Legal News

Accused of Plotting to Sell Company in Secret, Former Dow Execs Settle

By Dan Slater

Last spring, as the private equity boom was reaching its culmination, Dow Chemical sued two of its own executives for allegedly plotting to sell the company to a leveraged buyout firm — without the participation of Dow’s board. The execs — Romeo Kreinberg, head of Dow’s performance-chemicals unit; and Pedro Reinhard, a director — counterclaimed for, among other things, libel. Yesterday, Kreinberg and Reinhard settled with Dow, conceding in a joint statement that they should’ve informed Dow’s board when they began negotiations to sell the company, and that their firings “were appropriate under the circumstances.”

Here’s a story from the WSJ’s Ana Campoy and Tom McGinty. Click here for Andrew Ross Sorkin’s Dealbook column, which has some interesting background on the alleged caper. Here’s the complaint Dow filed against Kreinberg and Reinhard; here’s the complaint Reinhard filed against Dow, and here’s the complaint Kreinberg filed against Dow.

Terms of the settlement weren’t disclosed, although a Dow spokesman said the company secured some of what it had sought in the lawsuit it filed last spring, including reducing the amount of equity compensation the men received during their employment at Dow. The spokesman said Dow isn’t paying any damages claimed by the pair in their defamation suits.

Kreinberg’s lawyer, Stanley Arkin, said he didn’t approve of the settlement and advised his client against signing it because he doesn’t believe the executive did anything wrong. Whereas, Reinhard’s lawyer, Gary Naftalis, said his client is “very satisfied with the financial aspects of the settlement” and is glad “the matter is behind him.”

Full post as published by Law Blog - WSJ.com on June 03, 2008 (boomark / email).