Last week, Troika Media (NASDAQ:TRKA) stock plunged on news of a shift in management. Specifically, the company made the decision to terminate both CEO Sadiq (Sid) Toama and Chief Financial Officer Erica Naidrich after an investigation uncovered evidence of a personal relationship between the two.
Troika did not initially disclose these circumstances. Rather, it described the reason for the terminations as cause “pursuant to the terms of [their] employment agreement.” However, Toama doesn’t seem to agree.
On Aug. 18, Toama submitted a letter to Randall Miles, Chairman of Troika’s board, regarding his termination. In the letter, the former CEO makes it clear that he believes the board’s decision to be unjust — and that he is prepared to take legal action.
Does this news have any implications for TRKA stock? Let’s take a closer look.
What’s Happening With TRKA Stock?
TRKA stock has been falling since well before Troika terminated Toama and Naidrich. Currently, the stock is actually up almost 8% for the day, but shares are also down by about 50% for the past one month. In particular, a recent acquisition resulted in Troika being accused of failing to deliver on a $4.34 million payment, hurting TRKA in the process.
Now, Toama’s accusations could spell more legal trouble. In the letter, the former CEO makes it clear that he “unequivocally” denies that his relationship with Naidrich constituted cause for his termination. He also expresses shock at the decision, stresses the consensual nature of the relationship and implies that the board used the relationship as an excuse to terminate him in response to his “efforts to negotiate a fair employment package.” Finally, in the letter, Toama lays out the severance benefits that he believes he is owed. “Note that I am fully prepared to take legal action to enforce my rights under the Employment Agreement,” the former CEO writes.
While TRKA stock is in the green today, Toama’s accusations certainly paint the picture of a troubled company. If the drama continues, it could certainly push shares down further, depending on how the board responds.
In a recent 8-K/A filing, Troika stated that “[t]he Company strongly disputes Mr. Toama’s characterization of his termination and recitation of certain events.”
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
