MiMedx Plans to Claw Back Pay From Ex-CEO and Other Bosses
(Bloomberg) -- Hours after MiMedx Group Inc. said it will claw back compensation from four former top managers for harming the company, two of those affected criticized the investigation that led to their resignations earlier this year.
Ex-Chief Executive Officer Parker H. Petit and Bill Taylor, who was chief operating officer, are both victims of a company trying to clear itself of accusations of alleged malfeasance by dismissing senior bosses, a lawyer representing the two men said in a statement.
MiMedx “accused, tried and convicted them of unspecified inappropriate conduct without first giving them notice of the ‘charges’ or a fair and meaningful opportunity to respond,” said Bill Weinreb of Quinn Emanuel Urquhart & Sullivan LLP, adding that the board’s internal probe has “spun out of control.”
The biotech firm, which is under investigation by the Justice Department and the Securities and Exchange Commission, said Thursday it will recoup compensation from Petit, Taylor and ex-finance chiefs Michael Senken and John Cranston. The Marietta, Georgia-based company has already canceled some equity grants previously awarded to the four and will classify their exits as “for cause” terminations, according to the filing, meaning they won’t be eligible for severance payments.
While most public firms have policies allowing them to claw back incentive compensation from top executives in case of financial restatements or other wrongdoing, they’re rarely enforced. Boards typically use them only when they want to publicly distance themselves from those individuals and underscore the seriousness of their actions.
Last year, MiMedx came under attack by short-sellers alleging it had defrauded the U.S. government and inappropriately booked sales of products that hadn’t been ordered. After spending months rebuffing the allegations, MiMedx said in June it would restate results going back to 2012 based on the accounting treatment of sales and distribution practices.
The next month, Petit and Taylor resigned “in part from information the audit committee has identified through its previously announced independent investigation,” MiMedx said at the time.
“The investigators conducted an unfair investigation that has needlessly damaged employee morale, productivity and shareholder value,” Taylor said in the statement. Petit, who remains a shareholder, said he looks forward to getting MiMedx “back to efficient and effective business management.”
The audit committee, which is conducting the investigation, is led by J. Terry Dewberry, who’s worked with Petit for decades. Robert Borchert, a MiMedx spokesman, didn’t immediately comment on the former executives’ criticism of the board’s probe.
The Veterans Affairs Medical Center in Minneapolis has parted ways with five doctors over improprieties related to MiMedx skin-healing allografts, the Atlanta Journal-Constitution reported on Thursday. In May, federal prosecutors indicted three former VA health-care workers in South Carolina for allegedly taking bribes from MiMedx representatives.
Petit, 79, has been a fixture of the Atlanta business scene for decades and a noted philanthropist. He’s founded and sold several medical-equipment makers, donating millions of dollars to local universities and Republican politicians. He came out of retirement to take over MiMedx in 2009 -- when it had less than $1,000 in sales -- and built it into a $2 billion company.
MiMedx shares fell 3.6 percent to $5.98 at 10:18 a.m. in New York, and have tumbled 51 percent this year.
In a separate statement Thursday, MiMedx said that Nasdaq will allow its shares to continue trading on the exchange on the condition that it brings its financial filings up-to-date by Feb. 25. The firm has yet to file its 2017 annual report or subsequent quarterly reports.
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