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Dell Names Carty CFO

Change comes amid SEC probe. Also, former American Airlines executive Carty left the carrier after furor over compensation issues.
Stephen TaubDecember 20, 2006

Dell has named Donald J. Carty vice chairman and chief financial officer, effective January 1. He replaces James M. Schneider, who recently agreed to become executive chairman of Frontier Bancshares Inc. Schneider, who had been with Dell since September 1996, agreed to remain with the company through the end of the current fiscal year to assist with the transition. “Jim decided to resign,” Bob Pearson, a spokesman for Dell, told Bloomberg. “This is very cordial.”

The CFO change comes amid reports that the embattled computer maker’s accounting for warranty accruals is being probed by the Securities and Exchange Commission. The company recently delayed the filing of its quarterly results “due to questions raised” in connection with ongoing investigations by the SEC, the company’s audit committee, and the U.S. Attorney for the Southern District of New York.

Carty has served on Dell’s board of directors since 1992 and for much of that time has served as chairman of the audit committee. He is also the board’s designated “financial expert.” He will continue to serve on Dell’s board.

Carty is probably best known for his 5-year stint (1998 to 2003) as chairman and chief executive officer of AMR Corp., the parent of American Airlines. At one time, Carty served as CFO at AMR.

“Don has had a long association with the company and we are delighted that he is joining our senior leadership team,” Michael Dell, company founder and chairman, said in a statement. He added that Carty is an ideal candidate to help lead its Dell 2.0 initiative, its turnaround program aimed at better serving its customers.

“In terms of Dell trying to establish itself as a responsible corporate citizen and also a company that’s on the mend and doing the right thing, tracking a very senior guy like Carty and bringing him in as chief financial officer could send some assurances to Wall Street,” said Roger Kay, founder of the technology market research firm Endpoint Technologies Associates, in an Associated Press story. Carty, however, courted a fair amount of criticism when he headed AMR.

When the airline descended toward bankruptcy after the Sept. 11, 2001, terrorist attacks, he convinced employees to agree to major concessions. However, at the same time it was revealed that he had secretly approved bonuses and pension perks for himself and other senior executives, the AP noted. Carty wound up resigning amid the furor.

Dell said board member Thomas W. Luce will become chairman of the audit committee. “The way Dell portrayed it was that Carty was stepping up as a CFO, but really the flip side was that Jim Schneider was stepping down,” Kay told the AP. “Somebody had to answer for the fact that Dell’s books were out of order.”