Metropolitan Capital Advisors demanded today that Cyberonics (NDAQ:CYBX) Director Kevin Moore be immediately removed from the Board. The demand stemmed from a conflict of interest that Metropolitan called a "glaring violation of law and appropriate corporate governance practices". Apparently, Moore had a longstanding friendship with ex-CEO Robert Cummins - it turns out they were college buddies at Dartmuth. Soon after Moore joined the board in January of 2004, he was appointed to head the compensation committee. This conflict of interest ended up costing shareholders dearly.

The first major problems began on June 15, 2004, when Mr. Cummins managed to pull in $2.5 million overnight thanks to a conveniently timed options grant that we previously reported on. Then in 2005, Moore approved a raise for Mr. Cummins despite an existing contract with three years still left on it! That brought his salary up to $800,000 along with $17 million in additional option grants. And these were not options that were acquired when the company was in its infancy; rather, they were acquired in periods when shareholders were losing money.

If Metropolitan succeeds in removing Kevin Moore from the Board like they did Robert Cummins, they will finally have a clean slate to work with. They hope to then find a CEO that will be able to help lead the company return value back to the shareholders.

Mentioned Companies
Cyberonics (NDAQ:CYBX)