Less than two years ago, Steve Bennett signed on as CEO of Symantec with a song and a lot of praise. Now, he’s on his way out the door. The network security and anti-virus company just gave Bennett the boot. Yes, Bennett was fired and has resigned from the board, in what one analyst called a "jaw-dropping" surprise.
Symantec board member Michael Brown will immediately fill his seat as interim president and CEO. Symantec is now on the hunt for a permanent CEO and has engaged an executive search firm to lead the charge.
"We recognize Steve's contributions to Symantec, including developing and leading a series of successful initiatives focused on organizational realignment, cost reduction and process effectiveness,” Symantec's board chairman Daniel Schulman said. “Our priority is now to identify a leader who can leverage our company's assets and leadership team to drive the next stage of Symantec's product innovation and growth.”
Wall Street Shocked
Schulman acknowledged that the changes Bennett implemented have helped establish a solid foundation for Symantec's future, but that didn’t secure Bennett’s future with the company. Apparently, the board felt it needed a change in order to reach its commitment to greater than 5 percent organic revenue growth and better than 30 percent non-GAAP operating margin targets by fiscal year 2017. Schulman was clear that, “This considered decision was the result of an ongoing deliberative process, and not precipitated by any event or impropriety.”
The stock took a hit on the announcement, which surprised Wall Street. Daniel Ives, analyst at FBR described the news as "jaw dropping" in a note to clients. Shares were down $2.60 to $18.30 in afternoon trading. "While we believe the company was slowly heading in the right direction," Ives says. "Last night's announcement leaves a major black-eye on Symantec."
Interim CEO Brown, former CEO of Quantum Corp., is not looking back. With recent key hires, he said Symantec has a leadership team in place that is capable of accelerating growth. He plans to work closely with the company to help execute the next phase of its transformation plan.
“The need for protecting and managing your information has never been stronger, and we must act aggressively to capture a growing share of this market,” Brown said. “By concentrating on product innovation and growth initiatives, we aim to leverage Symantec's tremendous assets across both consumer and enterprise applications to enhance our position as a market leader."
Butting Heads With the Board?
We asked Rob Enderle, principal analyst at The Enderle Group, for his take on the surprise move. He told us companies in turnaround mode need to leave the CEO in place for at least five years -- and the situation almost always gets worse before it gets better because whatever downward trends were in place take time to reverse.
“When you are making structural changes, it takes at least a couple of years to impact revenue,” Enderle said. “If you look at the cycle for Jobs and Apple, which was one of the most successful turnarounds in history, the company didn’t turn around much until year five or six and it really wasn’t out of the woods until after that. We saw the same thing with Lou Gerstner at IBM.”
As Enderle sees it, when companies keep swapping out CEOs they never get through the most painful part of the transition. A new CEO comes in with a new strategy and that five-year clock starts all over again.
“At Symantec, it looks like a CEO on the board and the CEO running the company bumped heads and the CEO running the company lost,” Enderle said. “That happens a lot. It’s one of the arguments for not stacking the board with ex-CEOs. You get all these type A people that are used to giving orders, not taking them.”