Well, that was quick.
One month after Starboard Value disclosed a 5.8 percent stake in Symantec Corp. and nominated five director candidates to its board, the activist hedge fund and the cyber-security giant have reached a truce.
The company, best known for its Norton AntiVirus software, agreed to add three of Starboard’s nominees to its board: Starboard partner Peter Feld; Rick Hill, who has a lot of experience in technology hardware and software; and Dale Fuller, who Starboard says “has substantial expertise in the technology industry, and directly applicable experience in the cybersecurity market.”
“As we began our board refreshment process, we were mindful of upcoming director retirements given our board member age limit and were pleased that Starboard offered a number of talented candidates to ensure that Symantec maintained a strong and engaged board,” said Dan Schulman, Symantec’s chairman, in a company statement on September 17. “Our new directors have financial and business acumen, public company board experience and technology sector expertise that complement our board’s skills and experience.”
Investors seem happy with these recent developments.
Shares of Symantec rose more than 4 percent Tuesday to $20.65 each, and are up more than 10 percent since Starboard’s initial 13D filing in mid-August.
The stock, however, is still down about 29 percent since May 10, when the company said in an earnings report that its audit committee had begun an internal investigation tied to concerns raised by a former employee. Symantec voluntarily contacted the Securities and Exchange Commission about the development, according to the announcement, in which the company provided disappointing guidance to investors.
Starboard did not respond to a request for comment on the firm’s plan to boost the company’s value.
“We invested in Symantec because we see an opportunity for substantial stockholder value creation,” Starboard partner Feld said in the September 17 announcement. “We are aligned with management in our belief that there are significant opportunities to continue to drive improved financial results, including enhanced operating margins and growth.”
In this week’s announcement, Symantec said it will appoint an additional independent director from a mutually agreed-upon list of three to five candidates, shortly after its annual meeting later this year.
Symantec has agreed to name Feld to its nominating and governance committee, as well as to its compensation and leadership development committee. The company also agreed to appoint Fuller to the nominating committee and Hill to the audit committee. Starboard, in turn, agreed to withdraw its nominations and not launch a proxy fight.
Symantec still has not disclosed the results of its investigation, leaving investors in doubt about the potential for a major restatement of prior financial results.
In late May, the company warned it would delay the filing of its annual report for the fiscal year ended in March. Symantec also delayed the filing of its earnings report for the company’s fiscal first quarter, which ended in June.
In early August, the company reported first-quarter results that exceeded earnings expectations “but seriously disappointed on more leading metrics and guidance,” according to a Credit Suisse Group analyst report at the time. At the time, Credit Suisse cut its price target for the company’s stock to $23 from $26, while UBS Group reduced its target to $21 from $23.
Keep in mind these moves took place shortly before Starboard disclosed its activist stake.