Polycom CEO Resignation Leads to Share Price Drop, Investigation
Andrew Miller’s resignation as president and CEO of Polycom helped drive down the videoconferencing vendor’s stock price and kicked off an investigation of the company by a shareholder rights law firm.
Polycom, the second-largest videoconferencing vendor behind Cisco Systems, announced July 23 that Miller, who had been with the company since 2009 and became president and CEO a year later, had resigned the positions after the discovery of “certain irregularities in Mr. Miller’s expense submissions.”
Polycom officials did not disclose details about those irregularities, which were discovered by the board of directors’ audit committee, but said that Miller had accepted responsibility for them and that the issue did not have any material impact on the company’s current or previously reported financial statements. It also did not involve any other employees, according to the company.
Kevin Parker, a managing principal at Bridge Growth Partners and a member of the board of directors, is taking over as interim president and CEO until a permanent replacement for Miller is found.
“Andy Miller’s resignation under these circumstances is disappointing and should not be viewed as a reflection of the financial integrity of the company, the strength of our team or our plans for the future,” Parker said in a statement. “I look forward to working with the Polycom team, partners and customers to drive our strategy forward, and we thank Andy for his four years of service.”
Miller came to Polycom after spending 11 years with Cisco and as CEO of Tandberg, a video conferencing technology vendor that was bought by Cisco in 2010 for about $3.3 billion.
Polycom’s stock price plunged 15 percent July 24 in the wake of Miller’s resignation, and after the company reported second-quarter revenues of $345 million, which beat financial analysts' expectations, and net income of $26 million. However, officials July 23 also forecast third-quarter revenues at between $330 million and $340 million, reportedly below Wall Street expectations of about $355.5 million.
In addition, shareholder rights law firm Johnson and Weaver announced July 24 that it was investigating whether any officials or the board of directors violated state or federal laws in connection with the conditions of Miller’s resignation.
According to the announcement, Miller will still be employed by Polycom until Aug. 15 and will receive a lump-sum payment of $500,000 as part of an agreement reached with the company. He also will get a payment equal to 12 months’ worth of reimbursements under the COBRA health benefits program, will be able to keep his company-issued laptops and other devices, and will be eligible to receive his bonus for the first half of 2013, according to Johnson and Weaver.
Polycom officials have been aggressively expanding the company’s software offerings around its RealPresence platform to address the growing demand for videoconferencing capabilities in a growing range of devices—from desktops and notebooks to tablets and smartphones—as well as the cloud.
IDC analysts in May said that videoconferencing equipment revenue worldwide fell 13.2 percent over the same period in 2012. They pointed to a number of reasons, from challenging economics in some regions and longer procurement cycles, as well as the trend toward software-based solutions and the cloud.
Cisco remained the top vendor with 43.4 percent of the market, followed by Polycom at 26.5 percent.