A boardroom shakeup at a small St. Paul-based public company has led to the dismissal of its CEO and the resignation of a board member in protest of the sacking.
Image Sensing Systems Inc. said Monday that CEO Kenneth Aubrey was terminated, effective immediately. The company's news release and regulatory filings with the Securities and Exchange Commission were notably candid in the reasons behind the departure of Aubrey and board member Michael Doyle.
"Our view is that Image Sensing Systems' assets are strong and yet the company is under-performing against the opportunity," Jim Bracke, board chairman, said in a news release.
The board's decision came after it determined that Image Sensing Systems was "not taking full advantage of the strength of its product offering given the market opportunity."
The software company's board named Kris Tufto, a board member, as interim CEO.
Aubrey, 63, has been Image Sensing's CEO since 2007. He was fired on Friday, according to a filing with federal securities regulators.
In protest of Aubrey's termination, Doyle resigned from the company's board Friday, the filing said. Doyle, a director since April 2011, resigned "because of his disagreement with the termination of the employment of Kenneth R. Aubrey," the SEC filing said.
Tufto and Bracke were unavailable for comment on Monday, and neither Aubrey nor Doyle could be reached.
The board appointed Dale Parker, chairman at HickoryTech Corp. and a finance executive at a number of manufacturing companies, to replace Doyle on the board.
Tufto named to board in 2011
Tufto has been an Image Sensing board member since September 2011 and has experience with software and Internet companies. He was also president and CEO of Eden Prairie-based Jasc Software, a provider of digital imaging software, from 1998 to 2005.
Image Sensing, which ranked No. 86 on the most recent Star Tribune 100 tally, develops software for video and radar imaging products, which are used for traffic, parking, security and police purposes. The company had $30.5 million in 2011 sales in its most recent fiscal year, with a net loss of $10 million, compared to net income of $3 million for the same period in 2010.
Image Sensing Systems' stock has traded as high as $8.24 over the past year, and was over $13 in early 2011. Monday the stock closed at $4.97, down eight cents or 1.6 percent.
Companies are often obtuse in describing CEO transitions. For example, Supervalu's July 30 news release offered little direct commentary on the reason for CEO Craig Herkert's termination and instead gave more prominence to the new direction that interim CEO Wayne Sales would take Supervalu.
"Smaller companies have a poorer information environment ... [so] they might be more willing to be more transparent in their mandatory disclosures," said Jason Schloetzer, an assistant professor at Georgetown University and a co-author of a report on CEO succession practices at S&P 500 companies for the Conference Board.
Smaller companies are also more likely to cite performance in dismissing a CEO, while larger companies are more likely to cite age as a factor, according to Schloetzer.
"It's notable that they were so explicit there in describing the director's [Doyle's] resignation," Schloetzer added.
Mike Hughlett 612-673-7003 Patrick Kennedy 612-673-7926