Shares in Laura Ashley, down 10p initially on the news, later recovered to show a 4p fall to 81p after the company added that its results for the year to 31 January, due out tomorrow, would be in line with market expectations.
Dr Maxmin, born in the US, joined Laura Ashley in September 1991 after a 13-month search to replace John James, former chief executive. He was paid pounds 310,000 last year and is on a rolling two-year contract.
He is negotiating his compensation. Dr Maxmin, formerly with Thorn EMI's rental divisions, also holds 1.56 million share options withan exercise price of 70p and showing a profit of pounds 170,000.
No immediate replacement for Dr Maxmin is being sought. Hugh Blakeway Webb, non-executive chairman, is to become executive chairman.
The Laura Ashley board is also to be enlarged with the appointment of Graham Searle as non-executive director. Mr Searle recently retired as managing director of Dunhill Holdings, the luxury goods group.
Stephen Cotter, in charge of Laura Ashley's retail operations in the UK and US, joins the board as an executive director along with Stephen Grant, head of product development and design.
Dr Maxmin's dispute with the board is understood to focus on the level of marketing spending needed to exploit the Laura Ashley brand. Because of the company's financial condition since 1990, marketing has been limited in recent years.
Laura Ashley shares have been volatile since Dr Maxmin's appointment after revelations of mounting losses in the US which have held back a recovery.
In May 1993, Sir Bernard Ashley stepped down as chairman, reducing his shareholding from just under 50 per cent to 32 per cent by selling pounds 32m worth of shares.
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