Dispute leads to resignation by Nashua firm’s CEO
NASHUA – Khoa Nguyen, CEO and board chairman of Ezenia, resigned in a dispute with his board on June 9, bringing to a climax the turmoil that has engulfed the troubled Nashua office networking firm.
The board appointed Larry Snyder interim president and CEO, and named Samuel Kidston chairman, on June 10. It also recommended appointing several other major shareholders or representatives to join a restructured board, according to a June 14 filing with the Securities and Exchange Commission.
Kidston was appointed to the board in January as part of a settlement with creditor North & Webster after the company failed to meet revenue and operating targets.
“We are very confident that the steps we are taking will enhance the viability and profitability to a much higher level than it’s been over the past few years,” Snyder said.
The company lost a total of $6.2 million in 2009 and 2010 and another $784,000 in the first quarter of this year, leaving it with $1 million in cash. The company is down to a dozen employees – half the workforce it had at the beginning of the year. The company even let go its former president at the beginning of April.
According to the company’s SEC filing, Nguyen quit because “he felt that there was a systematic diminution of his role” as CEO and chair “due directly to explicit acts of the board.”
And since his resignation was forced, Nguyen claimed that sets into motion change-of-control agreements in which he’s entitled to receive salary and benefits continuation for up to 24 months, acceleration vesting of all options and extended medical coverage for himself and his spouse for the rest of his life.
Last year, Nguyen received $548,304 in compensation, which included $285,000 in salary.
The board rejected Nguyen’s “change of status” assertion and resolved to “treat Mr. Nguyen’s resignation as a voluntary resignation” and provide him the amounts earned as of the date of his resignation. It didn’t specify a figure.
Snyder, who declined to comment on the board’s dispute with Nguyen, is to be compensated $10,000 a month, less than half the amount his predecessor earned.
Snyder was appointed to the board in June. He is managing director of Quinault Capital, a privately held investment banking and consulting firm that he cofounded. Snyder will answer to a board – if it’s restructured by shareholders at the annual meeting to be held on July 26 – that would represent the largest shareholders.
In addition to Kidston, who represents North & Webster – an investment firm that holds 4.64 percent of the stock – the new board would include Paul Sonkin, of Hummingbird Management, with 10.7 percent of the stock, and Donald Jones, of Cotton, which owns 4.2 percent of the stock.
Only George Stevens, who was appointed in June 2009, has been there more than a year and isn’t a major shareholder.
Most of the old board resigned in a string of resignations starting in March.
Together, the new board’s holdings would exceed Nguyen’s 16.66 percent holdings, or 2.9 million shares, but Nguyen’s holdings include 1.6 million shares that he has the right to acquire by Aug. 10 by exercise of this stock options.
In addition to approving new board members, the board urges shareholders to do away with classification of board members whose terms expire at different times, switching to one-year annual terms for all members. Only shareholders as of June 10 will be able to vote.
“We felt that it would help the direction of the company if significant shareholders also had a voice on the board,” Snyder said.