Commvault CEO Hammer takes a hit
- 04 May, 2018 15:59
Commvault is set to replace Neil Robert Hammer, its current CEO, as part of a new strategic plan that was flagged by the company’s board following a “constructive” dialogue with an activist investor.
The US-headquartered data protection and information management software vendor on 1 May revealed new governance initiatives designed to support a new strategic transformation plan.
The new strategic plan and the governance initiatives, the company told shareholders, followed what it referred to as “constructive dialogue” with investment group Elliott Management and an associated cooperation agreement between Elliott and the company.
“Commvault Advance is a multi-pronged transformation initiative designed to drive sustained business performance and accelerate the company’s growth in both revenue and operating margins,” the company told shareholders.
“With this plan in place and the associated operating priorities clearly defined, N. Robert Hammer and the Commvault board of directors have determined that it is the appropriate time to begin a search for a new CEO to lead the company through its next stage,” it said.
As such, the Commvault board said it would appoint a search committee and engage an executive search firm to assist with finding a replacement. Hammer, meanwhile, will continue to lead Commvault as chairman, CEO and president until his successor is appointed.
The company said it anticipates that Hammer will remain as chairman of the board after his successor is appointed.
"This is a time of opportunity and transformation for Commvault,” Hammer said in a statement. “The changes we are making across the company are designed to ensure we fully capitalise on Commvault’s market leadership and fortify a foundation for continued success well into the future.
“As we are unveiling new strategic initiatives intended to drive Commvault’s next phase of growth, I believe now is the right time to begin the transition to our next generation of leadership,” he said.
Hammer added that the company’s dialogue with Elliott Management showed that Commvault is “closely aligned” on many matters, and that it is pleased to be moving in a direction that the board believes will enable it to deliver increased value creation for its shareholders and customers alike.
When a replacement is found, Hammer will step down as CEO after more than 20 years at helm of the company, which he guided through an initial public offering (IPO) and public listing in 2006.
The “constructive” dialogue with Elliott Management and the subsequent multi-pronged transformation initiative come as company reports its fourth and full-year quarter financials, both of which saw net losses.
Specifically, in the fourth quarter of fiscal year 2018, Commvault reported net loss of US$1.7 million. This was despite an 11 per cent year-on-year increase in quarterly revenues, to US$184.9 million.
For the full fiscal year, Commvault reported a net loss of US$61.9 million. During the 12-month period, the company reported total revenues of US$699.4 million, an increase of eight per cent from fiscal year 2017.
It should be noted, however, that Commvault recorded approximately US$52.5 million of non-cash income tax charges related to the combined impact of the lower US corporate income tax rate on deferred tax assets and recording a valuation allowance against the remaining value of deferred tax assets.
Regardless, the Commvault board of directors also plans to appoint two new independent directors prior to the 2018 annual meeting of shareholders, with the new directors to be identified by Elliott Management, subject to approval of the board.
Upon these appointments, two existing board members will resign, resulting in a board that continues to be comprised of 11 directors, the company said.