Bovie agreed to pay up to $850,000 to pay for legal fees and court expenses, with an additional "enhancement award" of $2,500 each to a pair of shareholders named in the lawsuit. The company also agreed to enact certain changes in corporate governance, although it admitted no wrongdoing.
Bovie made several concession during the course of the lawsuit, originally filed in 2011. As a result of negotiations, the company in March 2012 reduced its board of directors from 9 to 7 members and in 2013 agreed to pursue new financing to advance its J-Plasma product. Bovie also agreed in November 2013 to settle a lawsuit filed by former director and engineer Steve Livneh, as well as various other legal disputes.
The lawsuit also spawned a series of changes in Bovie’s corporate governance, including the appointment of a "lead independent director" on the company’s board, an extension of the CEO evaluation process, yearly evaluations of the company’s code of business conduct and ethics and the a promise not to return to former COO and current senior vice president Moshe Citronowicz some 75,000 vested shares that were canceled in 2011.
Bovie demoted Citronowicz in November 2011 after determining that he misrepresented his academic career. Citronowicz falsely claimed to have a bachelor’s degree in electrical engineering a university in Israel. The shareholder lawsuit further alleges that Citronowicz forced the company to "retain 2 of his brothers, [Arik] Zoran and [Yechiel] Citronowicz."
That may have had an influence in several other of the shareholders demands. Bovie agreed to codify a raft of practices into its corporate guidelines, including prohibitions on hiring relatives of any board members or company managers without formal approval from an audit committee. Bovie also agreed to hold no fewer than 4 regular board meetings each year, regularly circulate the company’s code of ethics and maintain an audit committee independent of the company and its leadership, among other practices.
Originally filed in 2011, the lawsuit accused Bovie’s leadership of mismanagement and nepotism that they claimed caused the company to miss out on commercialization and acquisition opportunities.
According to the lawsuit, filed in the U.S. District Court for Middle Florida, the defendants’ alleged misconduct caused lawsuits that pushed 2 of Bovie’s "critical technologies" off the market, cost it the rights to a 3rd "most promising" technology and prevented the Clearwater, Fla.-based company from diving into the "extremely lucrative" gastroenterological probe market.
The parties agreed to settle today after the plaintiffs decided that they had less to gain by dragging the lawsuit out any longer.
"Plaintiffs believed that further litigation would not likely succeed in producing a more significant recovery, and could result in little or no recovery," according to a Bovie SEC filing. "Plaintiffs and their counsel therefore believed that, under the circumstances, they have obtained the best possible relief for Bovie and its stockholders."
Bovie maintained that the company and its leadership have "acted in good faith and in a manner they reasonably believed to be in the best interests of Bovie and its shareholders."
The settlement remains subject to court approval.