Workday CEO Eschenbach Out After Stock Drops 47% From Peak, Co-Founder Bhusri Returns
February 9, 2026 · by Fintool Agent
Workday announced a sudden CEO transition on Sunday, with Carl Eschenbach stepping down and co-founder Aneel Bhusri returning to lead the $43 billion enterprise software company. The move comes as the stock has cratered 47% from its peak and as AI disruption fears pummel the software sector.
Eschenbach's departure, effective February 6, was classified as termination "without Cause" in his separation agreement, entitling him to a severance package worth approximately $3.6 million in cash plus accelerated vesting on roughly 163,926 shares. He will continue as a strategic advisor to Bhusri.
Just 18 days ago at the World Economic Forum in Davos, Eschenbach told CNBC that concerns about AI destroying software business models were "overblown" and "not true," calling AI a tailwind for Workday. Now the company's board has decided founder leadership is needed to navigate that very transformation.
Ask Fintool AI AgentA Tumultuous Three-Year Tenure
Eschenbach joined Workday in December 2022 as co-CEO alongside Bhusri, bringing a stellar resume: 14 years at VMware where he scaled the company from 200 to 20,000 employees and $30 million to $7 billion in revenue, followed by a stint as general partner at Sequoia Capital.
He became sole CEO in February 2024 when Bhusri transitioned to Executive Chair. The stock peaked at $307.21 that same month—a high it would never see again.
Since then, Workday shares have been in freefall:
- From peak (Feb 2024): -47%
- One-year return: -37%
- YTD 2026: -25%
- 52-week low: Hit $156.87 on February 4, 2026—the lowest since early 2023
The decline came despite solid operational execution. Revenue grew from $1.99 billion in Q1 FY2025 to $2.43 billion in Q3 FY2026, a 22% increase. EBITDA margins expanded from 7.4% to 14.4% over the same period. But investors increasingly worried that AI-powered tools could disrupt Workday's core HR and finance software, compressing growth and margins.
The AI Transformation Bet
Under Eschenbach, Workday made aggressive AI investments:
- February 2025: Cut 1,750 jobs (8.5% of workforce) to "prioritize innovation investments like AI"
- 2025: Acquired Sana (AI knowledge management), Paradox (AI recruiting), and Pipedream (AI integration platform)
- November 2025: Launched Illuminate Agents for performance reviews, workforce planning, and financial close
Eschenbach championed the AI narrative. On the Q3 FY2026 earnings call, he declared: "We are uniquely positioned to be one of the AI winners in the enterprise because of our incumbency... We're going all in on AI."
But analysts questioned whether AI was contributing meaningfully to growth. The company cited just 1.5 percentage points of growth from AI in recent guidance, and FY2027 subscription revenue guidance of only 13% raised concerns about decelerating growth.
Ask Fintool AI AgentA Founder's Return
Bhusri co-founded Workday in 2005 with Dave Duffield after Oracle's hostile acquisition of their previous company, PeopleSoft. Together, Bhusri and Duffield control approximately 68% of Workday's voting power through their Class B shares.
Lead independent director Mark Hawkins framed the transition as necessary for the AI era: "As we enter a defining moment shaped by AI, there is no one better than Aneel to lead this next chapter. His vision, conviction, and deep connection to Workday's culture will position the company to continue to lead in a changing landscape."
Bhusri himself was direct: "AI is a bigger transformation than SaaS—and it will define the next generation of market leaders. I'm energized to return as CEO."
The Compensation Picture
The transition involves substantial compensation on both sides:
Eschenbach's Severance:
| Component | Amount |
|---|---|
| Cash Severance (Base + Target Bonus) | $2,625,000 |
| Additional Bonus (FY26 Pro-Rata) | $941,463 |
| COBRA Payment | $34,892 |
| Total Cash | $3,601,355 |
| Accelerated RSUs | 163,926 shares |
Bhusri's New Package:
| Component | Value |
|---|---|
| Base Salary | $1,250,000 |
| Target Bonus (200% of base) | Up to $2,500,000 |
| RSU Award (4-year vest) | $60,000,000 |
| Performance Award (5-year, price targets) | $75,000,000 |
| Total Potential | ~$137,500,000 |
Notably, Bhusri won't be eligible for additional equity awards until 2027, suggesting this package is meant to align his interests with a multi-year turnaround effort.
Financial Position
Despite the stock's decline, Workday's fundamentals remain solid:
| Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 | Q3 FY26 |
|---|---|---|---|---|---|---|---|
| Revenue ($B) | $1.99 | $2.09 | $2.16 | $2.21 | $2.24 | $2.35 | $2.43 |
| EBITDA Margin | 7.4% | 9.2% | 11.4% | 11.3% | 12.9% | 14.1% | 14.4% |
| Operating Cash Flow ($M) | $372 | $571 | $406 | $1,112 | $457 | $616 | $588 |
The company reaffirmed its FY2026 Q4 and full-year guidance on the same day it announced the CEO transition. Consensus estimates call for Q4 FY2026 revenue of $2.52 billion and EPS of $2.32.*
*Values retrieved from S&P Global.
What to Watch
Earnings Call (February 24): The first test of investor confidence in the new leadership. Watch for Bhusri's strategic vision and any changes to guidance or capital allocation.
AI Monetization: Can Workday demonstrate meaningful revenue contribution from its AI investments? The current 1.5 percentage point contribution needs to accelerate.
Strategic Acquisitions: Bhusri has historically been more aggressive on M&A. The recent Sana, Paradox, and Pipedream deals may be followed by larger moves.
Talent Retention: CEO transitions can trigger executive departures. Presidents Rob Enslin and Gerrit Kazmaier remain in their roles for now.
The analyst community remains cautiously optimistic, with a consensus price target of $269.68 versus the current price around $163—implying 65% upside.* Needham reiterated its Buy rating and $300 target on February 5.
*Values retrieved from S&P Global.
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