WASHINGTON — Aerojet Rocketdyne has reprimanded its executive chairman, Warren Lichtenstein, over a series of comments he made criticizing the company’s chief executive and hunting for a replacement as well as about its failed merger with Lockheed Martin.
In a memorandum dated May 2 and released Monday, the non-management committee of Aerojet’s board of directors ordered Lichtenstein to follow the company’s code of conduct in the future and not make unauthorized comments to outside parties about Aerojet’s management or strategic direction.
The board hadn’t authorized a search for a replacement CEO, the committee said in the memo outlining its investigation’s findings and explaining its decision to reprimand Lichtenstein, and he had acted improperly by approaching two parties to gauge their interest in the job.
And at least one — probably both — of those approaches came after Lichtenstein had been warned in a September memo not to make this type of outreach, the committee said.
But the committee concluded Lichtenstein’s “extensive questioning and demands for information” from Aerojet’s CEO, Eileen Drake, and other top executives on contingency plans if the Lockheed deal fell through did not amount to harassment or retaliation and were not improper.
The investigation provides a glimpse into the turmoil behind the scenes of Aerojet as the stalled acquisition by Lockheed Martin led to uncertainty as well as a look at the remarkable bad blood between Lichtenstein and Drake.
Lockheed’s initially announced its attempted $4.4 billion acquisition of Aerojet, which is a key supplier of solid rocket motors, in December 2020. The deal would have greatly strengthened Lockheed’s position in the space and hypersonic market.
Some on Capitol Hill supported the transaction, saying it would restore competitive balance to the industry after Northrop Grumman’s acquisition of Orbital ATK. But Sen. Elizabeth Warren, D-Mass., criticized it as a potential blow to competition and urged regulators to closely scrutinize it.
In January 2022, the Federal Trade Commission announced it would sue to block the acquisition over antitrust concerns, arguing the deal could allow Lockheed to cut competitors off from critical Aerojet-made missile components like scramjet engines. One month later, Lockheed said it had abandoned the deal.
In 2021, with the deal stuck in limbo, the conflict between Aerojet’s leadership grew.
Drake originally objected to Lichtenstein’s conduct in a May 2021 memo to the company’s then-general counsel, Arjun Kampani. She sent follow-up memos in September and October.
Drake described an “ongoing erosion of trust” with Lichtenstein and accused him of defaming her character and “laying the groundwork with the board … to remove me as CEO so he can pursue his strategy and personally benefit financially.”
In her memos, she said Lichtenstein was fixated on scenarios in which the Lockheed deal fell through and engaged in “premature contingency planning requests” that undermined the deal. She repeatedly called him a “liability.”
In Drake’s second memo in September, she said she had become aware of several conversations Lichtenstein had had with outside parties about the deal and Aerojet Rocketdyne’s leadership.
She alleged Lichtenstein had told Jim McAleese of McAleese and Associates in August 2021 that if the deal didn’t go through, Lichtenstein would run the company himself. This reinforced Drake’s belief that Lichtenstein was defaming her and preparing to oust her.
After Drake sent that second memo, the board of directors’ independent members warned Lichtenstein in another memo his comments to outside parties about the Lockheed deal and company management were unacceptable, even if they didn’t go so far as to violate the December 2020 merger agreement.
The board members also warned Lichtenstein his alleged discussion of plans for Aerojet’s executive management would be “highly sensitive” topics and discussing them openly could open the company up to potential harassment and defamation liabilities.
In his response, Lichtenstein strongly denied the allegations. He said he had not provided confidential information to any third parties, sought to blow up the deal, or defamed, harassed, threatened, or been hostile to any Aerojet management official.
Lichtenstein also said Aerojet must be prepared for the possibility — which eventually became a reality — that the deal might not go through.
And he said he continued “to be frustrated by management’s lack of responsiveness and transparency related to operational issues since the agreement and plan of merger [was] executed.”
But one month later, Drake sent another memo about Lichtenstein’s further alleged “improper behavior.” She said an unidentified industry colleague had been personally approached by Lichtenstein about the possibility of becoming Aerojet’s chief executive.
Lichtenstein allegedly told this person he wasn’t confident the merger would go through and that he was searching for a replacement CEO, Drake said.
In her own release issued Monday, Drake applauded the committee’s findings and reprimand of Lichtenstein and suggested he’s not fit to continue as executive chairman.
“Shareholders should ask themselves, if Mr. Lichtenstein’s allies believe he should be reprimanded for his conduct as the executive chairman of the company, why should he be entrusted to run the company without independent oversight?” Drake said in her release.
Lichtenstein also issued a release in which he reiterated his stance he was acting in shareholders’ best interests by talking to third parties about contingency plans if the deal went under.
“If these conversations truly crossed a line, one would expect that the committee would call them a violation of applicable company policies or of my fiduciary duty,” Lichtenstein said. “The committee did not.”
And he criticized Drake specifically, saying she pushed for the investigation for her own “personal motives” and wasted company resources in the process.
“These conclusions also speak volumes about Ms. Drake’s utter lack of credibility and selfish and self-serving motivations,” Lichtenstein said.
Stephen Losey is the air warfare reporter at Defense News. He previously reported for Military.com, covering the Pentagon, special operations and air warfare. Before that, he covered U.S. Air Force leadership, personnel and operations for Air Force Times.