Champagne is popping and congratulations and high-fives are
being directed at Workday (
) and co-founders David Duffield and Aneel Bhusri. Unlike the
public relations nightmare that followed the Facebook (
) stock offering, shares in the cloud-computing applications
provider have almost doubled in value since its October 12th IPO
- further enriching both men.
Both Duffield and Bhusri have had success building and selling
software companies during the past twenty years, culminating in
the January 2005 sale of PeopleSoft, the world's second-largest
application software company, to Oracle (
) for $10.3 billion. As of September 2012, the 72-year old
Duffield had an estimated net worth of $2.1 billion, ranking him
221 on The Forbes 400. At current values, his 44% stake (of the
160.3 million shares outstanding) in Workday has boosted his
wealth by an additional $3.9 billion.
Wealth enough to bypass smaller sums? Not entirely, it seems.
Financial documents filed during the regulatory review for the
Workday IPO disclose:
• In June 2010, Workday entered into a lease agreement with
Lake Tahoe Land Company, an equipment leasing business owned by
David Duffield. The contract provides for equipment financing
credit for purchases of information technology and related
equipment for use in Workday's business operations. To date,
Workday has borrowings outstanding of $3.8 million (the
percentage rate of the loan hasn't been disclosed). Though not
detailed, the wording of the documents also suggests that Workday
is paying rent on space for unspecified office properties, too
(lowned by Duffield?).
• In January 2009, Workday entered into a consulting agreement
with Nevada Pacific Consulting that employs the latter company to
"provide finance and administrative services to us on a
part-time, as needed basis." As of January 31, 2012, Workday had
paid a total of $114,000 in consulting fees. The owner of Nevada
Pacific - one David Duffield.
• Duffield's son Michael works as a general manager on
Education & Government projects at Workday. He must be doing
an impressive job, seeing that his cash compensation (salary plus
bonus) jumped 54% year-over-year to $573,000 in the fiscal year
ending January 31, 2012.
• And, Amy Zeifang, Duffield's daughter, serves on a
"part-time basis" as a director of Corporate Giving, the
philanthropic arm of Workday. Her salary wasn't disclosed in any
To be sure, Duffield has done some good with all this money.
According to published reports, through his Duffield Family
Foundation, he and his wife have donated more than $290 million
to "Maddie's Fund," an animal welfare foundation named after his
beloved schnauzer. Not exactly the Gates Foundation's war against
polio, but every man gets to give away his wealth as he sees
Here's a link to the
take on the value of Workday stock.
If Duffield and Aneel Bhusri botch things, good luck in firing
them, Workday shareholders. The equity structure of the IPO
provided both men with Class B shares - 10 votes per one vote for
every share of Class A stock. This capital structure voids any
possibility of a hostile takeover, reflecting lessons learned in
the losing battle fought a decade ago to keep PeopleSoft out of
the clutches of Larry Ellison's Oracle. Together, Duffield and
Bhusri, control 67% of the voting power.
In total, holders of Class B stock control approximately 98%
of the voting power of outstanding stock. The list of such
stockholders includes Bhusri's venture capital firm, Greylock
Partners, current Workday executives and a board of directors
with unflinching loyalty to Duffield (many of whom were
lieutenants at the erstwhile PeopleSoft).
Substantially all of the 137.5 million shares of Class B
shares were purchased or optioned at prices ranging from a few
dollars to $13.75 a share. These shares will become available for
sale on or around April 15, 2013 (subject to "lock-up" terms).
Given their pre-existing net worth, it's doubtful that Duffield
or Bhusri (estimated wealth of about $2 billion) will look to
flood the market with their shares.
David J. Phillips is a contributing editor at YCharts,
which includes the just-released
YCharts Pro Platinum
for professional investors.