Exec's Departure Rocks Rackable

Shares dive almost 10% on the worldwide sales V.P.'s exit.

Author:: Alexei Oreskovic
Publish date:: Dec 12, 2006 2:17 PM EST

Shares of

Rackable Systems

(RACK)

plunged nearly 10% Tuesday, followingnews of the resignation of the company's head ofsales.

Milpitas, Calif.-based Rackable, whichsells servers used in corporate data centers,announced late Monday that Thomas Gallivan, vicepresident of worldwide sales, has notified thecompany that he will leave in early January pursuantto a written separation agreement.

Rackable did not provide any reason for Gallivan'sexit and said the company has started a process tofind a replacement -- suggesting the departure wasnot planned.

Until Rackable finds a new head of sales,President Todd Ford will oversee domestic salesactivities, and CEO Thomas Barton will take overinternational sales.

According to a filing by Rackable, Gallivan'sseparation agreement provides for aggregate severancepayments of up to $171,000 and a release by Gallivanof claims against the company.

Shares of Rackable fell 9.5%, or $3.17, at $30.05 in midday trading Tuesday.