Worse than being a public relations disaster, iBash turned into a financial black hole that largely sank Pixelon's chances of ever getting off the ground. Socolof, who was fired two months before iBash, received a severance package of $150,000 in cash and stock conservatively valued at $870,000, Paul Ward says. The music veteran, his secretary confirms, went on to take the coveted position of road manager for The Who's North American tour.
For their efforts, The Who received $2 million in cash and a generous offering of stock; LeAnn Rimes made $1 million; and the Dixie Chicks got $875,000 and at least $230,000 in stock. All told, iBash cost more than $16.2 million, more than 75 percent of the capital Pixelon had taken in during its year and a half existence. As if it made any difference, the company continued to tell the press the event's price tag was $12 million.
Fuming over the launch debacle, the principals from Advanced Equities were in no mood for negotiations when they arrived at Pixelon on Nov. 12. They had received enough reconnaissance information to know that the situation was dire. The trio's message as they stopped at each executive's office was the same. "It's not a negotiation. It's not a debate. It's not a discussion," one person remembers one of the principals saying. "If we don't have an agreement by the time we leave, you will have a class-action lawsuit on your desk within 48 hours."
Interim CEO Ward called Michael Kelley, a director living in Northern California, and told him to take the next available flight to San Juan Capistrano. He also began tracking down Bart Moore, another board member who was on a horseback riding trip for the day.
It was 10:30 that morning when the investors had their first contact with Stanley, who was clearly unhappy about their visit. Badger, who had been instrumental in sealing the deal with Pixelon, stood up and offered to shake his hand, but Stanley, who appeared out of breath and badly in need of sleep, just walked past the man. Stanley, according to some in attendance, then launched into a long and sometimes vulgar rant about how he would never give up control of the company. He seemed on the edge of violence.
The investors, however, were digging in. "We sold this deal as a $57 million market cap and we're not taking a percentage point less," one of them responded. "If you don't rectify this, you'll never raise money again."
The investors ticked off a plethora of concerns. There was the firing earlier that week of Pixelon's newly appointed CEO, Judy Smith, a former deputy press secretary during the Bush administration and communications exec at MSNBC. She was probably best known for being Monica Lewinsky's spokeswoman after the intern's affair with President Clinton became public. For months, Stanley had been pushing Smith as a candidate for the CEO spot, but Advanced Equities had resisted. Finally, at a shareholders meeting just two weeks earlier, Stanley had stunned the investors when he stood and with great fanfare introduced Smith as Pixelon's next CEO. Now, just as they were getting used to the idea, they had learned she had been fired. Advanced Equities was also upset about the massive and unauthorized grants of Pixelon stock that grossly diluted current shareholders' holdings.
As the day wore on, Wiskowski and others who wanted to oust Stanley were concerned about whether they had the votes. Of course, Stanley was sure to vote against the measure, as was Snyder. That meant the plan would need the support of either Moore, who was unreachable on his riding trip, or Kelley, who was still in flight from Northern California. In the meantime, they continued to worry that Stanley might get violent if he learned of the plan. They decided to get Stanley into the conference room and that Feldman, the recent Pixelon hire, would keep on eye on the room from outside through a window. If the plotters thought Stanley was about to go ballistic, one of them would gesture to Feldman with a thumbs down, the agreed-upon signal for him to call the police.
As the group attempted to meet again with Stanley, they encountered a new problem: Posted outside Stanley's office were two large bodyguards, and word around the office was that they were armed. Wiskowski and Badger walked past the guards and entered the office. Sensing he was close to being ousted, Stanley suddenly was in a mood to bargain, according to people present at the meeting.
"Give me 90 days and I'll turn the company around," he told them. Cam Fraser, another recently hired executive, approached the office door and asked the bodyguards to leave, but they refused. As nonchalantly as he could, Wiskowski feigned a yawn and a stretch, clasping his fingers together and turning his hands so that his two thumbs were clearly pointing downward - the prearranged signal to call the cops.
