There’s an episode of Seinfeld that ran in the late 90s in which George Costanza tries — unsuccessfully — to break up with his girlfriend Maura. “I refuse to give up on this relationship,” she says. “It’s like… launching missiles from a submarine. Both of us have to turn our keys.” When George urges her to “turn her key,” Maura respectfully declines.
The same scenario is playing out today at a mid-sized biotech just outside of Detroit. Rockwell Medical’s board has voted to fire its CEO Robert Chioini. But the CEO won’t turn his key. He’s… unfired himself, alleging that Rockwell Medical’s board members may have violated federal securities laws by voting him out. That’s because the purpose of this particular meeting was to discuss allegations of breaches of fiduciary duties, not to vote on firing the CEO.
“As that action was not the purpose of the special meeting, the termination of the CEO, in the opinion of the non-conflicted independent directors, was not effective,” writes Chioini in a letter to shareholders.
If that wasn’t enough, Rockwell Medical also fired its CFO Thomas Klema, who they said was colluding with the CEO. But that’s OK, because Chioini also rejected that decision, unfiring Klema shortly after via a letter to shareholders.
“The chairman of board issued a second conflicting 8K this morning,” Chioini wrote. “Therein is referenced a board meeting in which it is asserted that the CFO, Thomas Klema, was terminated. I have no information to suggest the governance requirements to call such a meeting were followed. The same 8K states that the board created a Special Transition Committee comprised of Benjamin Wolin, Lisa Colleran, and John Cooper, to provide board-level oversight of the company’s strategic direction and day-to-day operations during the company’s transition. I have no information to suggest that the governance requirements for the creation of such a committee were followed.”
This bizarre story is particularly interesting in light of Chioini’s salary — $850,000 annually for the past three years, with total compensation topping $12 million. That’s pretty decent for a company that hasn’t scored any commercial sales for two products it won FDA approval for in 2014 and 2015, as noted by STAT columnist Adam Feuerstein yesterday.
The company’s stock $RMTI has been halted due to the drama.
Rockwell Medical’s situation reminds us of another biotech duking it out with its ex-CEO. Arcturus Therapeutics has been in a very public battle with its former chief Joe Payne, who’s been working hard to undo the work of its board. It will be interesting to see if these ex-CEOs can elbow their way back into board rooms in the coming months.
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