The Herald, Sharon,
PA Published Saturday March 21, 1998


Family feud erupts over Werner Co. stock

The players
Here are the key people listed in the civil lawsuit involving the Werner family and Werner Holding Co.:
    The defendants

  • Eric J. Werner _ Don Werner's son, the brother of Craig Werner and thegrand-nephew of Leo and Anne Werner. Eric is general counsel, corporate secretary and chief administrative officer for Werner Co.

  • Richard L. Werner _ the brother of Robert Werner and Donald Werner, thecousin of Howard Solot and the nephew of Leo and Anne Werner. Richard is a director of the company, and was the former chairman and chief executive officer of the company.

  • Robert I. Werner _ the brother of Richard and Don Werner, the cousin ofHoward Solot and the nephew of Leo and Anne Werner. He is a director in the company.

  • Donald M. Werner _ the brother of Richard and Robert Werner, and cousinof Howard Solot and nephew of Leo and Anne Werner. Donald is a director, chairman, president and chief executive officer of the company.

  • Howard L. Solot _ the cousin of Richard, Robert and Donald Werner and thenephew of Leo and Anne Werner. He is a director, executive vice president and chief operating officer for the company.

  • Craig R. Werner _ the son of Donald Werner and the brother of Eric Werner. He is a company director.

  • Marc L. Werner _ the son of Robert Werner and the brother of Michael Werner. A former director and officer of the company.

  • Michael J. Solot _ the son of Howard Solot.

  • Bruce D. Werner _ the son of Richard Werner.

  • Michael E. Werner _ the son of Robert Werner and the brother of Marc Werner.

    The plaintiffs

  • Estate of Leo L. Werner _ Leo Werner died Aug. 10, 1996. He was the uncleof Richard, Robert and Donald Werner and the great uncle of Eric Werner and Howard Solot. Prior to March 8, 1992, he owned 2,700.8 shares of Werner Co. Class A common stock and 10,085.22 shares of Class B common stock. Leo headed Werner Co. from 1964 to 1977, according to a company newsletter.

  • Estate of Anne L. Werner _ Anne Werner died in April 1996. She was thewife of Leo Werner.

  • Elizabeth Werner _ the only child of Anne L. Werner and Leo L. Werner.Elizabeth is a beneficiary of the trusts created under Leo's and Anne's wills and of the Elizabeth Werner Trust created in 1967.

  • Jeffrey R. Ackerman _ one of Elizabeth Werner's two sons and a beneficiary of the trusts created under Leo and Anne Werner's wills and of the Elizabeth Werner Trust. Prior to the sale of Werner Co., the trust owned 7,506 shares of Class B common stock.

  • Matthew W. Weiss _ the other son of Elizabeth Werner who is a beneficiaryof the trusts created under Leo's and Anne's wills and of the Elizabeth Werner Trust.

  • Timothy Burke Jr. _ executor [JU]to the Anne Werner Estate and trustee of a trust created by Anne Werner. Prior to the sale of the company the trust owned 2,723 shares of Class B common stock in Werner Co.

  • Edward A. Pollack _ prior to the sale of Werner Co. he owned 1,668 sharesof Class B common stock, and 84 shares of the Class B stock through his capacity as executor of the Max C. Hanfling, and 100 shares of Class A and 17,489 shares of Class B common stock as contract vendee. He is a cousin of the main Werner family.

By Michael Roknick
Herald Business Editor

For more than 50 years, Werner Holding Co. operated as a closely knit family business.

When the Werner board met, it resembled a family reunion rather than a business meeting. Stock in the company, headquartered in Sugar Grove Township, was never traded publicly and was largely held by the Werner family and extended family members.

In November, the family's reign ended at the aluminum extrusion and ladder manufacturer when the Werner family sold a majority of its stock to Investcorp, an investment group composed of 10,000 Persian Gulf investors.

Over the years, the company was known for building a ladder to success. Employing 1,200, the local plant is second only to Trinity Industries in Greenville as the largest manufacturer in Mercer County.

To outsiders, it appeared the Werner family was happy with the strategy.

Now certain family members are claiming that the Werners who managed the company and other family members took advantage of them through breaches of fiduciary duties, duties of care and loyalty, fraud, self dealing and violations of federal and state securities laws.

A civil suit filed last week in U.S. District Court in Pittsburgh by the estates of Leo L. Werner and his wife, Anne, members of their family and others alleges top officers of the company tried to wrestle Werner Co. stock away from them for their own financial gain.

Leo Werner, who died in 1996, was company president from 1964 to 1977. He was one of the original family members who helped found and build the company.

In response, Eric Werner said he learned of the suit on Wednesday and the company and its attorneys made an initial review of the document. Eric Werner is a nephew to Leo Werner and is an officer and general counsel of Werner Holding.

``It is baseless. It is factually misconstrued and is without merit,'' Eric Werner said of the suit on Thursday. ``We will respond and defend this matter vigorously and we're certain when the facts come out, we will be successful and absolved of any of the claims that are made.''

In the past, the Werners were known for keeping financial information about the company to themselves. But the suit breaks that silence by giving a detailed account of stock ownership, salaries and other compensation for family members involved in the company.

Defendants named in the suit include the company, top managers and dozens of Werner family members.

It is alleged in the lawsuit that:

Prior to the company being sold in November, Werner Co. was authorized to issue 420,000 shares of stock consisting of 42,000 shares of Class A common stock, which had voting power, and 378,000 shares of Class B common stock, which had no voting power.

Before March 8, 1992, Leo Werner held shares of Class A and Class B stock and Eric Werner and his relatives owned 45.7 percent of the total Werner shares.

The suit alleges that in early 1992, Leo Werner's health began to deteriorate and it was about that same time that Eric and his uncle, Richard L. Werner, increasingly involved themselves in Leo's daily affairs, such as placing Leo's wife, Anne, in a nursing home and monitoring her condition. At the time Richard Werner was chairman of the company.

Richard lives in Sharon; Eric is a Hermitage resident. No indication is given as to where Leo Werner lived, but it is believed it was somewhere in the Pittsburgh area.

321WHUH 2 Both men became more involved in Leo Werner's affairs ``as their first step in putting into effect a plant to obtain Leo Werner's block of Werner Co. stock,'' according to the suit.

In January 1992, Eric Werner told Timothy Burke, a Pittsburgh attorney, that Leo wanted to replace Burke with Eric as executor and trustee of his will.

On about March 1 of that year, Leo Werner was hospitalized for about three days and was under medication. At about the same time, he was diagnosed with arteriosclerosis. On March 2 while in the hospital, and in the presence of Richard and Eric Werner, Leo Werner signed a document naming Eric Werner as executor and trustee and gave him power of attorney, the lawsuit claims.

Two days later, Eric told Burke that Leo Werner OK'd a plan to give all of his stock to Eric and his relatives. But Eric didn't tell Burke that the Werner board planned to distribute up to 20.4 percent of Werner Co. to Eric and his relatives. Had the new stock plan been revealed, Leo Werner would not have given the stock away, the suit says.

Then on March 8 of that year, four days after being released from the hospital, Leo Werner gave away all of his Werner shares to Eric and Richard Werner and their relatives as a gift. According to the suit, Leo was heavily medicated and/or sedated and, also according the suit, Eric and Richard used ``undue influence'' to get Leo to sign documents that transferred ownership of the stock to them.

The gift of stock represented 9.6 percent of the then outstanding and issued shares of Werner stock. Family members who received shares from Leo's gift included Robert Werner, Donald Werner, Howard Solot, Craig Werner, Michael Werner, Michael Solot and Bruce Werner.

On March 14, 1992, Werner directors approved a restricted stock plan where new shares were issued. As a result, Eric Werner and his relatives went from owning and/or controlling 45.7 percent of the total shares of the company to more than 50 percent. In contrast, Leo and family members who filed the suit received no new shares, the suit said. That meant their holdings in the company were diluted.

The majority shareholders, led by Eric Werner, ``embarked upon a plan to increase the value of their holdings to the detriment of the outside minority shareholders, such as the plaintiffs,'' according to the suit.

Other allegations contained in the lawsuit are:

Richard Werner retired from the company and was out of town and was not available for comment, Eric Werner said. Eric also said he spoke with others named as defendants in the suit and they also believe they will prevail.

Eric Werner said he could not comment on specific allegations raised in the document.

``Frankly, we're rather irritated and incensed over the whole matter,'' Eric Werner said. ``We're confident we will be successful.''

Donald M. Werner, chairman, president and chief executive officer of the company, said Friday that he and company attorneys have reviewed all of the documentation involved in the sale of Werner Holding to Investcorp.

``I find everything to be very appropriate and it appears to me to be correctly done,'' Donald Werner said. ``I find no basis for any of the allegations.''

Everything done by the company complied with the law and was done with full disclosure to Werner shareholders, he added.

Investcorp officials were notified of the suit, he said.

``We are sure when this is all sorted out, the truth will come to the surface,'' Donald Werner said. ``I have great confidence this whole thing will vindicate what happened.''

Richard W. Gladstone II, the Pittsburgh lawyer representing the plaintiffs, said the suit was only recently filed because it was only after the sale of the company that his clients discovered what had happened.

No particular damage figure was listed in the suit because more information was needed to determine the amount. But Gladstone acknowledged the damage figure would be in the millions of dollars.

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Updated March 21, 1998
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