Wright Medical Group's ($WMGI) board of directors has appointed Robert Palmisano as president and CEO. Interim CEO David Stevens will remain chairman of the board. The announcement comes days after the company reached an agreement to extend a deferred prosecution deal by a year. The DPA will now expire Sept. 29, 2012, and Wright will be under the surveillance of a federal monitor until that time.
Palmisano was most recently president and CEO of ev3, which was bought by Covidien ($COV) last year. He previously served president as CEO at three other companies: IntraLase, MacroChem and Summit Technology. Between 1984 to 1996, he held various positions at Bausch & Lomb.
This has been a year of shake-ups for the company, which agreed last fall to pay $7.9 million to settle a probe after the feds accused it of conspiring to violate anti-kickback laws by paying consulting fees to convince orthopedic surgeons to use certain Wright products from 2002 through 2007. There was to be no prosecution as long as the company stuck to the agreement. However, back in May, Wright announced the receipt of a letter from the U.S. Attorney stating the company "has knowingly and willfully committed at least two breaches of material provisions" of a deferred prosecution agreement.
Wright has also seen a number of top officials go, including CEO Gary Henley and CTO Frank Bono, as well as three others who left the company "without good reason."
But the feds seem to think Wright is looking to make amends. "As a direct result of the federal monitorship, Wright has made significant and wide-ranging changes in corporate culture and tone at the top," First Assistant U.S. Attorney J. Gilmore Childers said. "Our Office is pleased with the extensive cooperation from the newly appointed interim senior management team. Today's extension will allow Wright to make the transition from interim to permanent senior management while still under the terms of the DPA and the surveillance of the federal monitor."
The DPA extension comes with the company's announcement about its cost restructuring plan. As a result of the plan, Wright will reduce its workforce by approximately 80 employees, or 6%. "Our industry continues to face a challenging economic environment and, after extensive analysis and consideration, we believe this plan will enhance the company's prospects for growth and value creation," said Stevens in a statement. "We are taking these actions now to better position the company to grow its earnings in 2012 and we are confident that this plan will result in a leaner, more cost efficient operation, which is in the best interest of our business and all of our stakeholders."
- see the Wright release on Palmisano
- read more in the DPA release
- and this release on the restructuring plan