The CEO of test systems maker MTS Systems Corp. is leaving without explanation at a time when profits are up but the federal government is investigating the firm for possible export law violations. It is the second time in three years that the company has been probed about its export activities.
CEO Laura Hamilton, 50, who had been CEO since 2008 and with the company for 12 years, left "by mutual agreement" with the board, effective Thursday, the company said Thursday in a news release.
William Murray, 50, a director, was named interim CEO, and the company said it plans to begin a search for a new CEO.
Company officials could not be reached Friday for comment.
Earlier this month, the Eden Prairie firm reported third-quarter earnings of $11 million, up from zero a year ago, on a 38 percent increase in sales to $116.8 million.
The Star Tribune reported earlier this month that the U.S. attorney's office in Minneapolis is issuing grand jury subpoenas related to MTS export issues. That follows the company's disclosure in March that it was under investigation and was barred from bidding on new government contracts, which had accounted for 5 to 7 percent of its business.
Three years ago, MTS pleaded guilty to two misdemeanor criminal violations of export regulations and paid $836,000 in fines and penalties. Those two offenses were related to the planned sale of equipment that could have been used to test nuclear weapons in India. While the equipment was never shipped, company employees making export applications for the gear failed to disclose their knowledge about how the equipment might be used. At the time of the original export investigation, the MTS chief executive was Sidney Emery Jr.
MTS shares have lost 27 percent of their value prior to the March announcement. The stock closed Friday at $35.14, up less than 1 percent.
Being scrutinized by the government also has been costly. The company has spent $3.4 million on legal costs, and, in a conference call with analysts earlier this month, Hamilton said that "we're unable to determine the likely outcome or the range of loss or the resolution timing."
Changing CEOs also will cost the company. Hamilton's severance includes a lump-sum payment of $525,000, equal to 12 months of her base salary, according to MTS government filings. Hamilton's total compensation for the fiscal year ended Sept. 30, 2010 was $1,162,469. She ranked 48th on the Star Tribune's latest list of highest paid public company CEOs in Minnesota and was one of six women on that list. Two of those women on the list have now resigned as CEO in the past year, Lorna Nagler from Christopher & Banks in October and now Hamilton.
Murray, who has been a director for a year and is a former medical industry executive, will be paid an annual base salary of $590,000 a year and an initial bonus of $410,000 a year, both payable for at least six months whether or not he continues as interim CEO, the filings showed. He also will be eligible for an annual bonus of up to $770,000, 70 percent in restricted stock that vests a year later, and 30 percent in cash.
Steve Alexander • 612-673-4553