Newsday, May 16, 2006 article

CA finance execs make an exit
Latest resignations at embattled software maker comes on heels of a 4Q revenue slide, 2 top-level departures

BY MARK HARRINGTON AND JAMES BERNSTEIN
Newsday Staff Writers

May 16, 2006

The fallout from CA Inc.'s fourth-quarter financial shortfall rippled through its corporate ranks Monday, as the software company's finance chief, Robert Davis, resigned after just 15 months on the job, and a second top finance officer, Doug Robinson, also tendered his resignation.

CA Monday declined to elaborate beyond a statement saying that Davis, a former Dell Computer financial officer, decided to leave "under mutual agreement." He'll be replaced after a "short" transition by corporate controller Robert Cirabisi until a permanent replacement is found.

Davis' departure follows by weeks the resignations of chief financial officer Jeff .Clarke and top technology executive Mark Barrenechea. A company manager who requested anonymity described the internal mood as one of "shock," particularly given Davis' appearance on a videoconference just two weeks ago "telling us how solid the company was. If you're an employee, what do you think?"

Two people close to CA said Davis' resignation came after the company undertook a review of the reasons behind an earnings and revenue shortfall announced late last month.

Higher-than-expected commission payments were among the major reasons for the miss, and a suspension of some bonuses to sales managers is said to have led to considerable internal strife. Sales managers in two regions who earned special bonuses, already irate over suspended bonus payments, were said to be even more aghast at the suggestion they be paid in restricted CA stock instead of cash, a course CA did not take.

A company source said CA was near to putting the commission issues in its past.

But one unexpected casualty of the latest CA strife is longtime senior vice president Robinson, who has held a range of finance positions at the company, including acting finance chief, corporate controller and chief financial officer of CA spinoff iCan SP.

Reached at his home Monday, Robinson would only say he remains on the CA payroll, but he was said by two sources to have tendered his resignation in frustration after the quarter's financial shortfall. Chairman Lewis Ranieri is working to persuade him to return, several sources said.

Whether he stays, observers say the latest turn of events bodes poorly for CA; its shares were down as much as $1.42 Monday before recovering to close at $23.51, down 92 cents. "Davis' leaving is likely to raise concerns about the quality of CA's accounting, perhaps unfairly due to the company's past," wrote A.G. Edwards analyst Kevin Buttigieg in a note to investors.

Although CA probably isn't expected to elaborate on the issues surrounding the fourth-quarter miss until a conference call planned for May 30, Buttigieg said in an interview that certain signals are unmistakable.

"There's clearly something wrong with the compensation structure," given that revenue fell short while expenses tied to sales commissions ballooned, he said.

Investment banker Gary Lutin, who runs a CA shareholder forum, said there were two possible reasons for people "jumping off the boat. The question is whether this is [CEO John] Swainson getting rid of people that need to be replaced or whether it's people leaving in frustration because he isn't doing that."