Two top ACS officials resign

The CEO and chief financial officer of Affiliated Computer Services Inc. have resigned after an investigation into the company's stock options practices found that they violated ethics practices.

CEO and President Mark King and CFO Warren Edwards agreed to stay with the Dallas company until June 30, 2007, to help with the transition.

Lynn Blodgett, executive vice president and chief operating officer, was named CEO, and John Rexford, executive vice president of corporate development, was named CFO. Both have been with the company in various positions for more than 10 years.

ACS began its internal investigation into stock options because of a pending informal inquiry by the Securities and Exchange Commission and a subpoena from a grand jury in the Southern District of New York, the company said in a statement.

ACS has shared the results of its investigation with SEC and the U.S. attorney's office in New York.

The investigation covered the granting of stock options from 1994 through 2005. The company said it found that King, Edwards and former CEO Jeffrey Rich, who resigned in September 2005, intentionally misdated stock options to pick a date at which the stock was trading at a low price.

The company doesn't know yet whether it will have to restate financial results, but expects to take an expense of about $51 million.

ACS said it will try to file its annual report for its 2006 fiscal year by Dec. 31.

The company ranks No. 48 on Washington Technology's 2006 Top 100 list of the largest government IT contractors.