Eddie Sheehy and the disappearing Nuix share options

Here’s a conundrum for someone who writes about eDiscovery, its players, people and market. A company with whom you have had a long relationship falls out with its former CEO who was the original cause of that relationship and with whom you worked happily for years. It is too big a story to ignore. All you can do is report what you see. What I see is appalling.

The company is Nuix, perhaps the leading software company in eDiscovery, investigations, security and compliance. The former CEO is Eddie Sheehy who, with a small and dedicated team, brought Nuix from being a small Australian forensics company to worldwide standing before leaving in early 2017. It was no secret (or, at least, it was easily deduced) that there were differences of opinion between Eddie Sheehy and Nuix’s main shareholder, Macquarie, as to the direction the company should take.

So far, so not uncommon in any industry. Nuix was not the only big player facing choices at a time of considerable change in the worldwide eDiscovery market, and choices bring scope for differing views.

What brings this history back to prominence is a report of a dispute between Nuix and Eddie Sheehy about his share options. It reached me via Twitter in the form of a news report by Neil Chenoweth at Australia’s Financial Review. The heading, “Presto! $110 million Nuix options disappear”, seemed more dramatic than one would expect from a serious financial commentator, but that is exactly what the article reports – that Nuix is denying Eddie Sheehy the 50:1 share split granted to every other option-holder. The others include former chairman Tony Castagna, whose travails with the Australian tax authorities are covered in this article from Financial Review. As that puts it:

Even when things looked bleakest for Castagna, there was no move to scale back his 15 million options, now worth an estimated $75 million—and to be fair, there seems no reason that they should. But it makes the action against Sheehy look more singular.

Usually in disputes of this kind one can at least see the opposing viewpoints. Like Neil Chenoweth, I just can’t see how Nuix’s position is tenable. It certainly looks very wrong given Eddie Sheehy’s role in making Nuix what it has become.

Why do I care enough to write about it? For that, you have to go back more than ten years when Eddie Sheehy invited me to breakfast in the Warwick Hotel in New York during LegalTech. I was looking for sponsors, and had added Nuix to the list by the time we crossed the street to the Hilton. That connection took me to many events: I was a speaker at an event in Sydney in 2011 which, though I did not know it at the time, was the first Nuix User Exchange; I attended events at various locations over the years in the US and elsewhere, participating in or moderating panels, usually about international discovery or privacy.

Perhaps best was the User Exchange of 2016. The star guest speaker of that year was Gerard Ryle of the International Panel of Investigative Journalists speaking about the investigation into the Panama Papers, and Eddie Sheehy asked me to moderate the discussion with Gerard Ryle. It was, by a wide margin, the most interesting and the most fun of all the discussions I have moderated.

Perhaps fittingly, the tweet which tipped me off about the share options came from Gerard Ryle who, like me, has reason to be thankful for Eddie Sheehy’s help and interest:

So I am puzzled and sad in equal measure that this dispute should have arisen – puzzled because I don’t see any basis for refusing Eddie Sheehy, and him alone, his share options, and sad because I had ten enjoyable and interesting years of working with Eddie and Nuix.

Eddie Sheehy’s post about this on LinkedIn has attracted a great deal of supportive comment, much of it from people who, like me, worked with Eddie and with Nuix as he took Nuix to worldwide prominence and profit. I can’t think of anyone else in this market who would have won that level of appreciation. I hope right prevails and that he gets his share options. I think it a great pity that he again has to resort to the courts to get them.


About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Discovery, eDiscovery, Litigation Support, Nuix and tagged . Bookmark the permalink.

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