Maxxam Inc. (MAXX:US) Chairman Charles Hurwitz, the billionaire who controls the commercial real-estate company, will forgo $1 million in bonuses to settle an investor’s claim that he received excessive compensation.
Hurwitz also will relinquish options to buy more than 1,300 Maxxam shares, received as part of his 2012 compensation package, to resolve a Delaware Chancery Court lawsuit filed by Arbiter Partners QP LP, according to court filings. The New York-based hedge fund sued Maxxam’s directors in March alleging Hurwitz was “unjustly enriched” by the option grants.
“The proposed settlement confers an immediate and substantial monetary benefit to the company,” the fund’s lawyers said in court filings yesterday. “When measured against the substantial risks and costs of continued litigation, it is an excellent result.”
The settlement comes as the U.S. Securities and Exchange Commission is weighing a proposal to require corporations to disclose how much more their chief executives earn than rank-and-file employees. The pay-ratio disclosures are mandated by a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Greg Varallo, a Wilmington, Delaware-based lawyer representing Hurwitz in the Arbiter case, didn’t immediately return a call for comment on the settlement today.
Maxxam’s holdings include commercial real estate and horse-and dog-racing operations in Arizona, California, Puerto Rico and Texas, according to court filings. The Houston-based company is co-owner of the Sam Houston Race Park horseracing track in Houston and a greyhound-dog track in Harlingen, Texas, according to Hoover’s Inc., a business-information service owned by Dun & Bradstreet Corp. (DNB:US)
New York-based Arbiter, which said in court filings it owned 7.7 percent of Maxxam’s shares, alleged in its complaint that Maxxam directors approved “self-dealing transactions” that provided excessive compensation to Hurwitz.
Hurwitz, who owns stock giving him voting rights over 88 percent of Maxxam’s shares, received stock and option grants in 2011 and 2012 valued at more than $7 million, Arbiter’s lawyers said in court filings. To get those grants, he gave up $1 million in bonuses, the attorneys said.
The Maxxam case is Arbiter Partners QP LP v. Hurwitz, CA No. 8394, Delaware Chancery Court (Wilmington).
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