VeriSign's CEO Signs Off
VeriSign Inc. (Nasdaq: VRSN) started today with a bang, announcing that president and CEO Stratton D. Sclavos had stepped down from the security firm. (See VeriSign CEO Steps Down.)
In an early-morning teleconference that caught many observers by surprise, the company introduced a new chairman of the board -- Edward Mueller -- and a new president and CEO, William Roper.
VeriSign executives wouldn't elaborate on the timing or specific reason for Sclavos' departure, but they did say it was time for a change. "Earlier today, VeriSign issued a press release that Stratton Sclavos has resigned from the company, and the Board accepted [his resignation] because it believes the company has reached a point where it can benefit from new leadership," Roper said in the teleconference.
The big question on everyone's mind was whether Sclavos' departure has anything to do with the ongoing investigation into VeriSign's stock option grants and practices. But Roper noted that so far, "the findings... didn't show intentional wrongdoing by the management team, including Stratton."
VeriSign was subpoenaed for documents by a grand jury in California last June, and the Securities and Exchange Commission (SEC) also had informally asked for documents on its stock option grants and practices. The company last fall said it would have to restate its financial statements for 2001-2005 and first quarter 2006 to include stock compensation expenses related to past stock grants. According to VeriSign, some grants didn't have the proper documentation, or initial grant dates and prices had been modified.
Unlike some executive sendoffs that avoid the departing elephant in the room, Sclavos received some unsolicited kudos today from the VeriSign board. "I want to thank Stratton for all he accomplished while at the company the last 12 years," Mueller said in an opening statement during the briefing. "He established us as a global corporation that millions of businesses rely on every day."
Industry analysts say the move was likely a way for VeriSign to appear to be moving ahead despite the ongoing investigation. "It's more symbolic," says Brenon Daly, a financial analyst with the 451 Research . "There was the sense that this was just dragging [on and on]. Showing that the Board is decisive, cleaning [things] up, and giving the perception of moving ahead."
Daly says Sclavos was the face for VeriSign's biggest moves, including the deal to purchase Network Solutions Inc. several years ago, as well as several acquisitions at a time when "roll-ups weren't popular," he says. "The quick take is he's been such a lightning rod for criticism as the face of VeriSign, so his high profile was probably essentially a distraction," Daly says.
But Sclavos seemed to take it all in stride, Daly says. "He understood being the face of this business was going to attract some arrows."
Although he's so far been exonerated by VeriSign in its investigation -- as Steve Jobs was exonerated by Apple during its stock option investigation -- Sclavos didn't get to keep his job, as Jobs did. "Steve Jobs was the golden boy -- he had the Hollywood story of resurrecting the beloved Apple," Daly says.
Meanwhile, Roper, who says the company so far is happy with the results of its restructuring that began earlier this year, listed his top three priorities: continuing to execute VeriSign's business strategy; emphasizing managerial discipline and execution, including cost control and better administrative processes; and completing the stock option review investigation.
"We want to work closely with our executive team on our strongest opportunities," said Roper, who has been a member of VeriSign's board since November of 2003, and most recently was executive vice president of Science Applications International Corporation (SAIC). "You shouldn't expect dramatic changes."
VeriSign postponed its analyst day from June 6 to this fall, citing the company changes.
Overall, analysts see VeriSign's change as a healthy one. "This would be a great time to stop thinking about what it wants to be and what it actually is -- through a refocus and concentration on leveraging what it has, spinning out dead wood and supporting what works," said Nick Selby, a senior analyst at The 451 Group.
— Kelly Jackson Higgins, Senior Editor, Dark Reading