SAN JOSE, CALIFORNIA — In a recent form 8-K filing this past week, Eargo, Inc. revealed on June 23, 2023, that its Board of Directors has approved a comprehensive cost reduction plan aimed at optimizing the company’s cost structure and operational model. This plan, expected to be implemented throughout fiscal 2023, is anticipated to affect approximately 90-120 employees, equivalent to around 32-42% of Eargo’s workforce.
In line with the cost reduction plan, Eargo estimates non-recurring charges ranging from $5.0 to $7.0 million. These charges primarily encompass one-time employee termination costs, including severance payments, notice pay, employee benefits contributions, related expenses, and the potential impairment of certain intangible and other assets. However, it is important to note that actual expenses may vary from the disclosed estimates due to factors such as legal requirements in different jurisdictions.
Christian Gormsen
Additionally, Eargo announced the departure of Christian Gormsen, its President, Chief Executive Officer, and member of the Board of Directors. Gormsen will be stepping down from his positions effective June 30, 2023. The Board’s decision to reduce its size by one member upon Gormsen’s departure will result in a remaining Board comprising six directors. Notably, according to the filing Gormsen’s resignation is “not due to any disagreement with the company,” and the Board and management expressed their gratitude for his years of service.
Under an agreement entered into between Eargo and Gormsen, the outgoing CEO is entitled to receive a lump sum severance payment equivalent to his annual base salary and target annual cash bonus.
William Brownie Appointed Interim CEO
To fill the leadership void left by Gormsen’s departure, the Board has appointed William Brownie as the interim Chief Executive Officer, effective June 30, 2023. Brownie, who currently serves as the Chief Operating Officer, has been with Eargo since April 2019. He brings a wealth of experience to the role, having previously served as the Chief Customer Operations Officer and Chief Financial Officer of the company. Prior to joining Eargo, Brownie held key positions at Sonova e-Hearing Care and HearingPlanet Inc.
As of the time of this report, Eargo reportedly has not entered into any new compensation arrangements with William Brownie, the interim CEO.
This strategic cost reduction plan and leadership change demonstrate Eargo’s commitment to optimizing its operations and ensuring long-term sustainability in the highly competitive hearing solutions market. With a renewed focus on cost efficiency and a capable interim CEO at the helm, Eargo is poised to navigate this transitional period and continue delivering innovative solutions to enhance the lives of individuals with hearing loss.
Please note that the information provided in this article is based on Eargo’s recent Form 8-K filing and is subject to verification and further updates as necessary.
