Joseph Megibow, CEO of Purple Innovation, has resigned from his post ,and the company has named Robert DeMartini—a former president and CEO of sports footwear and apparel brand New Balance—as acting CEO and board member.
According to a filing with the U.S. Securities & Exchange Commission, the company will conduct a search to fill the CEO seat and continue DeMartini’s role as a director.
Under the terms of the employment agreement, DeMartini will hold the interim role until July 3; however, the date may be extended if needed. During that time, Purple will pay DeMartini $150,000 a month consisting of $50,000 payable in cash and $100,000 in stock compensation.
The SEC filing also outlines Megibow’s separation agreement with the company. Under the agreement, Purple will pay him a number of things including unpaid base salary as of December 13, a cash bonus of $25,000, more than $43,000 in unused vacation, plus $500,000 representing his 12-month base salary over 18 months.
Megibow, who joined Purple in 2018, will serve as an advisor to the new CEO to ensure a smooth transition, agreeing to consult with the company through June 30 for not more than 40 hours a month.
If Megibow complies with the separation agreement and his previous employment agreement, the filing said Purple will extend his previously granted stock options from three months following his resignation until Nov. 30.
“I am honored to take the helm at Purple, a company that has quickly established itself as a leader in the premium mattress category through its proprietary comfort solutions,” DeMartini says. “With a powerful portfolio of innovative products that help people feel and live better, vertically integrated manufacturing capabilities, and omnichannel distribution strategy, I believe Purple is well-positioned to further expand its market share in the years ahead. I look forward to working collaboratively with both the board and the talented and passionate team of employees to strengthen the company’s operations and best prepare Purple for its next phase of growth.”
This change comes at a time when the company has updated its outlook for the full year, saying it now anticipates net revenue and adjusted earnings to come in at the low end of the guidance range it issued Nov. 9—with net revenue up about 11%, or about $720 million.
The earlier outlook included a net revenue decrease of 8.7% and an adjusted net loss of $4.9 million compared to an adjusted net income of $17.2 million in 2020 and $9.5 million in 2019.
In addition to the CEO changes, Purple has extended its agreement with Bennett Nussbaum, who has been serving as interim chief financial officer for the company since August. The new agreement extends his service another six months until Aug. 19.
“Purple’s strategic direction and multi-year growth prospects have the company well-positioned for 2022 and beyond,” says Paul Zepf, non-executive chairman of the board. “The board is confident this leadership transition will help sharpen our execution and advance the business toward the long-term financial targets we established earlier this year.”