Avid Replaces Chief Financial Officer

Posted by Joe Zaller
Apr 25 2013

Avid announced that John Frederick, who joined the company in February 2013 as Chief of Staff, has assumed the role of CFO.  Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions.

Frederick replaces Ken Sexton, who has been Avid’s CFO since 2008 under previous CEO Gary Greenfield.  Avid says that Sexton, who, earned $2.4m in 2011 according to Bloomberg Business Week, will continue on in a consulting capacity and work closely with Frederick in order to ensure a smooth transition.

New Avid president and CEO Louis Hernandez, who previously worked with Frederick at Open Solutions said: “John is a seasoned financial executive with extensive experience directing the strategic performance of high-growth technology companies. I previously worked with John at Open Solutions, and John’s leadership and financial acumen were instrumental in our successful sale to Fiserv. I am thrilled to have him be part of the team at Avid, as we take the company into its next phase of growth.”

Hernandez added, “On behalf of the Avid community, I also would like to thank Ken Sexton for his guidance, leadership, and years of service to Avid. We are fortunate to be able to retain him in a consulting capacity, and to insure a smooth transition of his responsibilities.”

While it’s not unusual for a new CEO to bring in a CFO with whom he’s worked with previously, Frederick’s appointment may draw extra attention because Avid is in the middle of a major review of its previous accounting practices.

In February 2013, Avid announced that it would delay the release of its Q4 and full-year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

Because of this review, Avid also delayed the filing its annual 10-K with securities regulators. As a result, Avid was notified by NASDAQ in March 2013 that the company no longer complies with NASDAQ Marketplace Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.  Failure to comply with this rule could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

At that time, Avid said it was “working diligently to complete the review and continues to focus its efforts on completing the Form 10-K filing as soon as possible,” and that it intends to submit a plan to NASDAQ staff as to how it intends to regain compliance with continued listing requirements.

Under NASDAQ’s rules, the company has until May 20, 2013 to submit this plan.


According to Avid, the company has signed a five year employment agreement with Frederick that provides for (i) an annual base salary of $425,000, (ii) a signing and a relocation bonus totaling $200,000, (iii) an annual incentive bonus target equal to 100% of annual base salary (up to a maximum of 135% of annual base salary), (iv) an annual travel and housing allowance of approximately $134,000 subject to normal tax withholding and (v) a long term equity award consisting of time vesting stock options and restricted stock unit awards and performance vesting options (which vest upon attainment of specified targets relating to the Company’s return on equity).  Frederick also received 65,000 time vesting options and 65,000 time vesting restricted stock unit awards, as well as 400,000 performance vesting options. Frederick must repay the signing bonus of $150,000 to the Company in full if he is terminated for cause or resigns without good reason prior to February 11, 2014.

The company also said that it has entered into an agreement with former CFO Sexton to provide consulting services for an initial period ending September 30, 2013. According to the agreement Sexton will be paid $15,000 per month and commit 45% of his time to assisting the company with the ongoing accounting evaluation, and other matters relating to the transition of duties to Frederick, and other projects specified by the company.

The company also said that as part of his separation from the company, Sexton will receive (i) payment of his accrued and unpaid salary and benefits, (ii) salary continuation for twelve months in the aggregate amount of $433,000, (iii) remaining eligible for a prorated annual incentive bonus for the fiscal years 2012 and 2013 if the company pays bonuses on account of such years to executives who remain employed with the Company, (iv) payment in respect of COBRA premiums, (v) outplacement services and (vi) thirteen months additional vesting on his time-vesting equity awards which are unvested as of the Transition Date.



Related Content:

Press Release: Avid Announces New Chief Financial Officer

Bloomberg Business Week Profile of Ken Sexton

Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall

Greenfield Out as Avid CEO, Replaced by Louis Hernandez


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