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.


Published:

(page 1 of 7)

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.

Edit Module
Edit Module Edit Module
Edit ModuleShow Tags

Related Articles

Roll 'Em

The film industry in metro Detroit, which is very much alive despite the end of sizeable state incentives that were designed to attract top-flight actors and directors, can draw big-budget production companies like Disney and Warner Bros. by building up a creative infrastructure.

2018 Powered by Women

From reader nominations, DBusiness selected eight professional women who are driving growth in Michigan, the nation, and the world.

Q&A: Chris Thomas

Chris Thomas is a co-founder of Fontinalis Partners, a venture capital firm in downtown Detroit focused exclusively on investing in technology companies that improve next-generation mobility.

Line of Flight

A longer runway at Cherry Capital Airport in Traverse City, new golf courses and wineries, upgraded resorts, and revamped marketing campaigns are attracting more tourism in northern Michigan.

Integrating Circuits

Not since Detroit absorbed California hot-rod culture have the Motor City and the Golden State embraced each other so tight. The quest to perfect self-driving cars and find innovative mobility solutions made it happen. Is this the biggest story in American business?
Edit ModuleShow Tags

Most Popular

  1. Wayne State’s Graduate Supply Chain Program Ranked Among Top 25 in the Country
    Wayne State University’s graduate global supply chain management program is among the...
  2. The Corner Apartment and Retail Project at Old Tiger Stadium Site in Detroit to be Completed in February
    The former Tiger Stadium site in Detroit received the city’s first modular home drop today as...
  3. Wayne State University in Detroit Opens $2M Athletic Performance Center
    Wayne State University in Detroit has announced the opening of its updated Athletic Performance...
  4. Universal McCann Will Open Office in Downtown Detroit to Oversee Quicken Loans’ Media Planning and Buying
    Detroit-based Quicken Loans Inc. today announced a long-term agreement with Universal McCann (UM)...
  5. Condos in Detroit’s Historic Trumbull House Now Available
    Detroit’s Trumbull House, a home built in 1897 and located at 4304 Trumbull in the Woodbridge...
  6. Troy’s Kresge Foundation Donates $50M to Transform Detroit’s Marygrove College Campus Into Learning Center for Early Childhood Education Through Graduate Studies
    The Kresge Foundation in Troy today announced the donation of $50 million to the P-20...