Starboard Value has filed a lawsuit against software developer Autodesk in an attempt to postpone the company’s annual meeting and renew the nomination period for the Board of Directors to allow for a proxy campaign.
In a letter on Monday, Starboard confirmed that it owns a stake in Autodesk worth over $500 million. Autodesk’s shares rose by 6.5% after this information was disclosed.
Starboard claimed in its lawsuit that Autodesk had «hidden behind a nomination window,» deliberately delaying notifying shareholders about the postponement of the annual report and an internal investigation into financial irregularities and inaccuracies in financial reporting.
«Manipulating corporate governance and disclosure duties effectively gives shareholders only one choice of directors, formally depriving them of any choice,» Starboard stated in its lawsuit, filed in the Delaware Chancery Court.
Autodesk began investigating reporting irregularities regarding operating margins and free cash flow in early March. The company informed the SEC of the investigation on March 8, but only informed shareholders on April 1, after the nomination window had closed.
The results of the investigation, concerning Autodesk’s management decisions regarding the counting of customer accounts and expenses, were released on May 31 along with the appointment of a new CFO, Deborah Clifford.
«The incumbent directors failed to disclose these serious accounting and reporting issues during the nomination window as a calculated scheme to ward off challenges to their positions through a proxy campaign,» Starboard stated in its lawsuit.
After the results became known, Starboard began negotiations with Autodesk’s Board of Directors regarding these issues and the overall poor business performance.
An Autodesk representative declined to comment on the lawsuit, referring to the company’s previous statements where it rejected Starboard’s demands to renew the nomination window and postpone the annual meeting.
«Starboard is trying to use a completed internal investigation, which did not result in a financial restatement, as a pretext to extend the pre-notice period,» the company said in a statement.
