Autodesk Settles With Activists Sachem Head, Eminence

  • Company adds three new directors, including Sachem founder
  • Two incumbent board members won't stand for re-election

Autodesk Inc., the maker of architectural and engineering design software, agreed to settle with activist investors Sachem Head Capital Management and Eminence Capital Friday and announced three new members would join the board.

Sachem Head founder Scott Ferguson will be a director, along with Richard Hill, chairman of Tessera Technologies Inc., and Jeff Clarke, chief executive officer of Eastman Kodak Co., Autodesk said in a statement Friday.

“The actions taken by the company are evidence that there is a strong alignment between the current board and shareholders on a path forward that will drive long-term shareholder value,” Ferguson said in the statement.

The board will initially be 13 members with the new additions, shrinking to 11 after the 2016 annual meeting because two current directors won’t stand for re-election Autodesk said. Sachem Head and Eminence have agreed to certain standstill and voting provisions that expire Sept. 30, filings show.

Sachem Head disclosed a 5.7 percent active stake Nov. 4, and Ricky Sandler’s Eminence filed with about 5.8 percent on Nov. 16, both intending to engage management and directors in talks to boost shareholder returns. The two activist funds agreed to work together that month, according to 13D regulatory disclosures.

Autodesk, based in San Rafael, California, had a market value of about $12.6 billion at Thursday’s close. The shares rose 1.6 percent to $56.84 at 11:44 a.m. in New York.

Cloud-Based

CEO Carl Bass has run the company since 2006 and has been moving it toward cloud-based software subscription services, which generally boost recurring revenue and earnings in the longer term. The company also makes 3D-design software used to create visual effects for movies and video games.

In the statement announcing the board changes, Sandler said the investors “strongly support Autodesk’s business model transition and move to the cloud.”

As part of the pact announced Friday, Ferguson will be on the board’s compensation and human resources committee, Hill will be a member of its corporate governance and nominating committee, and Clarke will serve on the audit committee.

Sachem Head was founded by Ferguson in 2012 after he left activist Bill Ackman’s Pershing Square Capital Management, where he was one of the first investment professionals hired. The firm has previously targeted companies including CDK Global Inc., the information technology provider to automobile dealers spun off from Automatic Data Processing Inc., and animal health-care group Zoetis Inc. It ran an earlier campaign at hair-care products maker Helen of Troy Ltd.

Sandler founded Eminence in 1998. The hedge fund, which manages more than $6 billion, most notably went activist at Men’s Wearhouse Inc. where it pushed for the retailer to merge with Jos. A. Bank. Clothiers Inc.

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