Aqua Metals ‘transitions’ Steve Clarke as CEO, possible replacements discussed

Steve Clarke (pictured), the founder of Aqua Metals, a company that uses a novel electrochemical technology to recycle lead, is to be replaced as chief executive of the company he founded three years ago. According to a company statement on March 27 Clarke will also “transition from his current position as president and chairman of the board”.

The transition process is likely to happen within the next couple of weeks, possibly through an extraordinary general meeting or the firm’s annual general meeting, which is due to be held shortly.

No dates have been given for such meetings to be held.

Asked to remark on the leadership change, Clarke told BESB, “we are not yet cleared to comment as we have matters to complete first.  It would be mid next week at the earliest.”

According to a company statement, “Aqua Metals has engaged a recognized executive search firm and corporate governance consultant for advice and assistance on board compositional matters and corporate governance best practices.  In February 2018, Aqua Metals authorized such a firm to conduct a comprehensive search for a successor CEO, which has been ongoing since such time.

“Additionally, in February 2018, Aqua Metals commenced a process to identify up to two new independent director candidates to refresh the composition of the board.”

One investor group, Kanen Wealth Management, has proposed four director candidates to replace Clarke. David Kanen, the managing member of Kanen Wealth Management, said, “We are incredibly disappointed by the prolonged and severe underperformance that has plagued Aqua Metals.

“The company’s stock price has precipitously declined by more than 85% in the past year alone … meaningful board change is required to protect the best interests of all unaffiliated stockholders. 40% of the board is composed of non-independent, management co-founders. We have lost confidence in their ability to enhance or maximize stockholder value.”

A board meeting is to be held to reach a decision on the choice of candidate. According to one insider to the process, “as far as I’m aware there are no other candidates in the ring”.

Kanen’s four candidates include himself, Anthony Ambrose, Alan Howe and Jeffrey Padnos.

Kanen, 52, is a portfolio manager and has been president of Kanen Wealth Management, an investment advisory firm, since 2016. From 2012 to 2016, Kanen was the senior vice president of investments of Aegis Capital Corporation, a boutique investment bank and broker-dealer. From 2004 to 2012, he was a financial adviser for various financial firms, including Pointe Capital Management, First Midwest and Williams Financial Group.

Ambrose, 56, joined Data I/O Corporation (DAIO) on October 2012 and is president and CEO. Before Data I/O Corporation, Ambrose was owner and principal of Cedar Mill Partners, a strategy consulting firm from 2011 to 2012. From 2007 to 2011, he was vice president and general manager at RadiSys Corporation, a provider of wireless infrastructure. At RadiSys Corporation, he established the telecom platform business and grew it to more than $125 million in annual revenues.

Howe, 57, was co-founder and managing partner of Broadband Initiatives, a boutique corporate advisory and consulting firm. He has provided such services to corporate businesses since 2001. He has also worked as vice president of strategic and wireless business development for Covad Communications, a US national broadband telecommunications company, from May 2005 to October 2008.

Padnos, 69, has been chairman of PADNOS, a provider of scrap processing and management services, since 2016. He joined the family-owned scrap processing and recycling business in 1979 and was promoted to president in 1988. Before that Padnos worked as a consultant for McKinsey, the management consulting firm, from 1974 to 1978.

Insider talk is that although the four proposed for the position are almost certainly capable candidates, the need is for a CEO with greater technical and operational management expertise.

The departure of Clarke was first openly discussed in December, when various class actions alleging an attempt to mislead investors were announced.

Certainly Clarke, who has taken the company from nothing to this far, will be missed.

Investor reaction is still mixed. Aqua Metals’ share price initially dropped after the announcement, but has since trended higher. Its share price, at $2.48 on Thursday although way below its peak of almost $22 in April 2017, is still above its recent share offering of $2.10.

Vincent DiVito, an Aqua Metals independent director, said: “Steve is a very talented inventor and a true visionary.  During his tenure as CEO, Aqua Metals has achieved several important development milestones.

“Our search for a new CEO is well under way, and we are committed to recruiting an outstanding CEO to lead the company as it transitions from a founder-led, development stage organization to a more mature public company.”