Autodesk president and CEO Andrew Anagnost in June 2017.
CNBC
Activist investor Starboard Value has been engaging with the board of Autodesk, continuing its push to improve the company’s operations and financial performance, according to a presentation viewed by CNBC.
Starboard wants Autodesk’s board to reassess whether CEO Andrew Anagnost, who has helmed the software maker for seven years, is the right person to lead the company forward, according to the presentation.
The activist investor has shared the presentation’s findings with Autodesk’s board in recent weeks, after disclosing a $500 million stake in the company earlier this year.
Starboard is also pushing for cost cuts and a realigned executive compensation plan, all of which it believes can drive margin improvement of up to 1,000 basis points. A basis point is equal to one-hundredth of a percentage point.
That margin improvement would in turn drive better operating leverage, according to Starboard’s presentation. The activist also believes Autodesk can deploy its free-cash flow for share buybacks.
The activist has also honed in on Autodesk’s poor track record with investor communications, noting in its presentation that the company had missed or was on track to miss every investor day commitment it had made since 2018. Those misses have all been under Anagnost’s leadership.
Autodesk has underperformed its benchmark indexes in every annual time frame since Anagnost took over, according to Starboard’s analyses. Autodesk shares have returned 113% over a seven-year window, which the Dow Jones’ US Software benchmark has soared 362%.
Autodesk shares have continued that struggle this year, even as the technology sector has sizzled. Earlier this year, when the company disclosed accounting misconduct and misreporting, driven by executives, the stock took a hit.
It reassigned Deborah Clifford out of the finance chief role into a new chief strategy officer position in the wake of a probe into the misconduct. Starboard has repeatedly highlighted the accounting misreporting, as well as its belief that the company has not done enough to handle it.
Shares were down 10% year to date as recently as June, when Starboard revealed it had amassed a stake in the company and would seek to mount a proxy fight.
Those efforts were, in the short term, cut short by a Delaware judge. But Starboard has shown no signs of relenting, continuing to press the company and shareholders for change.
The presentation juxtaposed Autodesk’s best-in-class gross margin — 93% compared to a peer median of 82% — with its below-average operating margin of 35%.
Starboard has a long track record of technology investing and activism, and under managing member Jeff Smith has developed a reputation for deep analysis of targeted companies. In recent years, it has pursued campaigns at Salesforce, Tinder parent Match Group, and domain registrar and hosting provider GoDaddy.
Representatives for Autodesk did not immediately return a request for comment.