Robbing Peter to Pay Paul
During the last two years of Peter Karmanos Jr.’s tenure as chairman of Compuware Corp., a Shakespearian-type drama unfolded that led the board to fire him and cancel more than $4.1 million in vested stock options.
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For Peter Karmanos Jr., the last chapter of his storybook career at Compuware Corp. didn’t end with the flourish he might have envisioned. Rather than an enjoyable retirement party where Karmanos planned to introduce his longtime clients and key contacts to the new management team, it all came to a close with a trail of tears.
It happened on a late Friday afternoon at 220 Merrill, an upscale restaurant in downtown Birmingham, when his successor, Compuware Chairman Gurminder S. Bedi, began crying as he handed Karmanos a one-page memorandum from the board that thanked him for his services and terminated his six-year, $3.6-million consulting contract and the $4.1-million vested stock he had with the company he co-founded in 1973 and built into a technology powerhouse.
“He handed me this note and started crying,” Karmanos testified in an arbitration hearing earlier this year. “I said to him, ‘Gurminder, you really don’t want to do it this way,’ and he said, ‘I don’t have any choice.’
“I said, ‘Gurminder, stop crying, we’ve known each other for a long time,’ and he said, ‘I don’t have any choice,’ ” Karmanos said. Asked for the reason for his dismissal, Karmanos said Bedi told him the owners of a New York hedge fund that was attempting a hostile takeover of Compuware had told the company to get rid of him.
That bit of theater, the corporate infighting, the lead-up to his firing — which Karmanos says was built on a lie — and the roles his handpicked successors played in the almost-overnight implosion of what was one of Michigan’s largest companies, is revealed in thousands of pages of once-sealed transcripts released earlier this year by top Compuware executives and board members in response to a wrongful termination lawsuit Karmanos filed against the company in late 2013.