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.


(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

30 in Their Thirties 2018

The 2018 class of 30 in Their Thirties spans the business world, including employee staffing, finance, food production, health care, insurance, real estate development, and technology.

Mobility Midway

Ford’s recent acquisition of Michigan Central Station supercharges plans for a $740-million R&D mobility campus in Detroit’s Corktown district, which has already started with the opening of The Factory. How will it all come together?

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.
Edit ModuleShow Tags

Most Popular

  1. Revered Cadieux Café on Detroit’s East Side Sold to Restauranteur Paul Howard and Musician John Rutherford
    The owners of the Cadieux Café on Detroit’s east side today announced that they have sold the...
  2. Farmington Hills’ Plum Market to Open Street Concept Store in Downtown Detroit
    Plum Market, a food and beverage company based in Farmington Hills, will open a street concept...
  3. HTI Cybernetics in Sterling Heights to Invest $20.6M in Expansion
    Sterling Heights-based HTI Cybernetics Inc., a provider of automated and robotic welding systems,...
  4. BESA Detroit Restaurant Opens in the Central Business District
    A new restaurant, lounge, and private dining establishment called BESA Detroit has opened on the...
  5. Beaumont Health and Universal Health Services to Build $40M Mental Health Hospital in Dearborn
    Beaumont Health in Southfield and Universal Health Services (UHS) today announced they have...
  6. Bloomfield Hills-Based Sterilogy and Grand Valley Students Develop System to Help Reduce Hospital Infections
    Keeping hands clean and sanitized in hospitals and other medical facilities can be a challenging...