Business software maker CA expects to recover some of the funds it lost to former executives involved in a $2.2 billion accounting scandal, Chief Executive John Swainson said Monday.
CA's board in February 2005 established a special committee to study how the company should respond to any court ruling against former executives, and the committee is due to issue its report within the next month, Swainson said.
John Swainson
"We do expect to recover some money," Swainson told reporters after a shareholder meeting. "I expect that in that report, they are going to recommend that the company actively go after ill-gotten gains from former executives."
Ex-CEO Sanjay Kumar tops a list of former CA executives who have pleaded guilty to federal charges of fraud. Kumar is scheduled for sentencing in the U.S. District Court in Brooklyn, N.Y., on Oct. 12, while Stephen Richards, former head of worldwide sales, goes on Oct. 16. They both pleaded guilty in April for their role in the accounting scheme.
Swainson declined to say which former executives might be targeted or how much money CA may try to reclaim.
The scandal included making software licensing and asset purchase agreements that were done solely to improperly book revenue for the software company, according to some charges filed against another former CA executive, Thomas Bennett.
In September 2004, the government accused CA of improperly booking $2.2 billion in revenue.
"You will see the company take a proactive position on this as the special-litigation committee files its recommendation with court," Swainson added, referring to the Delaware Chancery Court. "The company will act on those recommendations."
At the New York meeting, CA's stockholders voted to re-elect all 11 members of its board of directors for one-year terms, including former U.S. Senator Alfonse D'Amato.
His re-election had been contested by several proxy advisory firms that believed CA should start fresh with directors that were not on the board when the bulk of its troubles occurred. D'Amato is the longest-serving member on CA's board.
CA, which sells software to help companies manage far-flung computer networks that include mainframe computers, PCs and wireless devices, said preliminary results at its annual shareholder meeting indicated that all of the directors received between about 74 percent and 98 percent of the votes cast.
Swainson defended D'Amato, calling him "a continual force for good and change in the organization."
"We value him as a member of the board," he added.
CA, which is trying to recover from accounting scandals, years of losses and the departure of executives, last month said it would cut about 10.5 percent of its work force under a restructuring.
It also reported a 64 percent drop in fiscal first-quarter profit, but some analysts said the company has shown signs of stabilizing.
Shares of CA rose 12 cents to $23.62 in afternoon trading on the New York Stock Exchange.
