Kyle E. Brown received 3.9 million shares, or 23.9 percent of outstanding common shares, under a property settlement approved Feb. 14 in Boone Superior Court.
At recent trading prices of around $9.60, that stake would be worth about $37.4 million to Kyle Brown.
That still leaves Don
Brown as the largest shareholder, with 4.8 million shares, or 28.6 percent, of the business communications software company he co- founded in 1994.
In recent weeks, Kyle Brown has been reducing her holdings-selling 24,136 shares on May 12 at $10.25 a share for gross proceeds of $247,394. That reduced her holdings to 3.67 million shares.
Although the company's second-largest individual shareholder, Kyle Brown was denied voting rights that could have given her more influence in areas such as who should serve as a director.
Under the state's corporate antitakeover law, an acquirer of more than 20 percent of a public company's shares must receive approval from a majority of the other shareholders to gain voting rights.
At Interactive Intelligence's annual meeting on May 18, shareholders voted 2.44 million shares in favor of giving her voting rights and 337,065 against. But she received less than a majority of the 7.9 million eligible shares because the bulk of shares were not voted on the ballot item. Thus, they were deemed a "non-vote" or "no vote."
"The law did not contemplate a situation where a large block of shares is acquired as a result of a divorce settlement. Nonetheless, the same 'non-vote' rules apply," Interactive Intelligence said in a statement.
Kyle Brown did not attend the meeting and could not be reached for comment.
The Interactive Intelligence board did not take a position on how shareholders should vote regarding Kyle Brown's voting rights.
"If they did, that would have been really ugly," said Randall Heron, an associate professor of finance at Indiana University's Kelley School of Business, noting the sensitivity of a divorce involving a CEO.
Whether there's any ugliness between the former couple that could affect Interactive Intelligence is anyone's guess. Many divorcees might justifiably take a jaded view.
But after the annual meeting, Don Brown shrugged off the issue. He said he was told Kyle didn't want voting rights because, technically, it would make her a company insider, putting her in more of a public and regulatory spotlight.
He also said she was being steered to potential institutional buyers for stock she wanted to sell. The institutional buyers would be less likely to dump the stock, flooding the market and possibly devaluing her holdings.
Little is known publicly about whether the Browns have an amicable postdivorce relationship, but shareholders might reasonably wonder. After all, local investors need only look to the divorce of Jon and Christel DeHaan, founders of Indianapolis-based Resort Condominiums International, in 1989.
Christel's attorneys argued that Jon, a heart patient, was no longer capable of running the company as CEO and, as he complained years later, her attorneys argued he "was nearly dead."
A court believed Christel's argument, and Jon stepped down in 1991. She paid her ex-husband nearly $70 million for his share of the company, which she later sold.
Observers noted that Kyle Brown was not an active partner in her husband's company, as was Christel DeHaan at RCI.
It would be financially counterproductive for an ex-spouse with a large holding in a company run by the ex to make waves, anyway, Heron said. Selling off a big chunk of one's holdings, for example, would effect a big price movement-likely downward, hurting one's own fortunes.
"With this large of a stake, it would be more akin to shooting yourself not only in the foot, [but] in the chest," Heron added.
The Browns were married in 1982 and have eight children ranging in age from 7 to 21. They filed for separation in January 2004.
The couple had some rough times during the divorce process, according to Boone Superior Court records. At one point, the two sought contempt of court citations against each other over financial matters and travel involving their children.
The disputes appeared to end in February with the property and child custody and support settlement.
Among what Don Brown relinquishes to Kyle is the entire value of his IBM and Interactive Intelligence 401(k) accounts. The value of those accounts was not disclosed.
Don Brown gets to keep assets including 4.4 million shares of Interactive Intelligence stock, his stock options, investments in two other companies, a 2000 Audi A8 and a golf cart.
He gets to keep one of the couple's Zionsville houses; she takes the other.
Though their marriage has ended, the Browns leave behind successful joint undertakings including the Interactive Academy, a $10 million college preparatory school the two created on 35 acres in Zionsville.
According to the school's Web site, both Browns remain on the board of directors.
Software firm's prospects rise
Whatever unpleasantness the Browns face in their personal lives, their investment is doing well. Interactive Intelligence stock has posted a one-year return of 90 percent. It traded as low as $4.17 last December, hitting a high of $11.87 April 28.
Revenue rose 23 percent in 2005 and Interactive Intelligence has pulled off nine consecutive profitable quarters.
Helping drive growth has been demand from companies for Internet protocolbased communications systems as voice traffic moves away from traditional phone networks in the workplace.
Last year, Interactive Intelligence sold Seattle-based Microsoft the Internet telephony software that no less than Bill Gates uses to make his phone calls.
Other notable customers include Illinois-based Abbott Laboratories, Maryland-based Lockheed Martin.
Interactive Intelligence has 415 employees, most based out of its headquarters near Interstate 465 and West 71st Street.