Starboard Acquires Autodesk Stake to Advocate Board Changes

Activist Investor Starboard Value Pushes for Changes at Autodesk

Activist investor Starboard Value has accumulated a stake in Autodesk Inc. worth over $500 million and is advocating for changes to the board, citing concerns over the software company's performance and its handling of an accounting probe. Starboard has engaged with Autodesk executives, requesting to reopen the nomination window for directors to enhance the board's independence. Despite these efforts, the California-based company has declined the request, leading Starboard to plan a lawsuit to delay Autodesk’s annual meeting set for July 16 and to compel the reopening of the nomination window.

Autodesk’s board has reviewed and rejected the notion, stating that reopening the nomination window would not serve shareholders' best interests. The company maintained that it welcomes input from shareholders, including Starboard, and has sought to engage constructively with them since early June.

Accounting Probe and Shareholder Concerns

Earlier this year, Autodesk postponed its annual financial disclosure to review its accounting practices concerning free cash flow and operating margins. This weeks-long delay spurred anxiety among investors and led to several shareholder lawsuits. Recently, Autodesk provided documents to the Securities and Exchange Commission and the US Justice Department as part of the ongoing investigation.

Starboard criticized Autodesk for not disclosing the investigation details before the deadline for nominating board members closed in March. Although the probe did not alter any previously reported financials, Autodesk's board decided to replace Chief Financial Officer Debbie Clifford with board member Betsy Rafael temporarily.

Stock Performance and Strategic Recommendations

Despite a recent 5.3% increase in shares, Starboard pointed out Autodesk’s underperformance in adjusted operating margins and share price over the past years. They recommended management focus on reducing expenses, undertaking share buybacks, avoiding major acquisitions, and enhancing the board for better performance.

Autodesk, known for its software solutions in construction and manufacturing, reiterated its commitment to delivering long-term value. The company emphasized its successful strategy and investments in cloud, platform, and AI technologies, which provide valuable and connected solutions to its customers. Autodesk intends to carefully review Starboard’s input, maintaining that their existing strategy is effective.