Mace CEO terminated for ‘willful misconduct’

Tuesday, July 1, 2008

FORT LAUDERDALE, Fla.--According to a filing with the SEC, Mace Security International has removed Louis Paolino from its board of directors and terminated his tenure as chief executive officer, citing “willful misconduct.”

The company’s bylaws authorize the removal of a director at any time by the unanimous vote of all other directors. This vote occurred during a special meeting of the board held May 20. “The actions of Mr. Paolino that the Board has determined as willful misconduct generally relate to the Board’s belief that Mr. Paolino has not followed the instructions of the Board or sufficiently performed his supervisory duties,” according to the filing.

Board member Gerald LaFlamme, president of JL Development Company and a board member since December, will take over as interim chief executive officer, and board member Jack Mallon, managing director of investment banking firm Mallon Associates, has assumed the chairman role.

“I served as lead independent member of the board,” said Mallon, “and I intend to play an active role going forward in attempting to dramatically improve company performance.” He also said he’s serving as chairman of the search committee for a new permanent CEO. “We’re receptive,” he noted, “to receiving inquiries from security industry executives and others who may feel qualified to perform.”

This action to remove Paolino comes on the heels of positive-looking financial results released by Mace at the end of March. Net income for Q1 was roughly $4 million, compared to a loss of $658,000 in Q1 2007. The financial results look less positive when you pull out roughly $6.2 million the company pulled in from discontinued operations, largely the sale of car washes. Looking just at net income from continuing operations, the company lost $2.27 million, slightly more than Q4 2007. The increase in total revenues was also offset by a slight decline in revenues of approximately $150,000 in Mace’s Security Segment, resulting in Security Segment revenues of $5.3 million in the first quarter of 2008 compared to $5.4 million in 2007.

Mace vice president Eduardo Nieves did not want to veer from the SEC filing in discussing Paolino’s removal, but said, “the business plan for the company remains the same and we enjoy the business that we’re in.”