Originally Posted by
Crac A Jac
Found this, not a pretty read, but even I can understand it.
Ten current and former workers at Summerville-based biotechnology firm ArborGen Inc. won a $53.5 million judgment against their employer and some of the nation’s top forest products companies after a judge ruled the companies tricked workers into accepting incentive plan changes that depleted most of their wealth.
Judge Edgar Dickson also entered judgments against International Paper, MeadWestvaco — now WestRock — and New Zealand-based Rubicon Inc., as well as some of those forestry companies’ board members, following a trial in Dorchester County that lasted nearly three weeks.
The trial was held in January and Dickson’s final decision was issued last week. Rubicon has said it will “vigorously appeal” the ruling. It is not clear if the other companies plan to appeal the Dec. 22 judgment. A lawyer representing those companies and their board members could not be reached for comment Tuesday.
ArborGen, which develops seedlings that sprout into fast-growing trees for the forestry industry, was formed in February 2000 when the biotech divisions of MeadWestvaco, IP and Rubicon were combined. The workers who filed the lawsuit were employees of IP or MeadWestvaco and later ArborGen.
According to the lawsuit, the employees were led to believe that they were getting potentially lucrative options in their compensation packages allowing them to share in the future growth of ArborGen, which was valued at $100 million shortly after its formation.
As ArborGen began to grow, the lawsuit alleged, the company’s board members decided the compensation package was giving the employees too much money.
“The defendants orchestrated a scheme to switch the option plans given to the employees, diluting the value of the original option plan,” according to a statement from Chip Bruorton, a lawyer with Rosen Hagood who represented the workers.
Bruorton said changes to the incentive plan were “introduced to the employees with false information, misrepresentations and concealment as part of a wrongful scheme to defraud them of their rights in the plan.”
When ArborGen was converted to a C-corporation — that is, a corporation that is taxed separately from its ownership firms — the company’s value was $650 million.
According to the lawsuit, the workers claimed they should have been given incentives based on the $550 million in growth ArborGen experienced since its formation, “but the defendants failed to provide the employees with the value they were entitled to.”
An affidavit by Steve Pomerantz, an investment management expert, showed the 10 employees should have received a combined $11.3 million of equity in the new ArborGen C-corporation. Instead, they were given a combined $414,330 of equity based on the revised plan that was created when ArborGen’s growth took off.
The $53.5 million judgment handed down last week also includes interest and punitive damages.
Dickson, the circuit judge, said in his ruling that the employees “were abused by ArborGen, its founders, its board members and its management. ... In not honoring the contracts, the defendants acted with a lack of honesty and integrity.”
Bruorton said in a statement that he is happy with the outcome.
“The court took a great deal of time and effort to understand the facts of this case and made a decision that is supported by the evidence presented. My clients were wronged, and I’m happy that their rights have been vindicated.”
Leaves me wondering just what Arborgen is worth, if anything.
Also consider after reading that, that Arborgen et al may be penalised even more if they do not settle quickly; I really wonder if they have anything much to settle with...so have to delay(and pick up CEO/Directors' fees along the way)
Would you lend the CEOs NZ80 mill to pay off such a settlement??