June 22, 2016 — Normally the announcement of a new board appointment isn’t big news, but yesterday’s news that CDK Global’s board has elected Lithium CEO Robert “Rob” Tarkoff to its board is another sign of the company’s ongoing overhaul.
CDK has come under pressure from investors to speed up its transformation plan which includes a massive restructuring along with a $1 billion stock buy back initiative. The pressure became public in early May following the first of two letters activist investor Elliott Management sent to CDK’s management team, led by Brian MacDonald. (Read our analysis of what the two letters mean for the future of CDK).
Tarkoff’s appointment is the latest in a series of moves CDK has made that follows suggestions made by investors in the two recent letters. Although, the timing of the suggestions and CDK’s subsequent “responses” indicates the management team has already been working to implement many of the ideas prior to the two recent two letters.
Meanwhile, Tarkoff’s appointment fills a vacancy created by former CEO Steve Anenen’s retirement in March. It also adds a noted software expert to the eight person board — a move that should be welcomed by investors. He is the CEO of social community management software firm Lithium Technologies. Formerly, he was an executive with Adobe Systems and EMC Corp.
“As we execute our transformation plan and implement our strategy to connect dealers even more closely to consumers, Rob’s expertise will be a valuable addition to our Board,” said Brian MacDonald, CEO at CDK in a statement yesterday about the appointment.
“I am very pleased to join the CDK Board at this pivotal time for the Company,” said Robert Tarkoff. “This Board has shown its commitment to taking swift action that will create operational efficiencies and enable the Company to meet its financial goals, while strengthening the customer experience. It is a privilege to join CDK, and I look forward to working closely with my fellow directors and CDK’s talented management team as they execute their plans to enable the company to fulfill its potential.”
Beginning July 8, shareholders have a one month window to nominate directors to the board. It will be interesting to see whether the activist investors push to have one or more of their people added to the board.