Ruling in Dole Food Co. Case Upholds Shareholder Rights
On August 27, 2015, a Delaware judge ruled that David Murdock, Chief Executive of Dole Food Co., and Michael Carter, the Company's former Chief Operating Officer, shortchanged shareholders when Murdock purchased the company for just $1.2 billion. Delaware Chancery Court Judge and Vice Chancellor Travis Laster ruled that the insiders "deprived shareholders of the ability to consider the merger on a fully informed basis." Judge Laster awarded these damages to investors after finding that the execs drove down Dole stock by both lowballing potential cost savings and canceling a previously-announced stock buyback in 2013, just before Murdock made his offer to take Dole private.
The case (In Re Dole Foods Co. Inc. Stockholder Litigation, Consolidated CA 8703-VCL) is a reminder of the sticky situation shareholders can find themselves in when a company they’ve invested in suddenly starts shopping for a buyer.