Former Weitz leaders locked in bitter court fight
Thursday, February 14, 2013 10:50 AM
Craig Damos, who guided The Weitz Co. for four years then sued the company in a shareholders’ dispute after he was forced to resign in June 2010, wants a Polk County judge to draw the company’s new owners into the dispute.
Damos has claimed that Weitz is cheating him out of payments from a stock buyback plan first instituted in 1995, when the company became employee-owned. The buyback plan was amended with his approval in January 2010.
Under the amended agreement, former employees received payments based on an evaluation of share value at the end of each year preceding the payments.
According to court documents, Weitz’s value had dropped about $100 per share as of December 2010 as it attempted to work through a bleak construction market that resulted from the collapse of financial markets in 2008.
Damos sued Weitz and former Chairman Glenn DeStigter, the man who had brought Damos into the company in an effort to diversify its lines of business. DeStigter was at the helm of Weitz from 1983 to 2006, when Damos was named president and CEO. Two years later, Damos was named chairman of the company’s board of managers. He first joined the company in 2000.
Court documents reveal the drama that surrounded the resignation, with Damos learning on June 1, 2010, that he would be told to resign the next day. According to court documents, DeStigter had maneuvered for several months to muster board support to oust Damos.
On the morning of June 2, 2010, Damos met with two board members who slid a copy of a letter of resignation in front of him and told him to sign it. Damos refused, brought in attorney Steve Zumbach to negotiate a better deal, then walked away from the company later that same day, separation agreement and severance package in hand.
The resignation was attributed to a desire to change management philosophies. Damos came from the business world. He was a numbers man who, it was thought, could develop new business opportunities. The desire was to bring in experienced construction engineers and managers, people who understood the nuances of the industry and realized that work, even low-paying jobs, were necessary to keep the Weitz machinery rolling until better economic times arrived.
After Damos’ resignation in June 2010, DeStigter returned as chairman, a position he gave up last year. Len Martling was named president and CEO, a position he still holds.
Observers of the company say it is worth noting that DeStigter and Martling had long careers in the construction industry and had a better understanding of a more nuanced approach to running the company. Damos’ experience was in finance.
Weitz was dismissed from the lawsuit last year in a ruling that could be appealed. One count has been dismissed against DeStigter, another partially dismissed and third is pending. DeStigter also has countersued Damos, saying he breached an agreement not to file a claim against Weitz and violated the separation agreement from the company.
Damos’ attorney, Steven Wandro, filed a motion last month to add Orascom Construction Industries to the lawsuit, maintaining that it is interfering with the agreement signed between Weitz and Damos.
According to the lawsuit, Damos was paid an initial price of $213.98 per share when he resigned, which dropped to $172.98 in July 2011 and $116.59 last July. Damos maintains that his purchase price should have locked in at $213.98 a share, the value at the time he resigned.
According to the lawsuit, DeStigter was able to lock into the higher valuation when he cashed in more than 33,000 shares for $7.4 million in 2009, at a time when Damos was attempting to have DeStigter give up all his roles with the company.
That payout, according to the lawsuit, made DeStigter the company’s largest creditor.
The Depot at 4th, 100 4th Street, Des Moines, Iowa 50309 | (515) 288-3336 | © 2012 Business Record. All Rights Reserved. | Legal disclaimer