Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 21, 1993 TAG: 9303190151
SECTION: BUSINESS PAGE: F2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
FOLLOWING FAMILY FEUD
A 1977 proxy fight for control of Rowe divided descendants of the company's founder.On one side was Jeanne Rowe Mathison, daughter of the founder, and her husband, Robert, and sons, Robert and Donald; on the other were the widow of the founder's son, and her sons, Keith and Michael Rowe.
The Mathison family wanted to replace management, arguing that executives were paid "exorbitant" compensation. Birnbach was being paid $160,000 a year. The suit also mentioned a $90,000 condo in Florida paid for by the company and the acquisition of a California subsidiary that lost $750,000 in 1976, and the purchase of a Mercedes-Benz sports car for Birnbach.
The proxy fight sent then-First National Exchange Bank (now First Union National Bank of Virginia) to court to determine how the bank should vote 215,486 shares of stock it held in trust for the relatives in disagreement. The stock was still in trust 13 years after Rowe Sr.'s death because the family couldn't agree on a value per share for disbursement of the stock.
The Rowe fight was called "a bloodbath" by then-Circuit Court Judge Jack Coulter. "I think the greed and lust for power that has dominated their thinking has overridden many, many other factors," Coulter said April 9, 1977.
Coulter, now retired, called the suit "a tragedy for two fine families." The families then controlled about a million of the 2.4 million outstanding shares of the company. The company sales had grown from $3.25 million in 1950 to $47 million in 1976.
The Mathison side of the family took the issue to U.S. District Court, charging that management wasn't playing according to the Securities and Exchange Commission's rules.
District Judge James Turk took both sides into his chambers and the next day a settlement was in the works. Turk said his aim was to keep the business from being torn apart by the battle.
The cost was $601,000, but the company still reported net earnings of $572,000 that year.
The next March, Birnbach got a $16,000 raise and the right to buy the controversial condo.
TAG - SANDRA BROWN KELLY