Some of the former top brass at MiMedx (NSDQ:MDXG), who were let go over the summer for what the company later determined to be “for cause,” said that their ousters were part of an out-of-control internal investigation.
Last week MiMedx, which makes regenerative and therapeutic biologics using human placental tissue allografts, said a probe into its accounting practices turned up “conduct detrimental to the business or reputation of the company” on the part of four departed executives.
Last July CEO Parker Petit and president & COO William Taylor were ousted amid a board-directed independent investigation that had already prompted the departure of CFO Michael Senken and treasurer John Cranston in June.
At the time, MiMedx said it would restate all of its earnings reports going back to 2012 and was cooperating with U.S. Securities & Exchange Commission and Justice Dept. investigations into the matter.
MiMedx said last week that all four of the departures were for cause, triggering the forfeit of all equity and incentive awards for the executives and Petit’s resignation from the board.
In a statement emailed yesterday to MassDevice.com, a lawyer representing Petit and Taylor said the men are the victim of an allegedly common Wall Street practice.
“Regrettably, public companies facing government investigations into alleged malfeasance have developed a standard playbook: identify purported ‘wrongdoers’ among top management, dismiss them without severance, and then argue that the ‘problem’ has been fixed and there is nothing more for the government to do,” Quinn Emanuel attorney Bill Weinreb said in the statement. “The company effectively 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.
“The internal investigation that led to today’s announcement has spun out of control. Shareholders should question whether the audit committee, which has led the investigation, is acting in the Company’s best interests or its own best interests in finding others responsible for accounting matters for which the Committee itself bears ultimate responsibility,” he said.
“I am extremely disappointed by the company’s decision and by the manner in which it was reached. The investigators conducted an unfair investigation that has needlessly damaged employee morale, productivity, and shareholder value. Despite today’s announcement, both Pete Petit and I remain immensely proud of our tenure at the helm of one of the fastest-growing public companies in the country. I hope every MiMedx employee shares our pride in having been part of that accomplishment. I thank every employee and am honored to have worked with each of you,” Taylor added.
“It was a great privilege for me to serve MiMedx shareholders as CEO and chairman of the board. I now look forward to joining our shareholders in initiatives that will refocus the company and its fiduciaries on getting back to efficient and effective business management,” Petit said in prepared remarks.