ASIAN AMERICAN ISSUES
Charles Wang's Early Exit from Computer Associates
e's brash, hard-nosed, touchy, greedy and hated. He's also playful, generous, loyal and filthy rich. He lives in a magnificent Oyster Bay estate, owns the New York Islanders and plies the world in a Gulfstream IV.
Tuesday, Apr 1, 2008, 04:51:54 PM)
In short, Charles Wang is an outsized embodiment of the Asian American Dream.
Leaving too early?
But his 26-year dream seemed to come to an abrupt end on November 18 when Wang resigned the chairmanship of Computer Associates (CA), the company he had founded and built into the world's third biggest independent software company. For several months he had been under federal investigation for possible improprieties connected with CA's May 1998 grant of $1.1 billion worth of stock options to Wang, then-COO Sanjay Kumar and then-EVP of R & D Russ Artzt. What amounted to a $670 million payday for Wang had come on the heels of four consecutive years as America's highest-paid CEO. Eyebrows were really raised when, a month later, CA's stock plunged from $58 to $30.
Multiple shareholder suits followed. Based on the company's failure to follow a procedural technicality, Wang was ordered to return a quarter of the stocks acquired in the option grant. In mid-2001 Wang faced a proxy fight by combative Texas billionaire Sam Wyly following CA's $4 billion acquisition of Wyly's Sterling Software. Wang emerged with his control intact thanks to the support of CA's biggest shareholder. The 90-year-old Swiss multi-billionaire rejected Wyly's plea for votes on the ground that Wang had caused his 21% stake in CA to increase tenfold since 1987. Wyly began a second proxy contest in early 2002 but withdrew after CA paid him off $10 million.
Most worrisome, for the past few months the Justice Department and the SEC have begun investigating CA's accounting procedures, especially as they relate to the granting of the 1998 stock options. Regardless of the probe's ultimate merits, a shrewd operator like Charles Wang could not have failed to recognize in himself a prime candidate for a highly telegenic media lynching. In building a software empire valued at $50 billion as recently as January of 2000, Wang has engaged in 50 takeovers followed by immediate firing of top management and key employees. His strategies had provoked descriptions like "rapacious", "heartless" and "Attila-the-Hun".
Charles Wang had also alienated many in and out of CA by his paternalistic, family-oriented management style. In 1979, three years after CA's founding, Wang had installed his older brother Tony, a onetime corporate lawyer, as president and COO. It was a post Tony was to keep until he retired in 1992 to make way for Sanjay Kumar. None too early, in the opinion of an investment community mistrustful of such cozy arrangements. It was no less leery when Nancy Li, Charles Wang's second wife, was named CA's chief technology officer in 1997. It didn't help when in August of 2000 she was named CEO of iCan-ISP Inc, CA's initiative into the fast-growing field of application service provision. The fact that Li had been an unusually capable CA employee since 1980 didn't seem to matter. Wang must have sensed that the investment community was punishing CA's stock because of his refusal to override his sense of familial loyalty to avoid the appearance of nepotism.
In the quarter century since he took CA public, his paternalistic style had become an anachronism.
One more factor may have influenced Wang's decision to bow out. Despite his enormous success and wealth, Charles Wang had tasted the power of racial prejudice. In 1998 Wang had initiated a $9 billion hostile tender offer for the shares of Computer Sciences Corporation (CSC). The Washington Post weighed in on the side of CSC's management by alluding to CA's "ties to foreigners". It was a pointed reference to Wang's origin and CA's clients in China. The suggestion was that becoming linked with CA would jeopardize CSC's contracts with U.S. government agencies. After much agonizing, Wang dropped the tender offer. The episode remained in his mind as his first encounter with overt racial discrimination in the business world. That his ethnicity might negatively influence the government's pending investigation would certainly have entered his mind.
To stay on as CA's chairman under a cloud, Wang seems to have concluded, might well invite doom for the company he founded.
But for CA's press release he put a happy face on his resignation.
"I am pleased to have completed the transition of leadership to Sanjay, who has been a trusted colleague and a valuable partner, in a smooth and orderly way,² Wang is quoted as saying. ³It is very gratifying to have completed this important step successfully by grooming and recommending my successor.... I am confident that Computer Associates, with a new generation of strong leadership, is well positioned for its next great period of growth and success."
There's little doubt that Wang accelerated his departure to defuse mounting pressures. As recently as March of 2000 he had told BusinessWeek that he had no intention of kicking himself upstairs to chairman as Bill Gates had done that January. "I feel like I'm just starting my business," he said, ''except that the opportunity is greater now."
But by August 2000 he had named Sanjay Kumar President and CEO. When he took the final step of giving up his chairmanship on November 18, investment community observers applauded the move as beneficial for the company in which Wang still retains 28 million shares, slightly less than 5%.
But Wang won't be lacking ways to keep busy. At around the time he gave up the CEO title to Kumar in August 2000, he became majority owner of the New York Islanders, a hockey team in need of much work to return to anything like its 1980s championship glory. Through his namesake charitable foundation, Wang has donated generously to numerous causes benefitting children, education and Asian Americans. The most visible among these is the 120,000-square-foot Charles B. Wang Center at New York State University at Stony Brook. The $40-million Center is the biggest single private gift ever received by the university and will be used in part to promote Asian culture. Wang has also contributed several million dollars to build schools in rural Cambodia.
Yet after a lifetime of success, being forced to leave one's own company prematurely and under a shadow will surely strike some as a bitter and regretful end. Should Charles Wang have retained his chairmanship until after the conclusion of the federal investigation? Or was his early departure really the best move for all concerned?
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WHAT YOU SAY
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THANK YOU for saying to a wide audience what we have been saying to a small audience at Stony Brook University. Instead of articles about Charles Wang achieving the American dream by building CA from nothing into a global company, the mainstream media has concentrated on the SEC investigations even though Wang has not been charged or found guilty of anything. Wang has been forced to leave the company he founded in order to save it, and that would not have been necessary had the media not forgotten that the US has other ideals that are as important as the First Amendment - and due process is one of them.
The following is an excerpt from the SBU AA E-Zine (an online student newsletter) and there are links below to Wang's donation of his Center Celebrating Asian and Asian American Cultures below:
Is Wang innocent or guilty? He says he is innocent. Our American ideals demand that he get due
process. Unless a court of law proclaims him guilty – he IS innocent. His parents emigrated to this
land of democracy, this nation ruled by laws - to escape from what the American press just did to him.
Charles Wang gave Stony Brook University the largest gift in SUNY history – a tremendous work
of art and architecture designed by P.H. Tuan that was recently dedicated and will open next year. In turning his gift over to the campus Wang said:
"Now like so many of my fellow immigrants I’ve been through what they call the school of hard knocks. These challenges and experiences are so central to the character of the United States and its people that it’s almost like the air we breathe. We hardly even recognize it on a conscious level because hard work, social assimilation, cultural diversity, freedom to pursue opportunity to the fullest - the
American experience has been forged from these precious raw materials, and
we must never ever take them for granted."
Just as they would not want the ideal of freedom of the press taken for granted, the media needs to
insure that they also never take any of our other cherished ideals for granted.
The current Stony Brook University Asian Am E-Zine - http://www.aa2sbu.org/aaezine/
(The 12/19/02 issue will be found at http://www.aa2sbu.org/aaezine/indexVol3No10.shtml after the next issue in late Jan)
In Defense of Charles Wang and American Ideals
The Thank You Editorial to Wang from the student editors
The series on the Wang Center
Ja, Alumni Advisor
Wednesday, January 01, 2003 at 20:36:12 (PST)
'I look forward to the next generation of Asian Americans who can and will not hesitate to "kick-ass" anyone or any institution that tries to push us down or keep us down. NO APOLOGIES!!!'
It's already happening...take it from an Asian New Yorker who has thick skin!
AAs need to become bi-cultural (fluent in their native language and English). Stop selling out and have respect for ur own people.
If Wang gave large sums of $$$ to the Asian community and charities, he would have been more powerful, and gained more support, making him less vulnerable to White racism in this country!
'Charles Wang was practicing cronyism and nepotism, the most disgusting aspect of power corruption in the long Chinese tradition.'
So why is Sanjay Kumar the current COO?
Monday, December 16, 2002 at 09:54:00 (PST)
I am proud of the many things Wang has accomplished. He is an exceptional example of an asian american who has created the american dream.
Unfortunely, Wang is also another victim of racism in america. Seems some whites do not like to see an american of asian heritage enjoying that kind of power.
ProAmerican - with an asian heritage
Monday, December 09, 2002 at 19:26:33 (PST)
It's just amazing how weak Asian Americans are both politically and character wise, even with such great achievers like Charles Wang. Anyone with an ounce of integrity would have stood their ground and fought against such overt racial discrimination. If someone like Mr. Wang does not have the moral integrity to fight against such racism then what does the average Asian American have as support. We just do not have the guts to take on another race or culture. I look forward to the next generation of Asian Americans who can and will not hesitate to "kick-ass" anyone or any institution that tries to push us down or keep us down. NO APOLOGIES!!!
As for nepotism, how about the Rockefellas, Kennedys, Pritzkers, Mellons, or even the Bushes. I think it is time for a Wangs or a Chongs or a Lims. Again "NO APOLOGIES" We are proud of who we are. Chinese is not a dirty word.
A Proud Chinese
Sunday, December 08, 2002 at 20:11:15 (PST)
Nevermind the accounting falsifications
Just think why bosses like wang and his cronies are paid so much while the workers at the factory floor are paid peanuts That is how the rich is getting richer
The donations made by wang will go back to him as a lower annual tax payment
Thursday, December 05, 2002 at 03:48:41 (PST)
Oh gimme a break! If he falsely inflated his company's income in order to keep his stock prices high, then he's no better than Ken Lay or Jeff Skilling or any of those other Enron A-holes who belong in prison for making millions off the backs of poor people. I'm all for Asian pride and achievements, but only when it's justly earned, and if he was in the habit of booking phantom income then that's fraud and deceit, plain and simple. I really wish they put all these white-collar criminals behind bars. Thousands of retirees lost their pensions on Enron stock while Lay and Skilling and other top Enron guys cashed out early with millions. They're probaby sitting around their 6 million dollar mansion staring at the fleet of luxury cars in the driveway, while blue collar people in their fifties have to find minimum wage jobs because the pensions they earned with 30 years of hard work were wiped out in 2 months. I admire riches and success as much as the next guy, and I don't doubt that Charles Wang worked his tail off for decades to build CA to what it is now, but I hope he didn't get the majority of his fortune by scamming Wall Street.
Wednesday, December 04, 2002 at 18:08:22 (PST)
absoultely, Wang is an exceptional example of an american with an asian heritage being outcast by the majority.
We need more men like Wang
Monday, December 02, 2002 at 18:37:24 (PST)
The rise to power and wealth by tycoons are always shady and suspicious to us common folk, but we'll never know the extent of any illegal activity Wang participated in. But I'd rather focus on his philanthropy. I believe that the home football field for Brooklyn Tech high school is named the Charles Wang Field. Way to go...I've always wanted to have facilities and schools named after me after I got rich...props to Charles
Monday, December 02, 2002 at 14:20:44 (PST)
FAMILY LOYALTY?! Give me a break. Stop being biased just because Charles Wang is an Asian. Stop making it sound so innocent and politically correct just because Charles Wang is a Chinese. Charles Wang was practicing cronyism and nepotism, the most disgusting aspect of power corruption in the long Chinese tradition.
Monday, December 02, 2002 at 12:15:25 (PST)
I suspect there has been some skulduggery that Wang was worried about being discovered. There was some article in the WSJ recently about how they were showing reveues based on sales that hadn't actually been finalized, probably to inflate the stock price for purposes of exercising the options. That would not be cool. But then most entrepreneurs who get their babies into the top of the Fortune 500 have probably done stuff like that at one time or another. It's just that Wang is an Asian man who wasn't shy about the way he went around dominating companies. He made a lot of enemies. He would be a prime target for the justice department's corporate witch hunt. Not to mention of analysts trying to show their "independence".
Bottom line, Wang did it his way, and I hope he will have a couple of good decades of fun as his reward.
Monday, December 02, 2002 at 06:23:43 (PST)
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