Former Computer Associates CEO Indicted

Criminal charges against it would disqualify the Islandia, N.Y., software giant from competing for government contracts, which would be a major blow.

Gary Lutin, an investment banker and shareholder-rights advocate who has been monitoring the case for some time, said, "I think the government is right in its view that the company needs more effective monitoring; I hope that this will encourage investors to take a more active role in the continuing oversight of Computer Associates."

The company agreed Wednesday to help the government retrieve any compensation and bonuses found to be awarded based on fraudulent financial results, a sore point with many investors. Three executives, including founder Charles Wang and Kumar, split stock bonuses worth $1.1 billion in 1998.

The investigation and its legacy of mistrust has been a serious overhang for the stock. Analyst Trip Chowdhry of FTN Midwest Research said the resolution should boost shareholder value, but perhaps not immediately. "This may signal the emergence of a new CA, and will free management to focus on execution," he said in an interview. "Customer apprehensions should be alleviated as well. But the very harsh IT spending environment is now very significant and could hold the stock back."

Con Hitchcock, outside counsel for the Amalgamated Bank's Longview Fund, which owns 250,000 shares said he is pleased that the company will likely not face indictment -- "an outcome that would serve no one" -- but "the proof of the pudding is when responsbile individuals write large checks back to the company." Amalgamated sponsored the shareholder resolution demanding return of the bonus money.