AQMS: Cotton Picking His Exit is Non-Event

Yesterday, AQMS shares were down sharply on no news. Rumors floated around about another short attack, or something else of nefarious origin. Turns out, as we found out in an 8-K this morning, the weakness was related to the departure of their Chief Commercial Officer, Steve Cotton.

Typically, the sudden departure of a C-level company executive is a major red flag for any company. Which, of course, explains the weakness in the shares of Aqua Metals. Why would he leave suddenly? Why would he give up options? What’s wrong at AQMS? These and more questions appeared almost immediately in the chat rooms this morning. Valid concerns in light of the lack of communication from the Company around the exit of an insider who had been there almost since the beginning.

I shared those same concerns. However, based on a recent phone call I received from Stephen Clarke, the Company’s CEO, I am pleased to report that my fears were misplaced and everything appears to be totally copacetic at AQMS.

Why did Cotton leave? To answer this question, you need to look at the role of Chief Commercial Officer. According to my go-to source of Wikipedia, the CCO is “responsible for the commercial strategy and the development of an organization. It typically involves activities relating to marketing, sales, product development and customer service to drive business growth and market share.”

When you look at Cotton’s role in that regards, he had done his job. I mean it’s like “mission accomplished”. By signing the JCI deal, along with bringing in InterState Batteries, Cotton had locked up all the battery supply that AQMS needs for the next ten years, and had sold all the lead they can produce during that time as well. Basically, the customer service component would be ongoing, but there is no sales or product development really left to perform.

Thus, in Cotton, you had an executive who had done his job and gotten paid for it. He has a decent option package that, and the chat rooms have this wrong, was close to fully vested. What did he leave behind? He left a 60 hour workweek, working only for salary as he likely wouldn’t be getting many additional options.

He left a position in which he had already done what he was hired to do; use his contacts to secure partnerships in the battery industry. From a professional standpoint, the dynamic aspect of his job at AQMS was certainly in the rearview mirror.

Steve Cotton is a very talented marketing and commercialization professional. He is also a career startup guy. In my opinion, his role at AQMS was completed. He had received his big payday and brought all his contacts to fruition for the Company. There was not much left to keep him at Aqua Metals.

My guess is that he joins another venture stage company soon, with a low salary and big options plan. He will take his early stage experience and drive another successful launch of a startup. This is the best use of his talents. Meanwhile, at AQMS, he had brought the company from seed stage to commercialization of a product. His work there was done. Unless, of course, his role was to help communicate with investors, in which case there is still work to be done here…

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