Tuesday Morning Corp.'s ousted chief executive, Kathleen Mason, has filed disability discrimination charges against the home-furnishing retailer, alleging she was removed after disclosing to the board that she was battling breast cancer.
"The board's attitude toward Kathleen changed after it learned of her breast cancer diagnosis and treatment," Ms. Mason's attorney, Rogge Dunn, of Dallas-based Clouse Dunn LLP, said in a statement Friday.
Tuesday Morning couldn't immediately be reached for comment.
Ms. Mason was relieved of her duties in June as the closeout retailer also lowered its full-year outlook, moves that came after activist investment firm Becker Drapkin Management LP reported a 5.02% stake in the company and criticized its performance and leadership.
The Dallas-based investment firm of Steven R. Becker and Matthew A. Drapkin had said it intended to engage in talks with Tuesday Morning about its assets, business strategy and financial condition, among other things. The firm recently paid nearly $8.5 million for roughly 2.1 million Tuesday Morning shares and has been building its stake since April, according to a filing with the U.S. Securities and Exchange Commission.
In a letter, it criticized Ms. Mason saying she had "led an extraordinary destruction of shareholder value in stark contrast to the success of Tuesday Morning's peer group."
Tuesday Morning, whose shares traded above $35 in 2005, faced near-extinction during the financial crisis, and the stock was trading under a dollar in early 2009. The company promoted its chief operating officer, Michael Marchetti, to the post of president and interim CEO in place of Ms. Mason.
Tuesday Morning has seen its revenue decline since the summer of last year. In April, it reported its third-quarter loss had widened as sales continued to suffer.
Friday, Mr. Dunn said Tuesday Morning had been profitable every year since Ms. Mason led the company and that it has no long-term debt. He said that during Ms. Mason's tenure, private-equity investors led by Madison Dearborn saw an initial investment of approximately $117 million grow in value to more than $700 million.
Mr. Dunn also noted that the severance package offered to Ms. Mason "emphasized medical benefits." He said the package included a 10-year consultancy clause, after which an 18-month noncompete clause would begin, "in effect locking her out of working elsewhere for nearly 12 years."
Ms. Mason has filed the charges with Equal Employment Opportunity Commission.