Hell Hath No Fury Like This C.E.O. Scorned

Things sometimes can get testy in the corporate board room, but it's taken an unusually personal twist at the small Rhode Island tech company, Nestor Inc.

The Providence firm is involved in a proxy battle--unusually--with its own erstwhile C.E.O., William B. Danzell, whom the board ousted on May 17.

Now, as head of the Hilton Head, South Carolina, investment firm, Silver Star Partners, he owns 64 percent of Nestor, whose traffic systems subsidiary sells red light enforcement cameras to local governments.

Since Danzell's departure, the company has focused on a financial turnaround. Its revenue for the second quarter was $3.1 million, compared with $2 million in the same quarter last year, thanks to increased sales of its traffic-control cameras and an infusion of $5 million from a private stock offering.

Danzell, meanwhile, as been focused on accumulating shares of Nestor and offering up his own slate of directors--including himself.

The company has ignored this move, but it's hard for Nestor to ignore Danzell completely. When he was fired (for which the company has offered no explanation), he owned nearly half of the company's outstanding shares. Since then he's purchased more with, as he put it to the Securities and Exchange Commission, "a view to controlling Nestor."

Then in a May 23 securities filing, he said Silver Star is exploring selling all of most of its Nestor shares, a move, he told regulators that "could result in a change of control of Nestor."

To make it all the more bizarre, while Danzell was dumped as C.E.O., he remained a company employee. The Nestor directors excluded him from a June meeting when they met to discuss his employment agreement.

Tangling the tale further, Danzell told Nestor directors in June that he would use his voting power to appoint himself chairman and appointment two new board members if the board did not do it. The board refused.

As to where things stand now--there was no illumination from Nestor's principals. Neither its new C.E.O.--former board member Clarence A. Davis--nor Danzell responded to calls for comment.

by Elizabeth Olson