In addition to laying off almost half of its employees, incubator VirtualFund.com Inc. said it fired Chief Executive Officer and President Melvin Masters in a detailed public statement issued late Tuesday.
In a stay-afloat maneuver that coincided with the termination of 91 of 212 workers, VirtualFund.com said Masters was found insubordinate and breached fiduciary duties because he paid $2.5 million to, and pursued a relationship with, software maker Manugistics Inc. after he was told not to.
VirtualFund board of directors Vice Chairman Timothy R. Duoos said the ruling was based on its concern over a rapid depletion of cash during the five months that Masters pursued a new electronic business-to-business strategy, following the company’s sale of its primary printer business for $47 million in cash.
The firm, which temporarily filled the newly-vacant positions with Robert L. Kelly, aired Masters’ deed list in a public statement Tuesday and listed the following reasons for his termination:
- Continued expenditure of corporate funds to repurchase shares of VirtualFund’s common stock after the board of directors determined stock repurchases should end
- Financial irregularities in connection with Masters’ related party transactions
- Charging the company for significant personal expenses that were not incurred in connection with his duties and responsibilities
In fact, Masters’ missteps are serious enough to warrant possible litigation, Duoos said, as the firm’s board said it will review “other improprieties.”
As for the all-too-familiar workforce reduction, Kelly said the workforce reduction was a “painful but absolutely necessary action” due to the reassessment of the company’s business-to-business e-commerce strategy and the need to reduce costs and preserve cash.
VirtualFund.com had earlier placed 70 employees on vacation or paid leave. The company placed another 36 of its employees on the same status on December 4, the same day Masters was suspended as chairman of VirtualFund’s board.
Kelly said most employees affected by the layoff will receive severance packages and benefit extensions.