The resignations of Sonova Group CEO Valentin Chapero and CFO Oliver Walker following improper stock transactions was an unwelcome surprise to a hearing aid industry still struggling to revive sales growth following the global economic recession. Sonova is the world’s leading hearing aid manufacturer, owner of well-known brands including Phonak and Unitron (hearing aids), Advanced Bionics (cochlear implants), and Lyric extnded-wear hearing aids. Chapero was an industry leader known for a strategy that combined aggressive investments in new technology and expansion of sales channels as well as growth through acquisition. His abrupt departure raises obvious questions about what effect the changes will have the hearing aid brands sold by its subsidiaries.
The management shakeup came after the Sonova board of directors determined that a March 16 financial projection warning of lower than expected sales and profits should have been made earlier, and that Chapero, Walker and other insiders with knowledge of the impending lower forecast sold stock before the announcement, avoiding a loss in the value of their shares when their prices fell after the public announcement. Sonova Chairman Andy Rihs, who built the company from a family-owned hearing-aid concern to a publicly held global leader, also stepped down from his position as chairman, but he remains on the board of directors. Swiss regulatory authorities are investigating.
The Sonova board’s quick appointment of Alex Zschokke as interim CEO and Paul Thompson as interim Chief Financial Officer made it clear the company intends to continue on the course charted by Chapero. Zschokke has run Sonova’s marketing and retail operations and has been a motivating force behind the company’s drive to develop and introduce new products based on its new Spice sound processing platform. And Thompson is a long-term Sonova financial executive whose most recent position was Group Vice President of Corporate Development.
At this week’s American Academy of Audiology (AAA) AudiologyNOW conference in Chicago, Sonova brands will make multiple announcements demonstrating continued forward motion: Phonak will be introducing a new member of its Naida high-power hearing aid family based on the Spice platform, Unitron will introduce its new Era sound processing platform that shares many of the Spice platform technologies, and the company’s Sona brand will introduce another version of its field-upgradeable hearing aids.
But now the company must deal with a major unexpected change in its leadership and an insider trading investigation, even as it continues to work its way out of the problems that caused the March 16 profit warning, including a recall of its Advanced Bionics cochlear implants. When I wrote that Sonova hit a “speed bump” with its March 16 profit warning, little did I know it was also about to land in a pot-hole.