Phorm Board Members Quit over Differences with CEO

Phorm, the behavioral targeting technology outfit, announced today that four of its board members including its COO have stepped down as a result of “differences with [CEO] Kent Ertugrul as to the management and future direction of the Company.”

Former Coca-Cola President and current Phorm Chairman Steven Heyer, and Virasb Vahidi, Phorm’s chief operating officer, have left their positions with immediate effect, alongside fellow board members, David Dorman and Christopher Lawrence. Vahidi was a board member in addition to being COO.

The company has announced four non-executive director replacements, including former Conservative Chancellor Norman Lamont; ex-Ofcom executive board member Kip Meek; Stefan Allesch-Taylor, CEO of investment bank Fairfax; and Stephen Partridge-Hicks of investment firm Gordian Knot.

“As we move into the next phase of our development, the priority will be to build momentum in the rollout of our strategy,” said Ertugrul in a statement. “The new Board members that we are announcing today will play an important role in helping us to achieve the Company’s goals.”

It is unclear exactly what the disagreements among ex-board members involved, but the firm has struggled recently to solidify relationships with British ISPs, despite announcing agreements with three of them in February. Though many of the U.K.’s major providers have not ruled out use of Phorm’s ISP-based targeting technology entirely, the majority remain reluctant to commit to it, owing largely to privacy concerns.

Additionally, the company’s practices have faced detailed scrutiny from regulators and privacy advocates, and have recently been the subject of much debate among industry execs and MPs.

To make matters worse, Phorm’s current financial situation appears uncertain. Despite raising $65 million (£32 million) of funding in March, the firm reported losses of $24.7 million (£13.7 million) in the first half of 2008. If it fails to win further investment or a substantial revenue stream soon, the company could struggle to operate. As a result, a great deal now seems to be riding on the successful completion of technology trials currently being conducted by BT, and the subsequent rollout of the platform across the ISP’s entire network.

Thanking the outgoing board members, Ertugrul said, “Their skills, experience and contacts have been immensely valuable and have been instrumental in the great strides we have made in developing the Company’s strategy and building relationships with ISPs, advertisers and publishers.”