Founder’s Heirs Battle Scherer Management In Proxy Fight
DETROIT (AP) _ After months of legal wrangling, Karla Scherer Fink will make her case to shareholders promoting the sale of R.P. Scherer Corp., the capsule company her late father founded and her estranged husband runs.
Fink, who together with her brother John S. Scherer controls about 38 percent of the company’s stock, is seeking three seats on the 11-member board in a proxy battle to be waged Wednesday at the Scherer annual meeting.
As the company’s largest shareholder, Fink already is a board member; her brother is up for re-election. The three board seats would give them additional clout needed to authorize the sale of the company, the world’s largest producer of gelatin capsules for the pharmaceutical and nutritional supplement industries.
Fink has been pressing for some time to sell the company as a means of disposing of her stake and maximizing shareholder value.
Heading the opposition is Peter Fink, Scherer’s president and chief executive officer and Karla Fink’s estranged husband. Karla Fink is reported to have filed for divorce in mid-May, about two weeks after the board rejected her proposal to sell the company.
″The people who own the company should make this decision,″ said John Scherer in a statement last month. ″There are members of management who obviously believe otherwise, for their own self-serving reasons. They are wrong to think their harassment can intimidate Karla into backing off.″
In a July 28 letter to stockholders, Karla Fink and her brother noted that Peter Fink and Scherer Chairman Wilbur H. Mack earned more than $3 million between April 1, 1985, and March 31.
″In our opinion it is perfectly clear who are the real beneficiaries of Scherer management’s economic policy: the top executives,″ the letter said.
Peter Fink responded in a letter to shareholders that he was dismayed by criticism over the very compensation his wife had approved while serving as a Scherer director.
He linked the company’s strong performance to management skills and urged shareholders ″to reject Mrs. Fink’s handpicked nominees.″
Scherer reported net income of $12.8 million, up 44 percent in the fiscal year ended March 31. Sales jumped 27 percent to $290.7 million.
Karla Fink and her brother said the strong financial performance makes it an opportune time to sell the company, but Peter Fink said the board is convinced shareholders would best be served by remaining independent.
Still pending Tuesday before the Michigan Court of Appeals was a ruling on stock carrying a potentially pivotal 9.3 percent of Scherer’s voting power.
The court action involves a block of 470,000 shares in two family trusts administered by Manufacturers National Bank. Karla Fink and her brother, beneficiaries of the trusts, argued that Manufacturers National Bank had conflicting interests.
A probate court judge named an independent fiduciary on Monday to decide how to vote on the stock, but Wayne County Circuit Judge Kathleen MacDonald vacated that ruling Tuesday, reinstating the bank as trustee and allowing it to vote the block at the annual meeting.
Attorneys for Karla Fink appealed that ruling Tuesday to the state Court of Appeals, said Beth Lyons, spokeswoman for the two.
Troy-based Scherer employs about 2,800 people at 22 facilities in 13 countries.