Cutera Inc on Wednesday fired its chief executive and a senior director, which prompted a nearly 30% drop in its share price and one of the aesthetics device maker's biggest investors to call for a special meeting to end the escalating boardroom brawl.
CEO David Mowry and activist investor J. Daniel Plants, who has served on the board for eight years, were terminated for alleged violations of their employment contracts, Cutera said.
The firings come just days after the company and Mowry along with Plants squared off publicly over how the board was handling succession plans for Mowry, who had said in January he wanted to leave.
Mowry and Plants' Voce Capital, who jointly own 7% of the company, on Monday accused the board of having become "factionalized" and blamed a number of directors for having failed to handle the search for a new chief appropriately.
The two men each asked for a special meeting where investors could vote on board candidates and the company created a special committee of independent directors to study the requests.
News of the firings on Wednesday unnerved investors who sent the share price tumbling 28% to end trading at $19.44 a share, leaving it down 72% in the last 52 weeks of trading.
RTW Investments, Cutera's second biggest investor with a 9.3% stake, called on the company to reinstate Mowry and to hold a special meeting. Market reaction to Mowry's removal "demonstrates the need for the Special Meeting and the lack of confidence in the board," RTW said in a statement.
Cutera justified the firings by saying Mowry and Plants had violated their employment agreements and fiduciary duties by disclosing "highly confidential internal deliberations of the board."
Mowry and Plants sued in Delaware Chancery to force the company to reopen the nomination window where board director candidates can be proposed.
RTW is the second large investor to speak out publicly about the escalating tensions after hedge fund Pura Vida on Tuesday warned the company to settle its differences. It also said it has a CEO and director candidates in mind who could help.
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