Cyberonics to Cut Work Force,
Names Daniel Moore as New CEO
By JONATHAN VUOCOLO
May 1, 2007 10:44 a.m.
Cyberonics Inc. said it will terminate 15% of its employees as part of an organizational restructuring of the company. The Houston medical-devices company also named a new chief executive.
Cyberonics, which is 9.8% owned by billionaire financier Carl Icahn, has been plagued with probes over stock-options grants, the related departure of top executives and a very public proxy fight over board members.
The Centers for Medicare and Medicaid Services expressed doubt in one of the company's products, a pacemaker-like device that provides electric stimulation to a major nerve for the treatment of drug-resistant depression, and said reimbursement approval was unlikely. A final decision follows in May, but analysts don't expect CMS to shift gears.
"Given the difficult reimbursement environment for treatment-resistant depression, the Cyberonics management team and board initiated a thorough review of the company's business structure," said George E. Parker, interim chief operating officer, in a press release Tuesday. "This restructuring, along with other cost-savings measures, was necessary to return the company to near-term positive cash flow and profitability."
Cyberonics expects annual savings of $12 million beginning in fiscal 2008, which begins April 30. The company said it will take a $1.3 million charge related to the staff reduction in the fiscal fourth quarter.
The company named Daniel J. Moore president, CEO and director. Interim CEO Reese S. Terry Jr. will remain a director. Mr. Moore had been Boston Scientific Corp.'s president of international distributor management.
In November, Robert P. "Skip" Cummins, company co-founder, chairman, CEO and president, stepped down following audit-committee findings of incorrect option-grant dating. Chief Financial Officer Pamela B. Westbrook also resigned at the time.
Cyberonics emerged in January from a proxy spat with Metropolitan Capital Advisors, which owns more than 1.8 million Cyberonics shares, about a 7% stake. The hedge fund, disappointed with Cyberonics' performance and governance, wanted to shake up the company's eight-member board. The parties recently agreed to replace three board members with those backed by Metropolitan Capital, including Jeffrey Schwarz, the firm's chief executive. |
