Mike Lynn Represents Founder of West Texas Manufacturer Seeking $50 Million
El Paso entrepreneur Jerry Rubin has accused the hair-care consumer products company he founded 45 years ago and its board of fraudulently and deceitfully forcing him out as chief executive.
In a 22-page lawsuit filed in Dallas, Rubin claimed El Paso-based Helen of Troy Ltd. made and then broke promises about his employment that cost him his job earlier this year.
Rubin seeks an estimated $50 million in lost compensation and benefits, as well as punitive damages.
Rubin, 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 for 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 revenue and profit soared, so did Rubin’s income — as much as $15 million per year.
In 2011, hedge fund proxy adviser Institutional Shareholder Services pressured Helen of Troy directors to slash Rubin’s compensation and add a provision in his contract that he could be terminated without cause. The demand came as 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 shareholders 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.”
Lawyers representing Helen of Troy declined to comment on the litigation Tuesday, but they did point to an Aug. 30, 2013, nonbinding vote of the company’s shareholders. They rejected Rubin’s compensation package by a count of 24.6 million to 3.4 million.
The legal battle between Rubin and Helen of Troy echoes the fight that proxy advisers 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, among the highest-paid executives in the U.S., 7 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 3 million.
By Mark Curriden
The Texas Lawbook