© 2014 The Texas Lawbook.
By Mark Curriden – (November 25) – El Paso Entrepreneur Jerry Rubin is accusing the hair-care consumer products company he founded 45 years ago and its board of directors of fraudulently and deceitfully forcing him out as the chief executive officer.
Lawyers representing Helen of Troy Ltd. declined to comment on the lawsuit Tuesday. But they did point to an advisory shareholder vote taken Aug. 30, 2013, in which 24.4 million votes were cast opposing Rubin’s compensation plan, while only 3.4 million votes supported it.
Rubin, who is now 71, started a small wig shop in downtown El Paso in 1968,called Helen of Troy. Forty-six years later, the company is a global consumer products corporation employing 1,500 workers and has annual revenues exceeding $1.3 billion.
The company makes products like Febreze, Vidal Sassoon, Revlon and Dr. Scholl’s. It is one of three publicly traded companies in El Paso.
According to the lawsuit, Helen of Troy directors historically based Rubin’s annual compensation on the financial performance of the company. As business revenues and profits soared, so did Rubin’s income – as much as $15 million per year.
In 2011, hedge fund proxy advisor Institutional Shareholder Services pressured Helen of Troy board directors to slash Rubin’s compensation and add a termination without cause provision in his contract – even though the company was experiencing record financial successes, according to the complaint.
The lawsuit states that Gary Abromovitz, the company’s deputy chairman, told Rubin that ISS was forcing the board to cut his compensation or face ouster at the next shareholder meeting. But the director “promised Mr. Rubin that the board would never act on this early termination provision,” the suit states.
In 2013, the same deputy chairman, again under pressure from ISS, told Rubin to resign or be fired, according to legal records in the case.
“Steel-eyed board members would have simply pointed to Helen of Troy’s stellar performance and Mr. Rubin’s invaluable contribution,” Dallas trial lawyer Mike Lynn, who represents Rubin, said in court documents. “But the spines of Helen of Troy’s board members proved to be made of a more malleable material.”
“Rather than celebrate the extraordinary success, Helen of Troy and its self-interested (and selfish) board of directors turned on Mr. Rubin, breaking their promises to him and forcing him to resign from the company he loved so much,” Lynn, a founding partner of Lynn Tillotson Pinker & Cox, said in the complaint.
The legal battle between Rubin and Helen of Troy echoes the fight proxy advisors had last year with Oracle’s board to slash the compensation package of its founder and CEO, Larry Ellison.
Shareholder activists expressed anger at the board for awarding Ellison, who is always among the highest paid executives in the U.S., seven million stock options during each of the past eight years – options valued at about $46 million. In response, the Oracle board cut the options it gave Ellison this year to three million.
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