Joseph Pandolfino has been fired as 22nd Century Group’s chairman and chief executive officer, with the Clarence cigarette manufacturer’s lead independent director, James Cornell, taking over as chairman.
Pandolfino, 22nd Century’s founder, was fired Saturday, the company said in a Securities and Exchange Commission filing Monday. The company did not disclose a reason for terminating Pandolfino’s contract, other than to say it was “without cause,” which will allow Pandolfino to collect severance payments from 22nd Century.
Henry Sicignano, the company’s president, was named to the additional role as 22nd Century’s chief operating officer, the filing said.
Sicignano said the company made the change as it shifts from developing its technology and products into a production stage.
“We have achieved a number of incredibly significant milestones in the last quarter,” Sicignano said. “The company is entering a new phase of its growth. We’re entering a commercialization phase.”
The company also has formed an executive committee made up of independent directors Cornell, Richard Sanders and Joseph Dunn to help manage 22nd Century until a new chief executive officer is hired.
Pandolfino will remain on 22nd Century’s board of directors and is holding talks with the company about becoming the firm’s chief technology officer, the filing said.
“Technology is his passion,” Sicignano said.
However, the changing nature of 22nd Century’s business meant that the company’s board of directors wanted a CEO with more of a focus on managing the business as it begins to generate revenues from the products it has been developing for more than five years.
“Henry Sicignano is ideally suited to lead the company’s tobacco-related business. His strong tobacco background growing the National America Spirit cigarette brand, coupled with his sound strategic and implementation skills, are excellent,” Cornell said in a statement.
Pandolfino was criticized in late August in a lengthy report posted on the Seeking Alpha website by a Pennsylvania-based hedge fund that will make a profit on its investment in 22nd Century if the share price declines. The hedge fund, GeoInvesting, noted that Pandolfino had agreed to a settlement with the Securities and Exchange Commission in 1992 on allegations that he fraudulently manipulated the price of two stocks by mailing anonymous letters urging people to buy shares in the companies.
Pandolfino agreed to pay about $26,000 – roughly the amount federal regulators said he made on the scheme while he was a 23-year-old graduate student at the University at Buffalo – to settle the charges.
“The issue I had with the SEC 23 years ago, when I was a kid in college, has given me the highest sense of awareness for securities laws and regulations,” Pandolfino said in a response he issued in August.
Pandolfino could not be reached to comment. Sicignano said Pandolfino’s departure had nothing to do with the SEC case.
Pandolfino’s ouster comes as the company has made significant progress over the last two months toward beginning production of its super-premium priced Red Sun and Magic brands at the factory that it bought and equipped in North Carolina. Sicignano said its products should be available nationally by the end of this year or early next year.
22nd Century in September received its long-awaited membership in the consortium of tobacco manufacturers that are part of a 1998 settlement with attorneys general in 46 states, clearing the way for it to begin producing its own cigarettes. The company’s technology allows it to alter nicotine levels in tobacco.
The company also is branching out into the marijuana market, acquiring the U.S. license to a biotechnology process last month that can alter the potency of marijuana plants for medical and recreational use, much like its existing technology allows it to adjust the nicotine levels in tobacco.
22nd Century raised $10 million in late September by selling restricted stock to an entity controlled by investor Terren Peizer for $2.58 per share. The company’s stock has since tumbled by 23 percent, even after posting a 4 percent gain on Monday, rising 8 cents to $2.10.