Tennessee-based Wright Medical Group saw a major shake-up Tuesday with the announcement that both CEO Gary Henley and CTO Frank Bono are no longer with the orthopedic device company.
Henley tendered his resignation prior to a board meeting held to address management's oversight of Wright's ongoing compliance program, according to a company announcement. The board accepted his resignation, but because the company has determined it is without "good reason" under the terms of his employment agreement, he will not receive a severance package.
The board also fired Bono for "failing to exhibit appropriate regard" for the Wright's compliance program.
Last September, Wright agreed to pay $7.9 million to settle a federal probe alleging it had conspired to violate anti-kickback laws by paying consulting fees to convince orthopedic surgeons to use certain Wright products from 2002 through 2007, as Dow Jones reports. As part of the settlement, the U.S. Attorney in New Jersey agreed to defer criminal prosecution for 12 months as long as the company met certain obligations.
Chairman David Stevens will serve as interim president and CEO while the company looks for Henley's replacement. Stevens emphasized in a statement the company "is committed to maintaining the highest standards of ethical conduct and to complying strictly with the laws and regulations that govern our business practices."
Wright's share prices fell about 10 percent following the resignation announcement, the Memphis Commerical Appeal notes. And Canaccord Genuity analyst William Plovanic expects downward pressure on the stock until more details of Henley's resignation are known. "It was noted that the resignation was due to compliance-related issues, which could be related to the Department of Justice investigation and settlement," Plovanic wrote in a note to investors, as quoted by the Commerical Appeal. "We note that a breach of the settlement with the Office of the Inspector General could include an extended monitor period, a fine, or possibly prosecution by the DOJ."