Mace Security fires CEO, won’t pay severance

Mace Security International Inc.'s board ousted chief executive Louis D. Paolino for misconduct and said the company would not pay his severance, according to a company statement today.

Paolino, who also was removed from the company's board, didn't follow board instructions and didn't supervise properly, according to a statement from the former Mount Laurel company, which is now based in Florida. The actions were taken at a special board meeting on Tuesday.

In a phone interview today, Paolino said that he and the board were deadlocked over certain business issues but that his firing came as a surprise.

He said that he did not violate provisions in his employment agreement and that the company did not have cause to deny his severance.

"I plan to file for arbitration immediately. My goal is to win the money," Paolino said, adding that he is owed $4 million in severance.

In a regulatory filing on May 12, the company disclosed that there was a sharp division on the six-member board of directors over how to grow the security and digital media marketing segments of the company.

Mace also disclosed in the filing that it was issued a grand jury subpoena on May 2 by the U.S. Attorney in Vermont for documents related to the company's storage, disposal and transportation of materials in its manufacturing processes in Bennington, Vt.

In January, the Environmental Protection Agency searched the Bennington location, which Mace leased, and found 212 drums of hazardous waste from the production of defense sprays and 55,000 pounds of a material used to make tear gas stored in eight plastic containers.

In addition, the EPA found contaminated soil on the grounds, possibly from sand-blasting paint from the building. The company added in the filing that it did not believe Mace was responsible for the soil contamination. EPA, Mace and the building owner have signed a agreement to remediate the site by May 30.

Paolino, who built the trash-hauling company Eastern Environmental Services Inc. in the 1990s and then sold it to Waste Management Inc. for $1.3 billion in 1998, said he was not responsible for improper storage of hazardous waste. "It was the operating guy in Vermont; I have no liability with that," he said.

Mace spokesman Eduardo Nieves Jr. would not comment beyond the news release but said more details would be contained in a regulatory filing. Mace said it would not restate its earnings because of Paolino's actions.

Mace's shares rose 11 percent, or 17 cents, to $1.70 in trading shortly after 1 p.m. in Nasdaq trading.

Paolino, who had hoped to build the nation's largest chain of car washes with Mace, has faced pressure from Lawndale Capital Management LLC. In October, Paolino agreed to enlarge Mace's board from five to six members and add independent directors.

Mace board member Gerald LaFlamme, president of real estate development and consulting firm JL Development, was appointed interim CEO, the company said today. Board member Jack Mallon, the chairman of IBI Armored Services Inc., was appointed chairman.

Mace, which sells the Mace pepper spray and electronics surveillance equipment, has been unloading its car washes. Its accounting and legal departments are located in Horsham.