Vulcan Materials CEO sued by company’s founding family

Members of the founding family of Vulcan Materials Co. have sued CEO Don James and directors, The Birmingham News reports. The family says Vulcan Materials erred in not accepting a buyout offer from Martin Marietta Materials.

Glenn and William Ireland filed a derivative lawsuit Friday in U.S. District Court in Birmingham, Ala. Such civil suits are, according to The Birmingham News, filed by shareholders on behalf of the corporation in an attempt 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 Vulcan board of directors 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 Irelands urged Vulcan’s board to accept a hostile-buyout offer from Martin Marietta this year that valued shares at an 18-percent premium, according to the lawsuit. The deal proposed moving Vulcan’s headquarters to Raleigh and installing Martin Marietta officers at the top of the company. Vulcan rejected the offer.

According to The Birmingham News, the suit filed claims Vulcan grossly overpaid when it bought Florida Rock Industries for $4.6 billion five years ago. The suit also claims 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.

A third claim is that Vulcan failed to recognize that the smaller Martin Marietta has been a stronger company, earning profits of $440 million between 2008 and 2011. Vulcan had losses of $136 million during that span.

Yet another claim of the suit is that Vulcan overpaid 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.”