CA Chief Swainson To Retire

CEO John Swainson led a multi-year turnaround effort at the IT management company after an accounting scandal. His successor has not been named.

J. Nicholas Hoover

September 2, 2009

3 Min Read
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CA Inc. CEO John Swainson, who has led the IT management software company back from a disastrous $2.2 billion accounting scandal since he took over in February 2005, will retire by the end of the year, the company announced Tuesday.

Swainson will stay on to help guide the transition to new leadership, which has already begun as the board searches internally and externally for a new CEO with "strong leadership and a proven track record of leading organizations through their growth phases," chairman Bill McCracken said on a conference call with investors.

When Swainson joined the company, it was reeling from fudged accounting and insider trading by previous CEO and chairman Sanjay Kumar and some of his top deputies, while at the same time struggling to shed its reputation as the company where, as Oracle co-founder and CEO Larry Ellison once put it, "software goes to die."

"Few companies survive what CA went through," McCracken said. "It is a testament to the dedication, hard work and resiliency of John and the CA employees that the company is what it is today."

Under Swainson's leadership, the company renamed itself from Computer Associates to CA, increased operating margins 50%, doubled earnings per share, and saw the three major credit agencies upgrade CA's credit back to investment grade. However, CA was also forced to take expensive steps to meet Justice Department demands for improved financial controls, saw significant executive turnover at some points, and cut several thousand jobs.

On the call, Swainson said on the call that he had come to CA to get the company "back on its feet," and had achieved his goals. "Five years is a long time to be a CEO in any company, but five years in a turnaround is a really long time," he said. "It might even be dog years." Now, he said, it was time to put the company in the hands of someone who can focus on CA's next phase: growth.

Recently, the company has significantly overhauled its software development processes, and is doing as much internal development as it has in many years. The company has unveiled cloud management and virtualization management initiatives, and plans to bring its mainframe software into the Web 2.0 age with simpler browser-based apps.

In morning trading Wednesday, CA's stock was down about 9% from its highs Tuesday morning before the announcement. "Certainly, CA would be considered a turnaround story under [Swainson's] tenure," J.P. Morgan analyst Dave Hafner said on the conference call Tuesday, "It seems as though it would be a less than opportune time to leave, but [he's] certainly got reasons."

CA will spend about $14 million next quarter on transition costs, mostly on severance pay, the company said on the call. However, it's not clear if retirement means forever for Swainson, who is only 55. He said that his wife wants to "go away without Blackberrys and PCs for a while."

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About the Author(s)

J. Nicholas Hoover

Senior Editor, InformationWeek Government

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