Mace Security fires CEO, won't pay severance

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

Paolino, who also was removed from the company's board, did not follow board instructions and did not 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 Tuesday.

Mace manufactures and markets the popular Mace-brand personal-defense spray and retails surveillance equipment such as hidden cameras. It has also been dismantling a chain of car washes. Mace had $14.5 million in revenue and $4 million in profit, which included gains from the sale of six full-service car washes in Florida, in the quarter ended March 31.

Paolino said in a phone interview that the board was 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 a regulatory filing May 12, the company disclosed there was a sharp division on the six-member board of directors over how to grow the security and online-retail segments.

Mace also disclosed in the filing that it was issued a grand jury subpoena May 2 by the U.S. attorney in Vermont for documents related to the storage, disposal and transportation of hazardous 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 waste from the production of the 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, possibly from sand-blasting paint from the building. The company said in the filing it did not believe Mace was responsible for the soil contamination. EPA, Mace and the building owner - whom Mace identifies as an employee - have signed an agreement to remediate the site.

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.

In an event that made headlines in the 1980s, a Paolino family company, Joseph Paolino & Sons, had a contract with Philadelphia to dispose of the city's incinerator ash. Unable to find a disposal site in the United States, the Philadelphia company subcontracted with the operators of the barge Khian Sea. The barge became an international pariah as it sailed from port to port without finding a place to leave its cargo. Eventually, the operators dumped the ash on a windy beach in Haiti.

Louis Paolino said in an Inquirer story published in 2000 that his family's contracting company was not responsible for the incinerator ash dumped in Haiti because it had hired someone else to dispose of the ash legally. Anyway, he was only an employee at the company.

In the late 1990s, Paolino and Eastern Environmental agreed to contribute money to bring the ash back to the United States as part of a deal for Eastern to enter the New York garbage market.

Mace spokesman Eduardo Nieves Jr. would not comment beyond the news release on Paolino's ouster, 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 17.65 percent, or 27 cents, to $1.80 in Nasdaq trading yesterday.

Paolino, who had hoped to build the nation's largest chain of car washes with Mace, has faced pressure from Lawndale Capital Management, one of the company's shareholders. 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 yesterday. Board member Jack Mallon, the chairman of IBI Armored Services Inc., was appointed chairman.