Competitive Technologies Inc. (PINK:CTTC), developer of the Calmare pain therapy device, provided an update on its ongoing mediation with former chairman, president & CEO John Nano, who was fired last year.
The laundry list of accusations against Nano include violations of loyalty and fiduciary duty, conflicts of interest improper use of company assets for personal benefit and inaccurate and incomplete reports to the board of directors and the public.
Nano was fired in September 2010 after the company tried unsuccessfully to revamp his employment contract to reduce his role to just president, binding much of his authority and altering the terms of his compensation, according to SEC filings.
"Mr. Nano contracted numerous relatives and friends to be sales representatives for the Company without disclosing these relationships to the Board," company documents read. "Mr. Nano allowed a friend to occupy one of the Company’s offices without payment of rent."
CTTC filings elaborate on allegations that Nano hired his son, who has a different last name, as a consultant without disclosing the relationship to the board.
According to documents, Nano also provided his son relocation compensation, which is against company policy for consultants; had the company pay contractor payments as "severance" for a month when his son didn’t work; and urged his son to file for unemployment compensation despite his consultant status, which his son was awarded when Nano had the company refrain from challenging the unemployment application.
Nano allegedly told at least one director as well as an outside contractor that the would "destroy the company" if the compensation in his existing contract wasn’t paid in full.
"[T]he Board of Directors exercised its reasonable discretion in finding that the former executive engaged in willful misconduct and gross negligence and that the executive’s actions were cause for employment termination under the employment agreement and governing law," CTTC maintained in its recent press release.
The company is reviewing the arbitrator’s decision and deciding what steps to take next. The company’s share price was down 2 percent to $1.41 in afternoon trading today.