Jeffrey
Smith,
CEO
and
chief
investment
officer
at
Starboard
Value
LP.
David
Paul
Morris
|
Bloomberg
|
Getty
Images
Starboard
Value,
the activist fund
run
by Jeff
Smith,
has
taken
a
sizable
stake
in
graphics-design
firm
Autodesk
and
has
spoken
with
the
company’s
board
in
recent
weeks
over
a
number
of
serious
concerns
involving
its
disclosures
around
an
internal
investigation
that
led
to
the
ouster
of
its
chief
financial
officer.
Starboard’s
stake
is
valued
at
roughly
$500
million,
according
to
people
familiar
with
the
matter.
The activist,
which
has
a
long
track
record
of
investing
in
the
technology
sector,
is
particularly
concerned
about
the
timing
of
Autodesk’s
disclosure
of
an
internal
investigation
which
revealed
that
executives
misled
investors
around
the
company’s
free
cash
flow
metrics
and
operating
margins,
said
the
people,
who
requested
anonymity
to
discuss
confidential
information
freely.
The
results
of
that
probe
led
to
the
ouster
of
Autodesk’s
then-CFO,
Deborah
Clifford,
who
was
moved
to
a
different
executive
role
within
Autodesk.
The
probe
found
that
executives
manipulated reporting
tied
to company’s
contract
billing
structure, as
Autodesk
shifted back
to
upfront
payments
from
annualized
payments,
to
improve
those
metrics.
Autodesk
first
disclosed
in
April
that
it
had
begun
an
internal
investigation
into
disclosure
issues
around
those
metrics,
almost
a
month
after
it
had
first
begun
the
investigation
and
had
informed
the
Securities
and
Exchange
Commission
that
it
was
probing
its
financial
reports.
Autodesk
shares
slid
20%
over
the
next
few
weeks.
The
company’s
market
cap
now
sits
slightly
below
$50
billion.
The
delayed
disclosure
came
a
little
more
than
a
week
after
the
deadline
to
nominate
directors
closed.
The
tight
window
and
timing
of
the
disclosure
has
raised
significant
concerns
inside Starboard,
the
people
said,
that
Autodesk’s
board
deliberately
chose
not
to
inform
shareholders
ahead
of
its
annual
meeting.
Such
a
delay
would
potentially
limit
a
shareholder’s
ability
to
nominate
its
own
candidates
in
a
contested
fight.
Starboard is
weighing
legal
action
in
Delaware
Chancery
court
to
compel
the
reopening
of
Autodesk’s
nominating
window
and
the
delay
of
Autodesk’s
annual
meeting,
the
people
said.
Autodesk’s
shareholder
meeting
is
currently
scheduled
for
July
16.
The activist also
believes
that
the
company
can
drive
actual
margin
improvement
and
improve
investor
communications
to
help
bolster
Autodesk’s
stock,
the
people
said.
Starboard has
built
stakes
in
other
major
technology
companies,
including
Marc
Benioff’s
Salesforce
and
Splunk,
which
was
sold
to
Cisco
in
2023
for
$28
billion.
News
of Starboard’s
stake
and
plans
was
reported
earlier
by
the
Wall
Street
Journal.
Autodesk
has
faced
activist
scrutiny
before.
In
2016,
it
settled
with
two
activist
investors
at
Sachem
Head
Capital
Management
and
Eminence
Capital
to
stave
off
a
proxy
contest.
Autodesk
disclosed
earlier
this
year
that
it
is
facing
Justice
Department
and
SEC
probes.
A
representative
for
the
company
did
not
immediately
return
a
request
for
comment.
