Starboard Value initiated legal action against software developer Autodesk in an effort to postpone the firm’s yearly gathering and reopen the board nominating period, allowing the activist group to initiate a proxy battle.
Activists typically kickstart a proxy battle by proposing a new set of directors to replace the current board within a specified timeframe. Following Starboard’s disclosure of owning over $500 million worth of Autodesk shares, the company’s stock surged by over 7%.
Starboard alleged that Autodesk tried to hinder a proxy competition by deliberately withholding information about delaying its annual report and commencing an internal investigation into accounting discrepancies and financial inaccuracies until after the nomination window had closed.
The investigation into Autodesk’s reporting of operating margins and free cash flow began in early March, with disclosures made to the SEC by March 8 but only revealed to shareholders on April 1, well past the nominating deadline.
An inquiry found that Autodesk executives made critical decisions concerning customer billing and expenditure to enhance free cash flow and operating margins. These revelations surfaced on May 31 alongside the appointment of a new CFO, Deborah Clifford.
Starboard accused Autodesk’s current board of concealing these severe issues regarding accounting mismanagement and disclosure failures during the nomination period, claiming it was a strategic move to prevent any potential challenges in the proxy contest.
Engagement between Starboard and Autodesk’s board began after the public announcement of these findings, addressing both the specific concerns raised and the broader operational underperformance.
Autodesk declined Starboard’s requests to extend the nominating window and postpone the annual meeting, stating that the completed internal investigation without financial restatements was being manipulated as a pretense by Starboard.
“Starboard aims to exploit a concluded internal inquiry that led to no financial revisions to justify reopening the advance notification timeframe,” the company articulated in its response.
VIEW: good’s discussion with Autodesk CEO
