30/03/2011 | 08:00 CEST | Company announcement
Stäfa (Switzerland), 30.03.2011 – In the run-up to the profit warning of 16 March 2011 the responsible persons at Sonova failed to issue a timely Sonova-internal black-out period for trading in Sonova shares and options. As a result of this failure, there were trades that should not have taken place during that period. In addition, Sonova has issued its profit warning too late. These findings are the result of an investigation carried out by a law firm upon a mandate issued by the Board of Directors of Sonova. Based upon these events and their consequences for the Company, the CEO of the Company, Valentin Chapero, and the CFO, Oliver Walker, have tendered their resignations. In addition, the Chairman of the Board of Directors, Andy Rihs, has declared that he will step down as Chairman of the Board of Directors.
To replace Andy Rihs, the Board of Directors appointed Robert Spoerry (56) as its new Chairman. Mr. Spoerry has been a non-Executive Member of the Board of Directors since 2003; he has extensive industry experience. Previously, Mr. Spoerry was CEO of Mettler Toledo, a manufacturer of precision measuring devices; he currently serves as the Chairman of its Board of Directors.
Mr. Rihs will remain a Member of the Board of Directors. The internal investigation has not revealed any evidence that he knew about the profit warning to be published a week later when he sold 300'000 Sonova shares on 8 March 2011. Mr. Rihs has offered the purchaser of the shares to buy them back at the original purchase price.
The former Chairman of the Board of Directors, Andy Rihs: "Even though the internal investigation concluded that I carried out my share transactions of 8 March in good faith, as Chairman of the Board of Directors I too am partly responsible for the shortcomings that happened. For that reason I have decided in the interests of the Company to step down as Chairman of the Board of Directors."
Members of the existing Management appointed as new leadership
The operative leadership of Sonova is taken over by Alexander Zschokke (46) who will be Interim-CEO. Mr. Zschokke has been a Member of the Group Management Board since 2006. He has previously been responsible for marketing and currently heads the Group-wide retail activities. Mr. Zschokke is a mechanical engineer. He graduated and obtained an MBA from the Swiss Federal Institute of Technology. Mr. Zschokke has extensive marketing experience and has had a successful career in consumer goods and engineering.
Paul Thompson (44) will become Interim-CFO of the Sonova Group. From 2002 to 2004, he already held this position and he has since been responsible for M&A transactions and the development of Group strategy at Sonova. Mr. Thompson studied business administration at the University of Waterloo, Canada; he is a certified Chartered Accountant.
Task force to improve internal rules and processes
Referring to the investigation ordered by the Board of Directors, Mr. Spoerry said: "The investigation by the law firm Homburger showed weaknesses in internal processes. Furthermore, it came to the conclusion that internal rules were not enforced. As a consequence the profit warning and the internal black-out period for trading in Sonova shares and options were issued too late."
The Board of Directors has therefore appointed a task force that will analyse in detail the shortcomings identified by Homburger and will promptly take the appropriate remedial measures.
The Board of Directors takes note of the fact that the SIX Swiss Exchange has opened a preliminary investigation in relation to the profit warning on 16 March 2011. Mr. Spoerry: "We have informed SIX that we fully support the investigation. As a result of our internal investigation, we must assume that the profit warning should have been issued earlier."
Currently, the Company is in the process of determining the amount of any extra costs that were caused by these events.
Strong product pipeline
Mr. Spoerry is confident that the new leadership will soon be able to regain the trust of the investors, employees, customers and the public which was lost in the last couple of weeks.
Mr. Zschokke is also convinced that: "Sonova is and remains a superb company. We have top talent and a strong leadership. With the aid of our recently-launched product range bearing the Phonak brand name, the next technology generation of our second most powerful Unitron brand and the gradual introduction of Lyric we will further expand our leadership in technology and continue to sustainably grow faster than the market. In addition, we are working hard to re-enter the market with Advanced Bionics' cochlear implants. Sonova continues to focus on the proven strategy of innovation, customer proximity and proactive cost control. This puts us in an excellent position to further improve our status as global market leader."
Ladies and gentlemen, we hereby notify you of a conference call to be held at 8 am today, March 30, 2011. Participants will be: Robert Spoerry, chairman of the board of directors, Andy Rihs, member of the board of directors, CEO Alexander Zschokke and CFO Paul Thompson. You can dial-in using the following telephone numbers:
Switzerland/Europe: +41 (0)91 610 56 00
United Kingdom: +44 (0)203 059 58 62
USA – toll free: +1 (1)866 291 41 66
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