CA Inc. (CA:US), a maker of software for managing information technology, named former Taleo Corp. Chief Executive Officer Michael Gregoire as its next CEO, replacing the 70-year-old Bill McCracken.
Gregoire, 46, will start as CEO on Jan. 7, Islandia, New York-based CA said yesterday in a statement. The company said in June that it had begun succession planning for McCracken, who will retire on March 31 and step down from the board on Jan. 7.
At Taleo, a maker of talent-management software, Gregoire orchestrated a sale to Oracle Corp. for about $1.9 billion in April. Before that, he navigated the Dublin, California-based company through its 2005 initial public offering and boosted revenue to $324 million from $78 million, CA said.
CA “has a compelling value proposition, a strong reputation and a growing relevance for customers, software engineering, and partners,” Gregoire said in the statement.
He previously worked at PeopleSoft Inc., another business- software maker that was acquired by Oracle. Prior to that, Gregoire spent 12 years at EDS Corp., a provider of computing services that was eventually bought by Hewlett-Packard Co.
Gregoire’s history of working for takeover targets doesn’t suggest that CA is expecting to be sold, said Mark Moerdler, an analyst with Sanford C. Bernstein & Co. in New York. International Business Machines Corp., a CA competitor, has said that it isn’t interested in acquisitions of more than $1.5 billion. CA’s market value is about $10 billion.
CA’s business selling products for mainframes -- high- powered computers serving a shrinking market -- may make it less attractive to buyers, Moerdler said.
“I don’t know that CA is well-positioned as a sale target,” Moerdler said. “They’re too pricey to be an IBM acquisition, and I could see Oracle considering it if it wasn’t for the mainframe business.”
CA shares (CA:US) rose less than 1 percent to $21.91 at the close in New York. The stock has gained 8.4 percent this year.
Gregoire will earn a salary of $1 million a year and is eligible for an annual cash bonus of 150 percent of his base salary, as well as a long-term incentive performance award of at least $5.5 million. He’ll also get a sign-on equity grant of $3 million in stock options and $2 million in restricted stock, which will vest over time. CA is paying him an additional signing bonus of $500,000, in part to help cover his relocation to New York.
McCracken, who was already CA’s chairman, stepped in as CEO after John Swainson retired at the end of 2009. Swainson was hired by Dell Inc. as president of its software group earlier this year. McCracken will help Gregoire with the transition until he retires in March.
CA said last January that it would return $2.5 billion to shareholders by March 31, 2014. Taconic Capital Advisors LP had urged the company to boost shareholder returns after the hedge fund acquired a stake of more than 5 percent. CA said yesterday in a filing that it remained committed to the $2.5 billion plan, which includes a $1-a-share dividend.
Gregoire will be taking on a bigger company than he’s managed before, so it may take time for him to get up to speed, Moerdler said.
“He does not seem to have any experience in corporate turnarounds or personally managing a very large organization, which some investors had hoped would be part of the resume of CA’s new CEO,” Moerdler said in a note. “We therefore do not expect to see him announcing very large initiatives in the near term.”
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