Smith Out As Westcon Group CEO

The unexpected departure comes with the distributor attempting to complete a $115 million initial public offering. Westcon had filed for the IPO with the Securities and Exchange Commission only two months ago.

Smith had been president and CEO since 2001. He will remain with the distributor through a transition period and has retained an equity stake in the company, according to Westcon.

The company did not say why Smith left, noting only that he "fulfilled his and the board's shared vision to transform Westcon into a leading specialty distributor" and that he "will pursue new challenges and business opportunities."

Smith could not be immediately reached for comment, but he said in a statement, "I am proud of the progress Westcon has made since I joined the company and especially during my years as CEO. Having completed what I set out to accomplish at Westcon, I believe the company has a strong organization, and a sound and exciting business strategy."

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Tom Dolan, executive vice president, as well as a co-founder and member of the board, has been named to replace Smith as president and CEO.

Dolan previously was president and CEO from 2000 to 2001 and chairman from 2001 to 2002.

"I look forward to the opportunity to lead Westcon as CEO. A number of people, notably Alan Marc Smith, have contributed to our company's considerable growth over the years and we now enjoy a reputation as one of the world's leading specialty distributors of networking and communications products. Now that we are positioned as an industry leader, Alan and I agree that this is this is the right time for this transition, and it will be seamless," Dolan said in a statement.

While at Westcon Group, Smith helped the company increase sales to more than $2 billion from $200 million and the number of employees to more than 1,200 from 120. He also managed the company through eight acquisitions and 24 subsidiary integrations in 16 countries.

"Alan has excelled in his role and we are grateful for his contributions and pleased that Westcon will continue to benefit from his expertise through a transition period. Since joining Westcon more than seven years ago, Alan has been one of the driving forces behind our success and he deserves a great deal of credit for many of our collective accomplishments," Dolan continued in the statement.

The distributor--which focused on local area networking in its early days and is now one of the top players in voice/data network distribution of Cisco Systems, Avaya and Nortel Networks products--reported revenue of $1.65 billion for fiscal 2003, $1.68 billion for 2002 and $2.07 billion for 2001.

Smith has a non-compete agreement with Westcon, according to Westcon's S-1 statement with the SEC. As part of that deal, Smith received $428,572 in fiscal 2003. That was on top of $746,595 in salary and bonus, according to Westcon's S-1 statement.

During fiscal 2002, Smith earned another $714,286 as part of the non-compete agreement. Under the terms of the deal, Smith committed to not competing with Westcon for a period of "18 months following the termination of his employment."

As part of the non-compete, Smith is due an "additional aggregate amount of $857,142" in fiscal 2004 and fiscal 2005, according to the Westcon prospectus. This was on top of exercisable Westcon stock options of 454,350 and unexcercisable options of 250,000 shares in fiscal 2003.

Smith's employment agreement with Westcon was due to expire on Dec. 31, 2004, with an automatic one-year renewal.

If Smith was fired for any reason other than "good cause" by the company or him, he is entitled to base salary and bonus that would have been paid over the next four years. Under the agreement outlined in the Westcon prospectus, Smith may be due base salary for the 18 months following his termination, an amount equal to the cost of maintaining health insurance benefits for Smith and his family for a period of 18 months; full vesting of 50 percent of the outstanding stock options held by him not vested; and any amount due under the non-compete agreement.

Smith may also be due "a monthly amount equal to his monthly base compensation on the date Mr. Smith's employment is terminated multiplied by nine and payable in monthly installments for a period of 18 months," according to the S-1 filing.

Smith joined Westcon seven years ago as director of business development and planning and was a member of Westcon parent Datec's board of directors. Before joining Westcon, Smith was the manager of the business management group at Bay Networks, now the data division of Nortel Networks.