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Symantec President, COO Michael Fey Out As Part Of Leadership Shuffle

As part of Fey's separation agreement with Symantec signed Wednesday, he has agreed to forgo severance benefits, unvested equity awards, and cash bonus payments.

Symantec announced that second-in-command Michael Fey is resigning and forgoing severance benefits just months after an internal investigation into concerns raised by an ex-employee was concluded.

The Mountain View, Calif.-based company said on Thursday that Fey's departure from Symantec is effective immediately. Fey started as president and COO of Blue Coat Systems in December 2014, and assumed the same role at Symantec in August 2016 when the company's acquisition of Blue Coat closed. Fey came over to Symantec alongside Greg Clark, who had been Blue Coat's CEO and assumed the CEO mantle at Symantec.

"Today is an exciting and difficult day. As I have chosen to embark on the next stage of my career," Fey wrote in a post on his LinkedIn page. "While this was a difficult decision to leave this awesome team, I am very excited about the future."

[Related: Symantec Completes Internal Probe, Will Defer $12M Of Revenue]

Largely filling Fey's footsteps will be former Skyport Systems president and CEO Art Gilliland, who led the hyper-convergence startup from pre-product startup to being acquired by Cisco Systems in early 2018. Gilliland previously worked at Symantec from early 2006 to mid-2012, culminating in a 15-month stint leading the company's 1,300-person enterprise information security business.

Gilliland will serve as Symantec's EVP and GM of enterprise products, where he will oversee the company's product and engineering teams, the Enterprise Security customer support organization, and the Security Technology and Response (STAR) research team. Gilliland will report directly to Clark, who has also assumed the president role at Symantec following Fey's departure.

"Art is a widely respected executive both inside and outside our organization, and we are excited to welcome him back to Symantec," Clark said in a statement. "We look forward to benefiting from his extensive enterprise security expertise and years of endpoint and network experience in his new role."

Symantec's stock was up $0.14 (0.62 percent) to $22.72 in after-hours trading Thursday. However, that's still $6.46 (22.1 percent) below the company's trading price of $29.18 prior to the announcement of an internal accounting probe on May 10.

In addition to his stints at Symantec and Skyport Systems, Gilliland led Hewlett-Packard's 1,700-person, $800 million enterprise security business from mid-2012 to mid-2015, where he was responsible for global P&L, sales, marketing, product development, operations and support. In addition, Marc Andrews will continue in his role as Symantec's SVP of worldwide sales, the company said.

As part of Fey's separation agreement with Symantec signed Wednesday, he has agreed to: forgo all severance benefits, unvested equity awards, and cash bonus payments; abide by a 12-month non-competition and non-solicitation clause; and release Symantec from any claims made by Fey against them, according to a filing with the U.S. Securities and Exchange Commission (SEC).

In exchange, Symantec has agreed to extend the exercise period for Fey's vested stock options until February 2020 or the final exercise data for such options.

The audit committee of Symantec's board of directors in September identified “certain behavior inconsistent” with the company's code of conduct and related policies, and referred the matter to the company for appropriate action. However, no employment actions with respect to any of Symantec's highest-ranking executives have been recommended as a result of the investigation.

Fey said that his departure was not linked at all to the investigation and that the lack of severance was due to the fact that he resigned. Symantec declined to comment on whether Fey's departure was connected to the findings from the investigation.

The company launched an internal probe in May in response to issues raised by a former employee around retaliation, stock trading plans, commentary on historical financial results, and reporting of some non-GAAP measures, including those that could impact executive compensation programs.

Four months later, Symantec said $13 million from a customer transaction had been improperly recognized as revenue in the quarter ended March 2018, while just $1 million should have actually been recognized during that period.

During Symantec's earnings call earlier this month, Clark expressed concerns about "momentum loss" in the company's Enterprise Security business, with implied billings falling 3 percent on an adjusted year-over-year basis due to longer sales cycles in the company's large, multi-product platform sales.

Clark said Symantec intends to recapture momentum in its Enterprise Security business over the next six months thanks to the company's sales capacity and cyber defense leadership. And in the fiscal year beginning April 1, 2019, Symantec said it expects Enterprise Security segment organic revenue to grow in the high single to low double-digits on a year-over-year basis.

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