Activist Starboard sues Autodesk in bid to mount proxy fight

Starboard Worth sued software program maker Autodesk on Monday to delay the corporate’s annual assembly and reopen the board nominating window and permit the activist to mount a proxy battle.

Activists can sometimes solely start a proxy battle, involving the nomination of a slate of administrators to exchange the prevailing board, in the event that they submit their proposals inside a particular window. Starboard confirmed in a letter on Monday that it has a stake in Autodesk valued at greater than $500 million. Autodesk shares rose 6.5% on the disclosure.

Starboard stated in its go well with that Autodesk, in “an obvious effort to stop a proxy problem,” intentionally waited till that window had closed earlier than disclosing to shareholders that it might delay its annual report and had launched an inner investigation into accounting irregularities and monetary misreporting.

“Manipulating company governance and disclosure obligations to present stockholders just one alternative of administrators successfully offers them no alternative in any respect,” Starboard stated in its grievance, which was filed in Delaware Chancery courtroom.

Autodesk started probing irregularities round the way it reported working margin and free money stream in early March. By March 8, Autodesk had knowledgeable the SEC of the probe, regulatory filings present.

The corporate waited till April 1 to inform shareholders concerning the investigation, filings present, which was greater than every week after the nominating window had closed.

The probe discovered that Autodesk executives made important enterprise selections round the way it billed clients and spent cash to enhance its free money stream and working margin. The findings had been introduced on Could 31, alongside the alternative of CFO Deborah Clifford.

“In a calculated scheme to beat back any potential challenges to their Board positions by means of a proxy contest, the incumbent administrators didn’t expose these egregious points relating to accounting misdirection and disclosure issues in the course of the nomination window,” Starboard stated in its go well with.

Starboard started talking with Autodesk’s board about these points and the broader underperformance of the enterprise shortly after the findings had been publicized.

An Autodesk consultant referred CNBC to its prior statements on the matter, the place it stated it might refuse Starboard’s requests to reopen the nominating window and delay the annual assembly.

“Starboard is searching for to leverage a now-completed inner investigation that resulted in no monetary restatement as a pretext for re-opening the advance discover interval,” the corporate stated within the assertion.

WATCH: CNBC’s interview with Autodesk CEO