Carl Bass has stepped down as President and Chief Executive Officer of Autodesk effective February 8. This is a direct result of a deal struck by the company with two activist investors agitating for changes at the company. Hedge funds have taken an increasingly important role at Autodesk in the recent years.
In March 2016, Autodesk agreed to appoint three new directors to its board, including Scott Ferguson, managing partner of Sachem Head Capital Management. Sachem Head and fellow activist investor Eminence Capital each held nearly 6% of the stock as of September 30, making them two of the top five shareholders of the company.
The agreement also calls for two of Sachem Head’s 2016 director nominees — Scott Ferguson and Jeff Clarke — to resign from the board of directors. Additionally, Sachem Head Capital has agreed to continue until June 2018 their earlier standstill and voting agreement provisions.
“Activist” investor refers to an approach where the investor takes a large shareholding with a view to influencing the company in a way that will enrich investors in the fund.
Amar Hanspal, Senior Vice President and Chief Product Officer, and Andrew Anagnost, Senior Vice President and Chief Marketing Officer, will function as Interim Co-Chief Executive Officers to oversee the company’s day-to-day operations during the transition.
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The board will begin a search for a new independent director candidate, who will join when Ferguson and Clarke step down. This is expected to occur after the 2017 annual meeting or the appointment of a new CEO.
Bass will continue to function as a special advisor to the company to oversee the transition process and will continue to sit on the board of directors.
Interestingly, the official statement from Autodesk said he will be nominated for re-election at the 2017 annual meeting of shareholders. Meanwhile, Crawford W. Beveridge will remain non-executive chairman of the board.
“I’ve worked with Carl through his tenure as CEO of Autodesk, and I’ve always valued his focus and vision, as well as his rare combination of business and technical expertise,” Beveridge said in a statement while highlighting Bass’s leadership in transforming Autodesk from “a 2D design company into the worldwide leader of 3D design and engineering software”.
“We have seen exponential growth in the last decade, both in the business and in Autodesk‘s market opportunity. Carl has always been a driven and passionate change agent for the company, and under his direction,” Beveridge added.
The board will begin a search for a new independent director candidate, who will join when Ferguson and Clarke step down, which will occur on the later of the 2017 annual meeting or the appointment of a new CEO. Executive search firm Egon Zehnder has been retained to assist in the CEO search.
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When Sachem Head began acquiring Autodesk stock in late 2015, Bass and the board put all discussions regarding a permanent successor on hold, agreeing that a stable leadership was more in the company’s interest to further investor negotiations. This was also the time when the company was making a transition to Cloud-based technologies and a subscription-only business model.
The agreement arrived at in March 2016 included a standstill agreement between Autodesk and Sachem Head, which required the activist to support the board and company for a set period of time. Autodesk said on Tuesday that Sachem Head has agreed to continue the earlier standstill and voting agreement provisions until June 2018.
While the board began discussing a potential CEO transition about one and half years ago, it felt this was the right time to identify the individual that will lead Autodesk‘s next stage of growth.
In 2016, the $16-billion hedge fund Soroban Capital Partners LP had doubled their stake in the company to become one of the largest investors in Autodesk. This latest investment means the hedge fund now owns 8% of the company, previously the total holding was reported at 4%.
Bass’s future plans
Bass is keeping his cards close to his chest as of now and revealed that he was not leaving to spend more time with his family but “in my shop with my robots”. He also announced he had some other plans but will reveal them in the coming months.
“For the last couple of years, I’ve been having discussions with the board about stepping down as CEO, and today we announced that I will do so. I’m pleased that I will be leaving the company in Amar and Andrew’s capable hands while the board searches for a new CEO. I know they’ll do a great job at holding down the fort—and I’ll be honored if either is chosen to be the next CEO. I’ll continue to serve on the Autodesk board and I will be here to help them and the board through the transition.”
“I love Autodesk and am immensely proud of what we have created together, but it’s time for me to do something new. Autodesk is doing very well and the financial markets are noticing. Our leadership team is strong, and our strategy is in place to go further and accomplish more than we could have ever imagined,” added Bass, who joined Autodesk 14 years ago as the COO.
Bass first joined the company in 1993 via an acquisition of his company Ithaca Software. He left two years later after a disagreement with then CEO Carol Bartz. He was however reinstated a few months later. Bass left Autodesk again in 1999 to launch another startup called Buzzsaw, which was again acquired by Autodesk two years later, thus bringing Bass back into the fold. Bartz stepped down as CEO in 2006, which is when Bass took over.