Top Sonova execs resign after investigation

David Kirkwood
April 6, 2011

STAFA, SWITZERLAND—The hearing aid industry was rocked by the unexpected resignations of the three top executives of the Sonova Group, the world’s largest manufacturer of hearing aids. Sonova, parent company of Phonak, Unitron, and Lyric, announced on March 30 that Valentin Chapero, the CEO, and Oliver Walker, the CEO, had tendered their resignations, and that Andy Rihs would step down as chairman of the board of directors.

The resignations came after an external investigation into share sales by directors and executives before Sonova reduced its profit forecast on March 16. Sonova cited the recall of an implant, a delay in introducing new products, and currency swings as the cause of the warning. The stock fell as much as 9.4% in Zurich trading and lost almost 30% of its value in a month.

According to Sonova, in the run-up to the profit warning of March 16, the responsible persons at Sonova failed to issue a timely internal blackout period for trading in Sonova shares and options. As a result, the company said, “There were trades that should not have taken place during that period. In addition, Sonova issued its profit warning too late.”

According to the SIX Swiss Exchange web site, Sonova directors and managers sold about 2.4 million shares and warrants between February 1 and March 16, when the new forecast was issued. Based on these events and their consequences, Chapero and Walker resigned.

Rihs, who owns about 10% of the Sonova stock, will remain a director. Sonova said that an internal investigation has not revealed any evidence that Rihs knew about the profit warning to be published a week later when he sold 300,000 Sonova shares on March 8. He offered the purchaser of the shares to buy them back at the original purchase price.

The board has appointed Robert Spoerry to replace Andy Rihs, as chairman. He has been a non-executive member of the board since 2003.

Alexander Zschokke will take over as interim CEO. He was previously responsible for marketing and currently heads the group-wide retail activities. Paul Thompson, who will become interim CFO of the Sonova Group, a position he held from 2002 to 2004.

Spoerry expressed confidence that the new leadership will soon be able to regain the trust of the investors, employees, customers, and the public.

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