The United States-based business and consumer database provider infoGROUP has removed its Indian-origin founder Vinod Gupta from the post of its chairman, following a shareholder lawsuit against the company and a probe by the market regulator SEC.
Gupta, who founded the company in 1972, would however continue as its CEO, infoGROUP said in a statement.
The decision is pursuant to an independent review by a Special Litigation Committee of infoGROUP's board on issues raised in derivative litigations filed against the company and in response to an informal investigation by the SEC.
The committee determined that various related party transactions, expense reimbursements, and corporate expenditures were excessive.
Following the review, the changes include separation of the roles of chairman and CEO and appointment of a new chief financial officer.
Gupta has also orally agreed with the SLC to pay the company $9 million, subject to execution of a definitive settlement agreement and upon the court approval of the settlement.
"I thank the Special Litigation Committee for all its hard work and endorse the recommended governance changes, which will implement best corporate practices at infoGROUP," Gupta said.
"I believe this resolution will allow the Company to move forward and continue to focus on providing our clients with industry-leading marketing solutions," he added.
Bill L Fairfield, chairman of DreamField Partners Inc and the board's lead independent director at infoGROUP since November 2005, has assumed the position of chairman of the board effective July 16, 2008.
"The decisions taken by the SLC address the internal deficiencies identified during the review and create a different governance process and structure that will enable the Company to build on our past successes," said Fairfield, who was also a member of the SLC.
"These decisions are in the best interests of the company, our shareholders and employees," he added.
The company has decided to appoint a new CFO and Stormy Dean, infoGROUP's current CFO, would maintain his position until his replacement is named.
The company also announced the creation of an executive vice president for business conduct and general counsel, who would be responsible for supervising all internal legal and compliance functions and would report directly to Fairfield as the chairman of the board.
Company's current general counsel and secretary John H Longwell would serve as the acting executive vice president for business conduct and general counsel until the position can be permanently filled.
