Healthways CEO Ben Leedle Jr. has left the wellness and population-health program provider for unknown reasons. His employment was terminated “without cause,” according to a regulatory filing.
Leedle, 54, stepped down as director, president and CEO and resigned from Healthway's board of directors last Friday, according to a regulatory filing published Monday. He has been replaced on an interim basis by Alfred Lumsdaine, the company's executive VP and CFO.
North Tide Capital, an activist investor in Healthways and owner of 11% of the company, has been vocal about disappointment in Leedle's performance. Managing member Conan Laughlin wrote in a January 2014 letter that North Tide was upset with the board's "laissez-faire attitude toward the need for change at Healthways and unwavering support for CEO Ben Leedle despite the substantial value destruction that shareholders have suffered during his tenure."
After several quarters of financial losses, Healthways had been under pressure this past year to give shareholders a greater voice in governance, and had hired a financial adviser while considering selling the company.
Healthways has been doing better recently, reporting a profit in the fourth quarter of 2014 and a notably reduced loss in the first quarter of this year.
On Monday, the company would not comment on Leedle's departure, though Healthways Chairman Donato Tramuto in a statement praised his former colleague's service to the company.
"Ben is a pioneer in population health and has led Healthways' transformation into a leader in the industry," Tramuto said. "On behalf of the entire Board, I sincerely thank Ben for his 30 years of dedication and commitment to Healthways and in particular for his 12 years of leadership as our CEO."
Compensation-related expenses as a part of Leedle's separation agreement are expected to cost the company about $5 million, all of which will be incurred in the second quarter.
Leedle will be paid all accrued and unpaid base salary and accrued medical and life insurance benefits he was entitled to through last Friday, as well as any pro-rated payments he was owed from the company's 2015 short-term cash incentive program, as determined at the end of this year. He'll continue to receive medical benefits for the next 24 months and will be given total severance in the amount of about $1.8 million, some of which is conditional on a release of claims against against the company.
As part of his separation agreement, Leedle will be eligible for a portion of his 2013 performance cash award that is based on performance during the 2015 fiscal year, but he will not be able to receive portions related to performance in fiscal 2013 and 2014. Leedle will also receive accelerated vesting of stock options and other financial benefits.
Leedle elected to net exercise some performance awards elected to him in stock options to purchase 434,436 shares at $9.96 per share. The company will repurchase these shares at Friday's closing price.
Lumsdaine, 49, has been CFO since January 2011, and will continue to serve in that position while at the helm of the company. Before becoming CFO, he served as chief accounting officer, a job he started in 2002.
Immediately following Leedle's departure, Healthway's board reduced its size from 11 to 10 directors.
