Violin Memory Inc. fired Chief Executive Officer Don Basile after the maker of flash storage lost 70 percent of its value following its initial public offering in September.
Howard A. Bain III, the chairman of Violin’s board, was appointed interim CEO, the Santa Clara, California-based company said in a statement today. The board has hired an executive search firm to find a permanent replacement.
Violin Memory went public three months ago even with quarterly losses that exceeded revenue and as the company dealt with the departure of its biggest reseller -- Hewlett Packard Co. -- which opted to focus on its own competitive product. The stock plunged 22 percent in its market debut and lost almost half its remaining value on Nov. 22, after Violin Memory provided a sales forecast that trailed analysts’ estimates.
Basile had been CEO since 2009 and was responsible for pushing the company into the flash array market, developing faster, more expensive storage products. Bain, who served as chief financial officer for several public companies, joined Violin Memory’s board in October 2012 and became chairman in August.
“The board believes this leadership change is necessary to enhance the management team’s operational focus and ability to execute the company’s plan for profitable growth,” David Walrod, a director, said in the statement.
Violin Memory shares rose 22 percent to $3.27 at the close in New York. The stock had declined 70 percent through Dec. 13 from its IPO.
JPMorgan Chase & Co. led the IPO with help from Deutsche Bank AG, Bank of America Corp. and Barclays Plc.
At least seven lawsuits have been filed against Violin Memory on behalf of shareholders, claiming the company and underwriters violated securities law. In the most recent quarter, Violin Memory blamed a slowdown in government spending, due to the shutdown in October, for canceled or deferred contracts.
Glancy Binkow & Goldberg LLP, a Los Angeles-based law firm, said on Dec. 6 that Violin Memory “failed to disclose that, prior to the IPO, the company’s sales and revenues were being negatively impacted” by the uncertainty surrounding a potential shutdown.
Basile was set to earn a total of $18.9 million this year, mostly from stock awards of $14.8 million, according to the IPO prospectus. His salary was $400,000, with a bonus of $725,000.
Assuming he was terminated without “cause,” Basile is entitled to either the payout of his salary for the remainder of his contract, which ends in 2015, or his salary and bonus this year plus the vesting of outstanding equity awards, the filing said.
Executives from Violin Memory were not available for interviews, according to a company representative. Basile didn’t respond to a request for comment.