New York, November 12, 2002
CRN
NRI Press
Two federal agencies joined forces in February to launch an investigation,
still ongoing, into CA's past accounting practices. A few months later,
dissident shareholders started a second proxy fight for seats on CA's
board. And the company reported a loss of $117 million on $1.54 billion
in sales for the past two quarters ended Sept. 30.
"It's kind of like a dog's life,one year is seven years,"
says Gary Quinn, executive vice president of sales and field operations
at CA.
"I don't think most CEOs in their careers have encountered what
he's encountered in the past two years, and he's actually managed his
way through and steered our ship through it."
Kumar, now beginning his third year as the company's top executive,
remains undaunted. Despite the distractions, Kumar has maintained CA's
focus on rebuilding partner, investor and customer confidence while
restoring profitability. Insiders say Kumar, described as an intelligent,
hands-on leader who is as quick with a practical joke as he is with
a helping hand, is proving to be the right man for the job.
Kumar recast CA as a model of corporate governance, adopting new policies,including
term limits for independent directors,and adding seven new members to
its 12-seat board this year. As a result, proxy consulting firm Institutional
Shareholder Services says CA outperformed nearly 95 percent of its peers
on governance issues, a stark turnaround from last year when ISS endorsed
dissident shareholder Sam Wyly's minority slate of nominees in his first
quest to oust CA directors.
Kumar also took a controversial step to rid CA of Wyly's perpetual
proxy fights, at least for now, by paying the entrepreneur $10 million
this summer to extend a noncompete agreement and to prohibit any proxy
challenges for the next five years. While some were critical of the
agreement, Kumar defended the payment as a justified trade-off to prevent
potential damage to CA's business from another proxy battle.
In addition to improving corporate governance and ending the proxy
battles, Kumar this year made drastic changes in the way CA compensates
its sales representatives. In April, CA launched a channel-preferred
compensation strategy in its storage unit that pays its sales force
more for channel deals than for direct deals, a plan the company pledges
to carry over into other product lines.
CA's newfound channel commitment comes directly from Kumar, says Michelle
Drolet, CEO of Conqwest, a solution provider in Holliston, Mass. "The
question for CA is how channel-friendly are they, and is [that friendliness]
going to stay the distance? The more I work with them, the more I see
it's staying the distance," Drolet says.
Kumar personally invited solution providers to set up offices at the
company's sales facilities to promote cooperation. He also brought partners
into more beta-testing and product-development planning.
In addition, Kumar randomly calls channel partners to check on CA's
progress. "When it's the end of the quarter and our folks are telling
us about deals, I take a couple of them and I call [solution providers]
up and say, 'I know we won, but how could we have done better?' You
learn a lot that way," he says.
Kumar's personal involvement in day-to-day matters is his hallmark.
He has loaned employees money to cover moving expenses. He shakes the
hand of every kindergarten graduate of CA's day-care program. And he
is a generous community philanthropist.
"I find him to be a very caring, concerned human being,"
says Teddy Bookman, executive director of Friends of the Arts, a nonprofit
organization in Oyster Bay, N.Y., that Kumar and his wife, Sylvia, support.
Kumar is personally involved in the tough stuff, too. One Friday in
July, after an internal audit disclosed that some employees in the Framingham,
Mass., office had falsely boosted commissions, Kumar arrived at the
office that evening and worked into the morning hours with a team of
managers to investigate. The inquiry led to the dismissal of a dozen
employees. "I'm not one of those people that sends somebody in
to go do the dirty work," he says.
Kumar, who was born in Sri Lanka, credits his parents with molding
his fundamental ethics. From his father, an animal husbandry researcher,
Kumar says he learned the value of patience, tolerance and broadmindedness.
From his mother, a school administrator, he learned leadership by example.
"She'd be the first person [at work], and she'd be the last person
to leave %85 and most days I'll be the first person here and the last
person to leave," he says.
Despite CA's tribulations, Kumar has made strides toward revamping
the company's image and improving the bottom line. Sales were up 6 percent
over the last two quarters, compared with the prior-year period, while
the company's loss was sliced by 81 percent. Once the investigation
is over and the economy picks up, people will see the real CA, Quinn
says. "All the efforts Sanjay has put behind the company ... will
start to materialize," he says.