Print this article | Return to Article | Return to CFO.com
During the first quarter, the chipmaker replaced its CFO and CEO and now must repopulate its board of directors.
Stephen Taub, CFO.com | US
April 26, 2005
On Sunday, officials at Sunnyvale (Calif.) -based Silicon Image Inc. announced that four board members, including the chairman, resigned. Three of them reportedly quit in a dispute linked to company founder David Lee.
Christopher Paisley, chairman of the board and member of the audit, compensation and governance, and nominating committees, stated that he was resigning because of a disagreement over whether Lee should be re-nominated to the board. David Courtney, chairman of the audit committee and a member of the governance and nominating committee, and Keith McAuliffe, chairman of the compensation committee and member of the audit, and governance and nominating committees, said they were resigning for the same reason.
Meanwhile, Richard Sanquini, a member of the compensation and governance and nominating committees, resigned without stating a reason.
The resignations left three members on the board: Lee, founder and chairman of PanelLink Cinema LLC, a wholly-owned subsidiary of Silicon Image; Steve Tirado, president and CEO; and David Hodges, an independent director.
As a result of the resignations, the board no longer has a majority of independent directors, as is mandated by Nasdaq listing requirements. Further, no directors currently serve on the audit committee. Nasdaq listing rules require that the audit committee must be comprised of at least three independent directors. Officials, however, promised to bring the company into compliance with the listing requirements "as soon as practicable."
Silicon Image’s stock fell more than 18 percent on the news, which came on the heels of a rough first quarter. In January, CEO Steven Laub resigned because of "issues related to the scope of his role and responsibilities," TheStreet.com reported. Laub had only been on the job for 10 weeks when he quit.
Then, on January 31, the company became the target of a class-action lawsuit in which shareholders alleged that management artificially inflated the price of Silicon Image stock while insiders sold off shares. According to the complaint, Silicon Image gave fourth quarter guidance that did not disclose management problems, including "uncertainty and distractions" related to Laub’s resignation.
The allegation contends that company insiders were aware of the executive disputes when they sold off more than 280,000 shares of stock before January 25, when the management problems were made public. Silicon Image hasn't issued a response to the lawsuit on its Web site.
Last week, CFO Bob Gargus resigned. No reason was provided in the company’s regulatory filings. However, Darrel Slack was immediately appointed the company’s new finance chief. Slack is the former CFO of Centillium Communications Inc, a broadband access provider.