Jeffrey Smith, CEO and chief investment officer of Starboard Value LP.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
Starboard Value, the activist fund run by Jeff Smith, has taken a large stake in the graphic design company Autodesk The company has spoken with the company’s board of directors in recent weeks about multiple serious concerns related to disclosures surrounding an internal investigation that resulted in the removal of its chief financial officer.
Starboard’s stake is worth about $500 million, people familiar with the matter said. The activist, who has a long track record of investing in technology, is particularly concerned about the timing of Autodesk’s disclosure of an internal investigation that revealed executives misled investors about the company’s free cash flow metrics and operating profit, people familiar with the matter said, who asked Feel free to discuss confidential information anonymously.
The investigation resulted in the firing of Deborah Clifford, Autodesk’s then-chief financial officer, who was moved to various executive roles within Autodesk. The investigation found that as Autodesk shifted from annualized payments to upfront payments, senior executives manipulated reporting related to the company’s contract billing structure to improve those metrics.
Autodesk first disclosed in April that it had begun an internal investigation into disclosure issues surrounding these metrics, nearly a month after the company first began investigating and told the SEC it was looking into its financial reports. Autodesk shares fell 20% in the following weeks. The company’s market capitalization is currently just under $50 billion.
The delayed disclosure comes a little more than a week after the deadline to nominate directors ended. The tight timing and time constraints of the disclosure caused significant concerns within Starboard, and Autodesk’s board deliberately chose not to notify shareholders before its annual meeting, people familiar with the matter said. This delay may limit the ability of shareholders to nominate their own candidates in a competitive race.
Starboard is considering filing legal action in Delaware Chancery Court to force Autodesk’s nomination window to reopen and postpone Autodesk’s annual meeting, people familiar with the matter said. The Autodesk shareholder meeting is currently scheduled for July 16.
The activist also believes the company can drive higher real profit margins and improve investor communications to help boost Autodesk stock, people familiar with the matter said.
Starboard also holds stakes in other major technology companies, including Marc Benioff’s Salesforce and Splunk (the latter sold to Cisco for $28 billion in 2023).
The Wall Street Journal earlier reported news of Starboard’s holdings and plans.
Autodesk has faced scrutiny from activists before. In 2016, it Settlement with two activist investors Worked at Sachem Head Capital Management and Eminence Capital to avoid proxy fights.
Autodesk revealed earlier this year that it was facing investigations from the Justice Department and the U.S. Securities and Exchange Commission. Representatives for the company did not immediately respond to a request for comment.
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