After the disclosure that Eric Krasnoff, chief executive of Pall Corp. will pursue a "personal relationship" with the company's general counsel, both executives chose to resign, Pall said.
Shares of Pall spiked more than 10 percent on news that a Credit Suisse analyst now sees the company as a takeover target, with Krasnoff's resignation as a catalyst.
The Port Washington filtration company said in a Friday news release that Krasnoff, who is also board chairman, will resign in March 2012, on his 60th birthday.
Pall left open the possibility that Krasnoff might depart earlier if the company selects successors to his two positions. The Pall board plans to launch an executive search to fill the jobs.
"The announcement follows the notice to the board by Mr. Krasnoff and the company's general counsel, Sandra Marino, on Jan. 10, 2011, that they intended to pursue a personal relationship."
The board accepted Marino's resignation and brought in outside counsel for an inquiry after learning of the relationship.
The inquiry "determined that the relationship did not have any impact on Pall's operating or financial results and that no company assets were misused or misreported," Pall said.
Bloomberg Businessweek listed Marino’s fiscal year 2010 salary at $345,646. Yahoo Finance shows the current compensation for Marino, 41, at $708,000, and for Krasnoff, 58, at $2.8 million.
Pall is headquartered on Long Island, where it employs 500 workers and is the Island's sixth-largest company based on sales. It relocated from East Hills to Port Washington in 2009.
Effective immediately, Robert G. Kuhbach has been appointed as senior vice president, general counsel and corporate secretary pending a search for Marino's replacement.
Krasnoff, 59, is the son of Abraham Krasnoff, the former company chief executive, who helped build the company after joining as an accountant in 1951. Abraham Krasnoff, who retired in the early 1990s, died in 2007.
In December, Eric Krasnoff exercised company stock options for nearly $8.5 million. In two sets of transactions, he exercised options for 167,948 shares for a total sale price of $8,472,522.
In the first set of transactions, on Dec. 14, Krasnoff exercised options on 102,449 shares, buying them for $22.09 per share and selling them for $49.47 a share. His outlay was $2.26 million, and proceeds were $5.07 million.
In the second set of transactions, on Dec. 15, Krasnoff exercised options on 68,499 shares, buying them for $22.09 and selling them for $49.55 a share. His outlay was $1.51 million, and proceeds were $3.39 million.
Yahoo Finance shows the current compensation for Marino, 41, at $708,000, and for Krasnoff at $2.8 million.
With a market capitalization of $5.78 billion, Pall had $2.4 billion in revenue for the fiscal year ending July 31. In that period, its net income available to holders of its common stock was $241.25 million.