Orthofix Pays $24 M to Former Executives

Orthofix Medical, a spine‑device maker based in Lewisville, Texas, abruptly fired its chief executive, chief financial officer and chief legal officer on September 11, 2023. The board cited “inappropriate and offensive conduct” in private text messages as the reason for the terminations. Investors reacted sharply, sending the company’s shares down 30 percent. The firings sparked a legal fight that the company has still not fully closed.

In a filing with the Securities and Exchange Commission on August 5, Orthofix disclosed that it had paid the former executives a total of about $24 million in damages. The former chief executive, Keith Valentine, received $14.8 million in April, with an additional $1.1 million awarded in June for attorney fees and costs. The chief financial officer, John Bostjancic, and chief legal officer, Patrick Keran, each received $4.25 million in the second quarter of the year.

Texts and moral turpitude

Arbitrators determined the key issue was timing. Valentine’s severance agreement began on June 19, 2023, while the text messages that led to the board’s decision were sent in 2022, before the agreement was effective. The arbitrator ruled that messages sent before the severance date could not be used as cause for termination under the contract’s “term of the contract” clause. This decision underpinned the award of damages to Valentine.

The messages themselves were graphic and sexual, describing bodily actions and threatening language toward employees and a board member. The board claimed these constituted “acts of moral turpitude,” a term that describes conduct that is profoundly immoral or unethical. However, the arbitrator noted that the texts were private chats between friends, not material acts that the contract intended to forbid. The court therefore found the conduct did not meet the legal definition of moral turpitude.