We are extremely cautious about pricing. We recognize the consumer environment is still very fragile. We have had a great success over the past year, and in fact 18 months, in building our customer traffic almost against the odds, again despite what is a very difficult consumer environment still. [BBW]
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Rough Year at KV Pharmaceutical Continues as Chairman, CFO Quit
- GoingConcern
- June 22, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
There’s no shortage of drama at KV Pharmaceutical. Last week Chairman Terry Hatfield, Stephen Stamp, who was named CFO April 13, and board member John Sampson quit, citing “serious concerns” about newly elected board members and senior management.
The previous week, immediately following the company’s annual meeting, the newly elected board ousted interim President and CEO David Van Vilet, who had been in charge since December 2008.
The St. Louis-based company has not named a new CFO.
It also said it is looking for a CEO with extensive pharmaceutical experience. For now, Gregory Divis will be interim president and CEO, while continuing as president of Ther-Rx, the company’s branded pharmaceutical subsidiary.
In their resignation letters, Hatfield and Sampson said they had “serious concerns regarding the ability of the newly constituted board and senior management to provide the required independent oversight of KV’s business during this critical time in the company’s history.”
They noted that only three of the board’s seven nominees for board seats were elected at the annual meeting. The remaining elected members were candidates proposed by shareholders. Among those re-elected to the board was Marc Hermelin, son of the founder, who was ousted as CEO in 2008. Also re-elected was David Hermelin, the son of Marc Hermelin, and a former director of corporate strategy who retained his seat. David Hermelin was among the board’s nominees, Marc was not.
The year has been tumultuous. In February, KV agreed to a $25.8 million settlement with the United States Justice Department. Officials with the company’s subsidiary, Ethex Corp. pleaded guilty to two felony counts of criminal fraud for failing to report it was manufacturing oversized tablets that could be harmful to patients, (some had double the advertised dosage of medicine). In March the company fired 289 employees, or 42 percent of its staff, to lower operating costs.
However, the company’s board still found the cash to pay themselves a hefty raise. According to a recent SEC filing, the board was paid $116,000 in 2009, a $60,000 raise while the company was involved in massive layoffs.
Earlier this month KV closed the sale of the assets of Particle Dynamics for $24.6 million, plus up to an additional $5.5 million in potential earn-out payments over the next four years.
In a prepared statement the company said the board’s primary focus is two-fold: to continue to work with the Food and Drug Administration to reinstate KV to Good Manufacturing Practice compliance, and to continue to explore a variety of financial alternatives as a means to strengthen the company’s cash position.
The company could not be reached for comment.
Does Andrew Hall Have a Little Andy Fastow in Him?
- GoingConcern
- February 16, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
They already share a first name.
Other than that, they probably don’t have much in common but does anybody else have a problem with the fact that the head of the energy trading unit that Citigroup sold to Occidental last year is setting up a hedge fund?
It would be an entirely different situation if Andrew Hall were leaving Occidental to do this, but he isn’t. Instead, he will wear both hats simultaneously.
That sure sounds like a clear conflict of interest to us. After all, fee structure of a hedge fund clearly incentivizes Hall to favor its investors over Occidental’s, though the oil company has a 20 percent equity stake in the fund.
The FT doesn’t explore this issue for some reason, referring merely to the fact that the two companies will be run “separately” and that the trades will be done “in parallel,” whatever that means.
And the article’s point about this deal having an air of history about it seems woefully misplaced.
Forget the fact that Hall’s hedge fund, Astenbeck, is named after a village near the historic German castle he owns. The more telling historical reference has to do with the conflict of interest. Indeed, the last time we saw a conflict this clear-cut was when Andrew Fastow ran some of Enron’s key off-balance-sheet partnerships while serving simultaneously as its CFO.
It was the disclosure of that particular factoid in a footnote that helped prompt short seller James Chanos to question Enron’s financial results back in early 2001.
And maybe this is just a coincidence, but Enron was an energy trading company as well. Remember Get Shorty?
As a side note, my colleague Matt Quinn wonders if Hall’s hedge fund will attract a lot of Citigroup’s former fund investors, and even draw Citigroup itself as an investor. That would certainly make sense if the bank is forced to get out of proprietary trading, as the Obama administration is proposing. Plus the bank would get to benefit from trading without having to reflect the risk on its balance sheet.
But the big question is, would Citi and its investors be treated better than Occidental’s shareholders?
Disney CFO Would Rather Talk to 5-Year-Old Than Federal Reserve Chair Because DUH
- Caleb Newquist
- June 13, 2014
[Jay] Rasulo was asked if he’d rather have five minutes with Federal Reserve Board chairman […]