiring "huge investments."

As for a promise early in his tenure to assign an additional 300 employees into mainframe development efforts, Swainson said the company has done "some" of that work, but added, "I'm not anticipating hiring a whole lot of new people."

At the same time, Swainson, after initially freezing hiring at a new CA facility in India, more recently has "concluded India does play a role," at the company. "We'll be cautiously expanding that role over the next year or so." There are currently 600 employees at that facility.

Swainson, who with four other CA executives attended the World Economic Forum in Davos, Switzerland, earlier this year, also acknowledged several capital expenditures that have been the buzz of rank-and-file employees in recent months. CA, he said, last year had purchased a Hawker corporate jet to supplement the Gulfstream jet and corporate helicopter it owns. Past management had been criticized for personal use of the jets. Swainson said the company had recently ended a contract with NetJets, a corporate jet leasing company, to justify the Hawker expenditure. "We took advantage of a very favorable tax climate," he said.

He also acknowledged an upgrading of the company's executive offices on the sixth floor of its Islandia headquarters. Employees who have seen them said the upgrades enlarge past executive offices significantly, with plans for dining facilities.

Swainson downplayed the remodeling, saying it was necessary and "not a big deal."
 

CA's new management team

Chris Broderick, a veteran of CA's storage products group, named senior vice president and general manager of storage management. He's charged with growing this core CA business and making certain the products are integrated with other core offerings.


Jacob Lamm, a former top development leader for CA's core Unicenter offerings, named senior vice president and general manager of the new business service optimization unit. The group will help clients "leverage life-cycle and systems management technologies," CA said.


Al Nugent, former chief technology officer for Novell Inc., named senior vice president and general manager for CA's enterprise systems management group. He's charged with expanding CA's dominant position in this core market.


Toby Weiss, former senior vice president for eTrust product management and marketing, named general manager and senior vice president of security management. Weiss, who has done stints for CA in the Far East, is charged with expanding its security portfolio and integrating them with other CA offerings.