Cutera executives call for meeting to reconstitute its board

Today J. Daniel Plants, founder and chief investment officer of Voce Capital and executive chairman of the board of directors of Cutera and David Mowry, Cutera’s CEO and a director – who together own approximately 7% of the outstanding shares of Cutera – commented on the fact that they have each delivered to the company separate notices calling for a special meeting of stockholders, pursuant to Cutera’s amended and restated bylaws, which expressly empowers each of them to requisition the special meeting. Both notices call for the removal of directors Gregory Barrett, Sheila Hopkins, Timothy O’Shea, Juliane Park and Janet Widmann; neither notice seeks to remove independent director Joseph Whitters. Plants’ April 3 notice was accompanied by a letter to the board as well as a duly noticed request for a special meeting of the board to discuss the issues raised in his letter. In light of this, Messrs. Mowry and Plants have each issued public statements in their individual capacities. David Mowry said: "In early January, I communicated to the Board that I wished to begin a transition process to facilitate my retirement as CEO. The Board considered a number of its own members – including Sheila Hopkins, Juliane Park, Dan Plants and Janet Widmann – as potential candidates, but ultimately was not able to reach a suitable agreement with a qualified replacement. On February 22, the Board formed a committee to conduct an external search. Today, to my knowledge this committee has not even met once, has not established a job specification and has not selected a recruiting firm. From my perspective – despite the passage of many weeks – the Board is no closer to finding a replacement. Out of serious concern regarding some of the interim ‘solutions’ the Board was openly considering as my replacement while the search was being conducted, on March 9, I offered to delay my retirement to minimize the disruption, confusion and instability to the business caused by the insertion of an ‘interim CEO’ or ‘Co-CEOs,’ and I advised the Board as such. The Board has failed to accept my proposal. In my opinion, the approach the Entrenched Directors have taken to these matters has been detrimental to the business and served no purpose other than to position certain Directors closer to the CEO title that they seem to covet for themselves. Making matters worse, these critical deliberations around succession planning are being conducted during informal meetings held by a subset of the Board. It is disappointing to me that through the actions of the Entrenched Directors, the Board has reached such a level of dysfunction that critical decisions are not being made and vital initiatives are unable to move forward. As the Company’s CEO, I was particularly disturbed that the Entrenched Directors chose to repurpose a simple 8-K – that had been prepared by Company management and counsel in response to a request from our auditors – into the opening salvo of the public fight that they seem to prefer over a private resolution. They then chose to file the 8-K on April 7 with the SEC without Board approval and over the objections of several Directors. While I have tried to remain neutral and focused on the long-term value creation strategy that we have been building at Cutera, I am now firmly convinced that our employees, customers and shareholders deserve better – which is why I have taken this action to demand the Special Meeting to refresh the composition of the Board." J. Daniel Plants stated: "As an investor in Cutera for 10 years and one of its largest stockholders, I am deeply invested in the Company’s success. I have been heavily involved in the development of the new commercial model and product strategy that has the potential to be transformative for the Company and unlock substantial value for its shareholders. But the Board’s lack of transparency, attempted micromanagement and political behavior have become a major distraction for the Company and its leadership team. The failure to meaningfully progress on a CEO succession plan is just the most glaring indication that the Board’s agenda is now being driven by the Entrenched Directors, whose apparently personal priorities and allegiances – rather than what will deliver value for Cutera and its stakeholders – are motivating and guiding their actions. When it became apparent that the state of the Board’s governance had become so corroded that it was impeding our ability to achieve performance objectives, I first sought to reach a constructive solution with my fellow Directors by pursuing a confidential internal dialogue directed toward a resolution. After scheduling a Board meeting with the express purpose of discussing a resolution of the concerns raised in my letter, the Entrenched Directors came to the meeting with no intent of having this discussion and had instead already engaged several defense advisors, despite having sought no Board authorization to do so. Moreover, on April 7, they then elected to issue a press release disclosing all of these matters publicly. They clearly prefer an expensive, public fight using shareholder dollars to an amicable resolution. In light of the Board’s actions, I am moving forward to allow shareholders the ability to have a direct say in who will represent them and steward their investment in the Company going forward." The notices delivered by Messrs. Mowry and Plants require that the special meeting be held within 60 days of the date of the notice. The notices further demand that the company provide each Cutera stockholder entitled to vote with prompt written notice of the special meeting and that it act immediately to schedule it. Plants concluded: "We fully expect the Entrenched Directors to follow the law and advance the Special Meeting process and will take all appropriate action to ensure this happens."