Thirty-five days hath September, April, June, and November. That, at least, was how Computer Associates International Inc. (CA), the world’s fourth-largest independent software manufacturer, used to view its sales calendar. And a rosy view it was — if you were among the executives who received millions of dollars in bonuses that were tied, ultimately, to quarterly results distorted by those 35-day months. The backdating of contracts triggered a whopping accounting scandal that resulted in indictments and resignations at the highest levels, including the CEO, CFO, and several other finance executives.
The tumult also created a job opening for Jeff Clarke, the former CFO of Compaq Computer and, following Compaq’s merger with Hewlett-Packard, an executive vice president at HP. Clarke was brought into CA as CFO in early April with a mandate to clean house and restore credibility. “My role is to ensure that we have a zero-tolerance policy to anything that might harm our integrity, governance, or accounting,” he says. “CA will be a customer-focused company that will set the gold standard for integrity on a go-forward basis.”
Ironically, “gold standard” was the clichÉ that then-company CEO Sanjay Kumar used in a speech on corporate governance several months before Clarke arrived, a speech in which he noted that “companies are making greater demands on their [boards of] directors.” In April, CA made a sizable demand: that Kumar step down as CEO. He briefly adopted the title of chief software architect (see “Past and Present Tense,” at the end of this article), and board member Kenneth Cron was named interim CEO. The company also named Clarke as its new COO; at press time, he retains the title of CFO, but a search is on to fill that position.
Whatever his title, Clarke seems to have what it takes to, as Sagient Technology Group analyst Kim Caughey puts it, “stop the madness” at CA. An 18-year technology-industry veteran, Clarke served in senior-management positions at Digital Equipment Corp. before joining Compaq, where, in addition to serving as CFO, he was co-leader of the merger with HP. “From an operational and integration standpoint, it’s pretty hard to find fault in anything about the merger, and he was one of the prime movers in making it happen,” says Gordon Haff, a senior analyst with Illuminata Inc. “He’s shown he can clearly deal with difficult challenges.”
Clarke had barely finished unpacking at CA when nine finance and legal staffers were fired from the company. Three senior executives, including former CFO Ira Zar, had just pleaded guilty to conspiracy to commit securities fraud or conspiracy to obstruct justice. New CA chairman Lewis S. Ranieri quickly made Clarke COO, saying that Clarke’s “superior operations and management experience” made him well suited for the role.
Aside from the obvious need to restore financial credibility with investors and financial partners, industry watchers believe that Clarke’s biggest challenge will be to hang on to customers. “As he tries to clean up, he has to keep an eye on the customer,” says Caughey. “CA has to reach out to them by having the right product and the right value in the product.”