I caught up with Mercury Interactive's Christopher Lochhead for an update on the situation that resulted in three top executives exiting the company due to apparent financial misdoings. As you would expect, Lochhead, the company's chief marketing officer, is upbeat about the fate of the company. The alleged misdeeds are primarily related to stock option grants. The company does not believe that the misdeeds will have an impact on the company's historical revenue, cash position or operating expenses, according to a press release. Mercury has slightly above 30-percent compound growth in revenue over the last ten years, and $1.37 billion in the bank. That said, the forthcoming financial restatements for several years will have a "material" impact, although Lochhead could not quantify the cost or impact of a potential delisting by NASDAQ.
The question everyone is asking is why a CEO with the track record would of Amnon Landan would mess around (49 instances from 1995 to the present) with stock option grant dates. It's nice enough to have stock options without trying to game the system by changing dates to get a better strike price.
"Clearly it's a big disappointment. Amnon is incredibly well repsected, very trusted and led company through a tremendous amount of growth and change," Lochhead said. "He deserves a lot of credit. He's a very powerful figure inside and outside the company and a close personal friend." Lochhead added that he and fellow employees were "surprised and shocked" by the news. "I saw Amnon over the weekend. It tough conversation, very challenging on personal level," Lochhead said.
Lochhead maintains that the new CEO, former President and COO Tony Zingale, has been performing as a CEO since he recruited him to join Mercury in December 2004. "It was clear internally that [Zingale] would ultimately take over for Landan as CEO of the company in an orderly, natural transition. "No anticipated this set of circumstances," Lochhead said. "In reality, since he joined the company, he has been running the company and Amnon has been in a strategic, visionary role."
Lochhead told me that in times of crisis the good people in good companies come together. "I'm more motivated and focused on getting this done than in anytime in my career. We have a plan for what we need to do....You put company on your shoulders, get to work and kick some ass." First up for Zingale, Lochhead and team is maintain focus in day-to-day operations, restoring trust and hoping that NASDAQ will give Mercury a deadline extension to avoid delisting.