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Polycom CEO Andy Miller Resigns - the End of an Era

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Polycom CEO Andy Miller Resigns - the End of an Era

By: -
24 Jul 2013

Polycom CEO Andy Miller Resigns – The End of an Era

As is the case with any abrupt and unplanned CEO departure, the resignation of Andy Miller as Polycom's President, CEO, and member of the board of directors, as announced by the company on July 23 simultaneously with its Q2 earnings call, represents the end of an era.

When Miller took the helm in 2009, Polycom was a company in dire need of change.  The company was viewed as a technology company selling point products in a world seeking end-to-end solutions.  The sales team was not executing effectively.  The marketing engine was under-performing.  The employee ranks were bloated with layers of mid-level management.  Innovation was slow – both in terms of product development and corporate strategy.  And perhaps most importantly, there weren’t enough people actually touching customers and generating demand for Polycom solutions.  The net is that the company was tired – and it was showing.

In many ways, Andy Miller was the perfect new CEO to drive fast change.  He was highly driven, aggressive, focused on increasing sales and shareholder value, and willing to change everything with no delays and no regrets.  And he did just that.  Within a few months, Miller brought in a brand new management team, re-spun the sales and marketing divisions, and redirected the company efforts to be more externally facing.  In the end, he replaced ~ 40% of the company employees, and put the fear of termination into everyone else. 

This plan put in place by Miller may sound severe – but it was just what the patient needed, and it generated immediate results.  People worked harder, and productivity increased.  Things happened faster, with fewer people, and the sales team became more focused.  Andy injected a sense of urgency into Polycom that was sorely lacking before.  However, at some point things started to change as the atmosphere of speed and precision evolved to an atmosphere of fear and constant pressure where "unquestioned loyalty" became the measure of worth.  

For the record, Andy joined Polycom on June 8, 2009 as COO EVP of Global Field Operations, when the share price was $10.19 and became CEO in May 2010.  The July 23, 2013 price was $11.18, representing a compound annual growth rate of approximately 2% during his tenure at Polycom.  Somewhere between the beginning and end, the share price hit ~$34.

So now we enter the post-Miller period at Polycom with a new (but highly experienced and software-savvy) CEO, a team of ~ 4,000 motivated and probably exhausted global employees, and a product portfolio including hardware products that generate most of the revenue and software products that the company has yet to fully promote.  Today’s Polycom looks nothing like the Polycom from just 4 years ago – and despite the recent controversy, much of the thanks goes to ex-CEO Andy Miller.

Strange but True

While rumors of Mr. Miller's impending departure have circulated for several quarters, we have to admit that we are surprised by the circumstances surrounding his resignation.  According to the press release, Polycom's audit committee found "irregularities" in Mr. Miller's expense submissions, for which Mr. Miller accepted responsibility.  We don't know the details of the situation, and certainly the lawyers for Polycom and Andy have been busy working out the path forward, but we find it strange that Andy wasn't immediately shown the door.  Instead, according to the SEC filing, Andy Miller remains an active Polycom employee until August 15th, at which point he will receive a US $500k payment, a few laptop computers, some additional toys, and will walk away with a pile of stock options.  While separation payments like this are not unheard of, you have to wonder what's really going on.  It is hard to believe that admitting to “expense irregularities” doesn’t automatically trigger some form of termination-for-cause clause.   Again, we are not attorneys and haven't reviewed Miller's employment agreement, but something here doesn’t add up.

Lastly, we respect Polycom for being so open about this situation instead of simply tagging this as a “resignation for personal reasons.”  Such transparency is always appreciated.


Don't forget that it is the Channel that sells all of the kit and since Andy Miller's appointment it has been the channel that has taken the brunt of the punishment with lower discounts, lower margins, higher demo stock commitments and even greater costs to continue to participate as an accredited reseller. This all in a business that has been in decline, whilst reseller numbers have increased....7000 of them worldwide. Mr Miller's clear lack of honesty and integrity could easily be seen as endemic in the Polycom culture. They take the reseller for granted, many of whom are owner managed businesses using their personal money, not NASDAQ'S, to invest in their business and earn a living. Perhaps they will appoint a CEO who appreciates that the channel ARE customers and values them as much as he/she values his/herself?

highly appreciated comment. Miller and his team down to channel management really seemed to have forgotten what partnership means.

i would 100% agree with the gentleman's comments. Andy made reseller life miserable. its nature call guys, what goes around comes around. Andy had to pay the price for what he did for the reseller community, i hope polycom will realise plight of resellers and will come out with a better plan to deal with reseller and will think about their concerns also rather then being selfish and thinking about numbers and their own figures.

This is spot on. Polycom will not even call the integrators customers - they are a necessary annoyance in the way of the real customer - the end user. All focus is on the end user and dealer be damned; whoever gets the p.o. first is all that matters. Horrible business practice.

Polycom needs to come clean about how much money and for how long this was going on. Full disclosure is the only route safe route forward. Two months after Dave DeWalt leaves and all this comes out along with two other senior level "resignations" that you don't mention. Kudos to you for questioning why the payoff for what appears a for cause termination.

Your characterization of Andy's near-term success is not really accurate. What Andy did was ride changes that had already been in the works and set in motion by the former CEO Bob Hagerty, and were just about to hit the market when Andy took over. He rode that for several quarters in the meantime making it look as if he was making "fundamental" changes; but he wasn't. He changed a lot of players needlessly. And, by the convulsive change he authored he so destabilized the workforce that no one wanted to work there anymore and voluntary turnover skyrocketed. During that time he became almost universally disliked, even hated, by employees and management. Even many of his own personal hand-picked colleagues that he brought in ended up quitting. Working for the man was impossible. He was arbitrary and capricious in everything he did and he treated people so poorly that really great people simply left for better assignments. Look at his track record elsewhere before PLCM. I think you'll find he lowered shareholder value everywhere he's been. When Chairman Dave DeWalt picked up a new CEO assignment recently it was in conflict with PLCM so he had to give up being on the Board. Dave was Andy's only protector and once he was gone the Board turned on him. Yes, they could have simply said to him, "Well, PLCM has gone flat for too long and we need to make a change." However, I would suggest that the audit of his expenses found very little of substance. Andy likes to spend money especially when he benefits from it, but he doesn't have a reputation of handing in bogus expense reports. No, I think using the expense issue was a more subtle and effective excuse to blackball him so that he doesn't have a chance to work in a position of power again anytime soon; if ever. It's easier to make a 'come-back' from a sex scandal than from an expense scandal regardless of it being a paltry amount. Is it a bit like finally getting Al Capone on tax evasion instead of something major? Who knows. I don't agree with the way his departure was handled, not because I don't think he should have been removed, but because I think it could do more harm to shareholder value and depresses the stock price in such a way that it potentially puts the company into play either by another public company or a private equity group. Or is that the objective? Don't be surprised if Kevin Parker's (interim CEO)private equity firm or Charlie Giancarlo at Silverlake, etc., don't end up making PLCM an offer "they can't refuse". As my father used to say, "The plot sickens..."

Andy is a wealthy and powerful man, just how much money do people need to keep their fingers out of the till? was he the only one at it one wonders.

Simply happy for Polycom and us Mr. Miller has left the company. Remember the reactions of the Tandberg employees and channels when he was fired? This other change was desperately required. Mr. Miller seems to be the right manager for hard & quick changes. But he definitely was not the best CEO for implementing a sound company culture. Scaring the management and employees on a constant level since he was appointed CEO only can lead to what Polycom is today: Perceived being arrogant in the market (channels & end-users), rather low level quality products, delayed transition for becoming a software company, missing key functionality especially in infrastructure products, did not set a considerable benchmark in the market with the recent, massive product portfolio change, missed a huge opportunity to bypass Cisco which was struggling integrating Tandberg. So, Mr. Miller has gone. I really hope for the responsible management at Polycom this was for reasons beyond the expense report?

I agree with WH analysis. There is certainly intrigue surrounding a departure like this one. I suspect that the departure has mostly to do with lack of clarity on how to transform an endpoint company to a software company while keeping the revenues going. Why else would they boot the sales and the marketing leaders? They all could not have had 'accounting irregularities'. The usage of interactive video in meetings is growing leaps and bounds. The industry needs a legacy player like Polycom to be strong and produce quality endpoints. I personally prefer Polycom endpoints for the larger conference rooms.

Andy's departure cannot be a surprise anybody who has been watching the technical path Polycom has been on. Andy and the team just plainly did not execute. The vision was based on buzz words Andy needed to use to demonstrate that they were adjusting to the market. He and his team failed to recognize that delivering on a vision required more substantial change with the engineering ranks. The control of engineering now lies within teams that are more worried about protecting their own interests than demonstrating technical leadership. The teams more capable of innovation have been stifled or eliminated. Andy, Sudhakar and the less public departures of Manny Kostas and Tracy Newell are a sign that Polycom may have recognized that change was needed to right the ship. Now is the time to bring in new leadership that can assess what has transpired over the last 3-4 years and make the necessary changes so that Polycom becomes a company that delivers both innovative products and can build mutually rewarding partnerships. Don't get mired in the technicalities of why Andy Miller left the company. This is positive move and I personally hope that Kevin Parker is able to cut through the rhetoric to make the right changes as deep as they may be.

The way Polycom has been handling not only the resellers, but also the customers is finally impacting on sales. While most of the revenue of Polycom is coming from expensive room endpoints, and as this market is now facing a real competition from south-east Asia (similar specs, price 50% lower or more!), without a loyal ecosystem, it will be impossible to handle. Maybe "unquestioned loyalty" is as concept you can impose on your employees, but for channels and customers this is something you have to earn! I guess that having a "formal" reason (even if difficult to believe" to have Andy resign is a lot better than having to recognize the sales strategy has been a big mistake and that's its almost impossible to revert!!!