Advertisement

Critical Path Chairman, Founder Resigns

Internet: David Hayden says e-mail provider is on the right track after nearly collapsing in accounting scandal.

May 14, 2002|MICHAEL LIEDTKE | ASSOCIATED PRESS

SAN FRANCISCO — Beleaguered e-mail provider Critical Path Inc. on Monday parted ways with its chairman and co-founder, David Hayden, a former building contractor who cashed in on the Internet craze and then watched the company nearly collapse in an accounting scandal.

Hayden said he was resigning to focus on a new venture, which he didn't identify. He also said he felt confident that San Francisco-based Critical Path is back on the right track under Chief Executive William E. McGlashan Jr., a venture capitalist Hayden recruited last year.

"I feel that I have succeeded in doing what the board asked me to do in February of 2001--restore Critical Path to health," Hayden said.

Although its balance sheet has been strengthened by a $95-million infusion made by investors last year, Critical Path remains unprofitable.

After losing $1.9 billion the last two years, the company suffered a $26-million loss during the first quarter.

Hayden, 46, had been working for a $1 annual salary, but the company lent him $1.5 million in August, according to documents filed with the Securities and Exchange Commission. In February, Critical Path agreed to forgive the loan if the company is sold for at least $10 a share.

Critical Path also agreed to pay Hayden $350,000 if he resigned "for good reason." The company didn't indicate whether Hayden's resignation would qualify him for the severance payment.

Monday's resignation comes at a time when Hayden is under fire on Wall Street for his role in another high-profile Internet company-- ETrade Group Inc.

As chairman of ETrade's compensation committee, Hayden signed off on a package that awarded the online brokerage company's CEO, Christos Cotsakos, $80 million last year.

The rich package drew fire from investors who zeroed in on the ties between Critical Path and ETrade, which do business with each other.

In reaction to the criticism, Cotsakos last week agreed to return about one-fourth of his pay package and forgo his salary for the next two years.

Hayden's resignation from Critical Path isn't related to the highly publicized outrage over Cotsakos' contract, a Critical Path spokesman said.

Hayden, who co-founded Critical Path in 1997, returned to the company last year after the management team that replaced him admitted to fabricating some sales during 2000.

Two former Critical Path executives have pleaded guilty to criminal charges that arose from the accounting scandal. An FBI investigation is continuing against other former executives of the company.

Critical Path's shares closed up 7 cents to $1.56 on Nasdaq, before news of Hayden's resignation was announced.

Advertisement
Los Angeles Times Articles
|
|
|