News out of the offices of McAfee Inc. has raised eyebrows, as the company’s board of directors announced it has named Dale Fuller as interim CEO and president following the retirement of George Samenuk as chairman of the board and CEO. McAfee also says it has fired company president Kevin Weiss.
The executive departures at the world’s No. 2 ranked anti-virus software maker are related to accounting discrepancies in its stock options grants. McAfee would absorb charges of (US)$150 million in order to restate 10 years of earnings after a probe into its’ stock option practices dating back to January 1995.
Fuller said the Santa Clara, Calif.-based company could not disclose any details of the Samenuk and Weiss exits or of the accounting discrepancies at this juncture. He said more detail would be provided during McAfee’s regularly scheduled quarterly earnings call on Oct. 26.
McAfee has appointed a search committee to conduct an internal and external review for a new company CEO.
“This company has a solid team of people and we’re on the right track as we execute our strategies in security and risk management,” Fuller said. “This has been a difficult decision for our board but we believe it is in the best interests of our shareholders.
“My role in the internal investigation is now complete and I will be focused 100 per cent on the necessary steps to ensure the continuance of our business.”
Fuller said he’d be spending the next few days speaking to McAfee’s customers. Moreover, he downplayed the impact of Weiss’ departure on McAfee’s sales team and strategies, saying he has total confidence in the company’s sales team and that he doesn’t anticipate any disruption in McAfee’s business.
With the internal investigation now complete, focus shifts to what officials called phase two: The restatement of 10 years worth of earnings which is expected to be a complex and time-consuming affair. Full disclosure isn’t likely until the conclusion of said financial restatement to the U.S. Securities and Exchange Commission (SEC).
McAfee now joins a dubious list of high-tech firms that have come under recent scrutiny for their handling of stock option grants.
“It’s an ugly morning (in the IT world),” said Rob Enderle, principal analyst for The Enderle Group. “This is a catastrophic change leaving McAfee virtually headless and creates a very serious problem for the company. Tactically, McAfee can continue to operate but likely at reduced capacity due to the distraction, long term, they now have no reliable strategy because those that set that are virtually all gone. CNet isn’t looking much better and suddenly Steve Jobs is at risk.”
Fuller joined McAfee in January 2006 and served more than six years as CEO and president of Borland Software Corp. He was also CEO for WhoWhere? Inc.; an Internet company that was purchased by Lycos in 1998. Prior to that he served as general manager and vice president of Apple Computer’s Powerbook division and as vice president and general manager of NEC’s portable computer division.
“I look forward to taking on this leadership role and am committed to continuing the company’s initiatives to provide customers worldwide with innovative security and risk-management software,” he said. “I am confident of our company’s deep bench, strength, and talents. Our future remains bright.”
McAfee announced last May it was communicating with the SEC on the issue of stock option grants and at that time fired general counsel Kent Roberts in connection with the investigation. Last June, the SEC subpoenaed McAfee and the formal probe was launched.
Beyond Fuller’s appointment, McAfee officials also named Charles J. Robel as non-executive chairman of the board. Robel joined McAfee in June 2006. He had served as a managing member and COO at Hummer Winblad Venture Partners up to 2005. Robel began his career with PricewaterhouseCoopers, from which he retired as a Partner in 2000.
“After almost six years at McAfee, I have retired as chairman and CEO in the best interests of the company, its shareholders and employees,” Samenuk said in a statement. “I regret that some of the stock option problems identified by the special committee occurred on my watch. I am proud of the accomplishments of the McAfee team in serving our millions of customers during my tenure. I wish the McAfee team the best of luck in the coming years.”
Fuller ended the Oct. 11 conference call abruptly stating he and other McAfee executives had “a lot of work to do” but he added he looked forward to providing greater detail of recent events in due time.