The tensions simmering between VLI Corp. founder and former chairman Bruce Vorhauer and the company's management boiled over Tuesday when Vorhauer told shareholders at the company's annual meeting he wants to replace top executives and redirect the marketing strategy of the Irvine maker of personal care products.
The emotional comments were the first public indication of the rift that has developed over the last nine months between Vorhauer and VLI President Robert Elliott, whom Vorhauer hired in 1983 to handle the daily operations of the struggling maker of the Today contraceptive sponge.
"Bob Elliott doesn't have the expertise needed at VLI now," Vorhauer said. "We need someone who knows pharmaceuticals. That's where the company is headed."
Elliott admitted to shareholders that "philosophical differences" exist between Vorhauer and the rest of the company, but dismissed them as the misgivings of a company founder who has a hard time turning over the reins to professional managers.
Vorhauer said he is particularly disturbed that the company has spent about $21 million on advertising in the last three years but has yet to turn an annual profit. Additionally, Vorhauer, who owns about 600,000 shares, or 5.5%, of VLI stock, complained that the stock's price has dropped from a high of $26.75 to its current level of $4.375 under Elliott.
"It all boils down to performance," said Vorhauer, who resigned as VLI's chairman last August after failing to persuade fellow directors to fire Elliott. Vorhauer, who said he has retained an investsment banker to help him decide how he should handle his stake in the company, remains on the board--he says as "a dissident shareholder"--and has a $150,000 annual consulting contract with the company.
Elliott claimed that VLI's new lines of condoms, pregnancy tests and ovulation predictors could lead the company into the black in 1987. In the first quarter, ended March 30, the company earned $217,000, its second-ever quarterly profit, largely due to fast-paced sales of the Clearblue pregnancy at-home test kit.