Members of the founding family of Vulcan Materials Co. are suing Chief Executive Don James and members of the board of directors, saying they erred in not accepting a buyout offer made by rival Martin Marietta Materials.
Vulcan spokesman David Donaldson said the suit is without merit.
Glenn Ireland and William Ireland filed the suit Friday in U.S. District Court in Birmingham, Ala., in what is known as a derivative lawsuit. Such civil suits are filed on behalf of the corporation by shareholders who are attempting to collect proceeds that would be paid into the company to compensate for harmful acts alleged by the legal complaint.
The suit says James and the board of Birmingham-based Vulcan engaged in “breaches of fiduciary duties, gross mismanagement, abuse of control, corporate waste, unjust enrichment” and other conduct that has eroded shareholder value. The suit seeks a jury trial.
The Ireland family took over Vulcan's predecessor firm in 1916 and built it into a publicly traded powerhouse. Glenn Ireland served in top management roles until the late 1970s, and family members control hundreds of thousands of shares.
“The Irelands are the longest-running owners of this business, having had a family economic stake in Vulcan and its predecessor for almost a century,” the suit reads.
The Irelands earlier this year urged Vulcan's board to accept a hostile-buyout offer from Martin Marietta Materials that valued shares at an 18 percent premium, according to the lawsuit. The deal proposed moving the headquarters to Raleigh and installing Martin Marietta officers at the top. Vulcan rejected the offer, calling it “low ball and opportunistic.”
The suit filed also claims:
- Vulcan grossly overpaid when it bought Florida Rock Industries in 2007 for $4.6 billion.
- Vulcan erred in rejecting the offer from Martin Marietta, which would pay a 20-cent quarterly dividend per Vulcan share, from the nominal penny per share collected by Vulcan shareholders now.
- Vulcan failed to recognize that smaller Martin Marietta has been a stronger company, earning profits of $440 million between 2008 and 2011, when Vulcan had losses of $136 million.
- Vulcan overpaid CEO James, awarding $64 million in compensation as ‘he negotiated and consummated the Florida Rock acquisition and proceeded to lose two thirds of the company's retained earnings built up over a half century.”
- Proceeds, if any, from derivative shareholder suits are typically collected from insurance policies protecting directors and officers of large corporations from personal liability.
- Shares have fallen 7 percent in the past 12 months and are down from a high of $121 reached in 2007. Martin Marietta's $4.7 billion offer in December valued Vulcan shares at about $36.69 each.