May 10, 2019

Breakingviews: Symantec board leaves company exposed

by Breakingviews.

Symantec’s board has left the $14 billion cybersecurity firm exposed. Chief Executive Greg Clark is suddenly leaving after almost three years in charge – but with no successor in place. That’s poor planning for any company’s directors. But Symantec’s board had plenty of reasons to be better prepared.

Granted, Clark is leaving to care for an ailing family member. At the very least directors should be ready for such unexpected developments, though, by being able to elevate another executive to the hot seat, even if they haven’t got a longer-term candidate in place. Instead, Symantec has had to rely on appointing Richard Hill as interim boss – a man who only joined the board at the start of the year.

Several other senior staff have left in recent months, including finance chief Nicholas Noviello. The company was also subject to an audit investigation last year. And buying LifeLock, which Clark unveiled just a few months into his tenure in 2016, has a history of legal problems, whistle-blowers and run-ins with regulators.

Meanwhile, Symantec is also dealing with pending litigation and an investigation by the Securities and Exchange Commission. On top of that, its enterprise business has been suffering – and was in part responsible for the company missing fourth-quarter earnings estimates on Thursday. The forecast it issues for this quarter is below analysts’ estimates, too.

All these issues ought to have sent clear messages to the board to get more involved and ensure the leadership of the company was at least taken care of. Its members are no slouches, counting Peter Feld, managing member of activist investor Starboard Value among them, as well as executives from buyout shops Silver Lake and Bain Capital. It even has an independent chairman – PayPal boss Dan Schulman.

Their inaction has left a gap at the top of the company and a stock price that fell as much as 15 percent in after-hours trading – on top of a 25 percent drop over the past year. Late last year private equity firm Thoma Bravo considered taking the company private. Now Symantec looks even more exposed to a takeover.

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