Cincinnati, OH: (Mar-06-08) A shareholders class action lawsuit was brought against Midland Co., alleging that Midland's directors stood to gain enormous benefits from the $1.3 billion sale of the company to insurance company Munich Re. Records show that the class action was filed in December 2007, in common pleas court in Clermont County. The shareholders claimed that the benefits that would come to the directors had not been disclosed to them, the valuation process was not properly disclosed along with other certain details of Midland's sale.
The benefits to Midland directors that were disclosed include: cash for non employee directors' share equivalents ranging from $146,027 for Richard Norman to more than $1 million for John O'Mara; acceleration of stock options worth $1.6 million each and cash for stock-based performance awards of $1.3 million each for CEO John W. Hayden and Joseph P. Hayden III, the company's chairman and chief operating officer.
Undisclosed benefits include severance payments to J.P. Hayden III under a change of control agreement and incentives to him related to the sale of its barge transportation business, and payments to John W. Hayden under a post-merger employment agreement, the lawsuit said.
As part of a settlement reached, company sources stated that Midland has agreed to enter into a Memorandum of Understanding as well as pay the plaintiff's legal fees and expenses, the amount of which also were not disclosed. In a filing with the Securities and Exchange Commission, Midland informed that, as part of the proposed lawsuit settlement, it will make certain additional disclosures, which were included in a revised proxy statement that was filed early March 2008. It did not otherwise identify any additional disclosures that are in that document. [